NEW YORK--Microsoft says its ready to take on the competition with its next iteration of its Windows Phone 7 software.

At an event here today, the company demonstrated some new features that will be part of the updated software code-named Mango, which is designed to make Windows smartphones smarter and easier to use, according to Andy Lees, president of the Mobile Communications Business for Microsoft.

Andy Lees, president of Microsoft&39's Mobile Communication Business

The company offered a series of demonstrations that showed off some key features such as a smoother integration with social-networking applications like Facebook and Twitter, some built-in voice recognition technology, and some multitasking capabilities that allows the device to run one application while another is also working in the background.

There was also a demonstration of how Microsoft's Bing search engine can be used on a more local level. The company showed the Local Scout capability that used search and location information to offer suggestions for nearby restaurants, shopping, and activities. Microsoft also showed off the Quick Cards feature, which provides a brief summary of relevant information and related apps when users search for a product, movie, or event.

The new software update is due to be released this fall. Meanwhile, Google is also readying the next release of its Android software called Ice Cream sandwich. And Apple will likely be out with a new iPhone 5 and software update this fall as well.

CNET sat down with Lees to talk more about the upcoming Mango updates and to get his thoughts on the competition. Below is an edited excerpt of that conversation.

Q: Will the Mango updates work on existing Windows Phone 7 devices And will the update be available to all Windows Phone 7 devices at the same time That's been an issue for Google's Android OS, as I am sure you're aware. Lees: Yes, the update will be available for existing phones. And the update will be available at roughly the same time for all Windows Phone 7 devices. Each carrier does its own device testing on their networks, so the release may be a bit staggered based on that. But it won't be like what you see with Google.

The reason for that is that our approach to the ecosystem is very different. We wanted to have a way for all the pieces to come together without fragmentation. With Android, everyone takes a piece of the code base and they can hack it up for their own devices. What happens when you have an update to the original code is that everyone then has to touch that code to tweak it for the update.

We have a specification for how our software should work so that the look and feel is consistent for the consumer. This means all the apps come together in a predictable way. So when updates occur you know it will work on all phones.

Microsoft just announced the acquisition of Skype. And you mentioned it briefly in your presentation that Microsoft is adding a Skype app to the Windows Phone platform, but are there any additional integration plans you can talk about Lees: We are in the middle of a review process of the purchase of Skype so I can't go into specific details right now. That review process will likely be finished by the end of the year and then we can talk more specifically about things. What I reiterated during the presentation was information that Skype had made available earlier this year when it said it would have a Windows Phone app that will work with Mango.

Now that Microsoft has a tight partnership with Nokia, when will we start seeing some navigation apps from Nokia's Navteq group built into Windows Phone Lees: We will be highlighting some capabilities in the coming weeks that will be centered around directions and mapping. We did show a few mapping-related demos today, such as the one that shows you not just where the mall is but what stores are inside. And the Local Scout and Quick Card functionalities that use location to give you more information about things around you.

In terms of how we will integrate these capabilities with Nokia mapping, that's really beyond Mango. The development work we are doing with Nokia around navigation and mapping is just starting now, and what we've been doing with Mango is almost ready to be launched. So we will be bringing more Nokia maps and navigation functionality into the platform in the future. It's definitely a space that will keep evolving and one to watch.

Google Android has had an incredible past two years. And Apple's iPhone is still selling quite well. How will Microsoft set itself apart from the competition Lees: Android benefited from having a modern smartphone OS at a time when there wasn't the same level of alternative anywhere else.

Apple has focused on the consumer. They do not have ecosystem approach and instead control everything on the platform.

What we're doing is different. We're going to be focused on the consumer experience and also build an ecosystem. We want to break the apps out of their silos. So take something like Facebook or Bing. We'll provide a unique user experience for those applications. And we'll also take an ecosystem approach. But we'll do it smarter than what Android has done so that we won't have the fragmentation issues.

But how can you ensure there is no fragmentation when it comes to the Microsoft Windows Phone ecosystem when you have device partners, such as Samsung or LG, that might want to add their own special sauce to differentiate their hardware from someone else's in the ecosystem Lees: Samsung and others can add features to the software. But we want the experience to be predictable for the user so we don't want everyone changing everything. For example, we don't want manufacturers changing the home screen, because then every phone is different and there's not predictability for the consumer. But OEMs [original equipment manufacturers] can add a live tile. Software is still software and things can be added and changed.

For example, LG wanted to add DLNA (Digital Living Network Alliance) capabilities to their initial Windows Phone devices that would allow people to connect their phones to an LG TV. So they made a live tile with that built in. And users could easily access that functionality and they felt that was able to add value to their device.

Do you think that the fragmentation headaches that users and developers are experiencing with Google Android right now will eventually become an opportunity for Microsoft to grab market share Lees: Fragmentation is one issue. But there are other opportunities for us. We plan to build in a lot of core functionality into the software, so that users don't need to open a separate app for everything. For instance, other smartphones may have several apps for instant messaging, social networking, and photo sharing. But what we've done with Mango is integrate messaging from different applications together. So PC IM messaging is integrated with messaging on social-networking sites and that's integrated with SMS text messaging.

It's not just about the individual apps, but instead it's about what the overall experience is for the user.

People want to do some core things with their phones. They want to connect and communicate with friends, family, and people they work with. They want to access mobile apps so they can do things. And they want to harness the power of the Net, which is why we provide the full IE 9 browser experience and Bing in the phone.

We know certain apps get very high usage on phones, such as the camera. In fact, it's the third most used app on a phone. But on other smartphone platforms, you have to get into the camera app, take a picture. And then open up Facebook to send it and tag it. And if someone comments on that picture, you have to go back into Facebook to check.

With Mango and Windows Phone it all just comes to you. You can take a picture and immediately tag and upload it. And then notifications are pushed to you right on your phone.

And if you don't want to see all those notifications, you can filter it or turn it off.

Microsoft has to innovate quickly to keep up in this competitive market. Mango is the second major update to the Windows Phone operating system since it was launched last September. Should we expect this pace to continue Lees: The pace at which we release updates is important. This is the second major one we've released in less than a year. Right now, we're talking about this release. But clearly we have a roadmap for others.

In general though for our strategy, we don't want to do lots of minor releases of features and software. In other words, we don't want the pace to be so quick that these updates become insignificant events. But this is a competitive market and we need to be quick with updates. So there's a balance to being timely and making sure that we don't overwhelm consumers and the ecosystem.

When Microsoft and Nokia first announced their partnership, I wondered if device partners, such as HTC or LG would balk. I figured they would assume that Nokia might get special treatment. Now that it's been a few months, how have these partners reacted Lees: Our OEMs want a vibrant ecosystem and the bigger that ecosystem gets, the better it is for them. Nokia helps us add scale. They sell about 40 percent of the world's cell phones worldwide. So that offers a big distribution channel for Windows Phone devices.

So the reaction since the announcement from our partners has been very positive. In fact, I think it gave them the confidence to accelerate some of their plans, because it increases the potential of the overall ecosystem. And we'll start to see this with Mango. So I've been very happy with the reaction of our partners.

How do you feel about the relationship Microsoft has with its developers Lees: Well, we've gone from zero apps when we launched the platform last year to 18,000 unique apps today. That's the fastest ramp of any new platform ever in the mobile space. Why were we able to do this so quickly The platform and the tools we offer to developers are rich. Developers also know how the program works based on work for the Xbox and desktop apps. And as a result they can develop apps quickly for multiple platforms.

So we feel good about where we are with developers. And the new tools for developing for Mango are out today.

We also haven't focused app development on volume but on quality and the types of apps we think people will want. For example, 40 percent of the apps people use regularly are games. And we allow developers to work with Xbox, so we have developers creating games not just for Windows Phone, but for the Xbox console and PC. That's a really good value proposition for developers. And that's why I think the ecosystem has accelerated.

Where would you like Microsoft Windows Phone to be in relation to the competition by the end of this year Lees: So you're asking me what I'd like for Christmas Well, the most important thing for us is to build phones that people love. Having something in the market that people really like, is very important. I'd also like to see strong support from a vibrant ecosystem. Sales are important, but they are a trailing indicator. These things always take a little time to ramp up. And if you look at the unit volumes already, we are ahead of where we should be compared to the competition. We know we need to eventually overtake other folks, and we need products people love and a vibrant ecosystem to do that.

Do you need to unseat Apple or Google or even both of them to be successful in this market Lees: We want to compete vigorously. And we plan to take market share from competitors.