This week Microsoft did something it's done all too infrequently over the past several years: It introduced a new product that people were excited to see, generating significant buzz with press, pundits, and consumers alike. Perhaps it's no coincidence that this product—which is awkwardly called Windows Phone 7 Series—is named after Microsoft's only other smash product in the past decade, Windows 7.

In case it's not obvious, Windows Phone 7 Series is the next generation of the venerable Windows Mobile system that's gotten so long in the tooth you can actually see cobwebs in some screens. (OK, not really, but it does feel that way. Some Windows Mobile UIs literally date back to 1996.) And while these two systems do share a common technological foundation and the same general mission, Windows Phone and Windows Mobile veer off very sharply in the way they go about things. That is, Windows Phone is all about the future and about fixing the platform's shortcomings vis-à-vis the iPhone.

To this end, Windows Phone introduces a dynamic, Zune-inspired UI that's all about multitouch flicking of "live tiles," short attention span animations, and integrating virtually every other conceivable Microsoft and third-party service that makes sense. This means Xbox Live, Windows Live, Twitter, and Facebook, as well as more traditional online services—and core Windows Mobile strengths—like email and calendaring, and digital media features around music, videos, and pictures.

Windows Phone may look like it's for the hipper-than-thou college crowd that's currently flocking to the iPhone, but thanks to its deep customization capabilities, I suspect it's going to find a home with business users as well. Third parties—including hardware makers, wireless carriers, and independent developers—are going to be able to create their own live tiles to make custom user experiences. So it's not hard to imagine work-related tiles as well as entertainment and leisure-time tiles that will further blur the line between work and play.

From a hardware standpoint, Microsoft is playing to its historic strengths and working with a wide range of partners to produce innovative, capacitive-screen-based devices that will begin appearing in late 2010, just in time for the holidays. But Microsoft has one-upped Apple by specifying some requirements for these devices, including three prominently placed hardware buttons for Start, Back, and Search. This is genius, because it corrects the iPhone's major problem of not having a Back button and because it creates a nice consistency that will make moving from device to device more seamless.

I still have questions, mostly about backward compatibility and upgrade paths. And I can't wait to see the new system and devices next month at the MIX conference I'll be attending. But for now, I can say for the first time, perhaps ever, that Microsoft might be able to pull off something wonderful with its smartphone software. And it appears to have created a system that will appeal equally to consumers and business users, which is smart because in today's connected world, these two audiences are increasingly one and the same.