Just read this article on Gizmodo: http://gizmodo.com/gadgets/what.s-wrong-with-windows-mobile/whats-wrong-with-windows-mobile-and-how-wm7-and-wm8-are-going-to-fix-it-333536.php
One can spend a whole day listing things that are better on iPhone than they are on Windows Mobile - the UI, the browser experience (speed), the media support, the web apps, or which are better on Windows Mobile than they are on iPhone - the browser support (page rendering for the smaller screen), the business apps, the email, calendar, contacts support.
I am not going to. The point I want to make is - the iPhone has already won. Despite the fact that I have spent a third of my career working on Windows CE, despite the fact that I am still using Windows Mobile phone, after considering switching to the iPhone and playing with one, on and off, for about a month, despite all that - it's time to admit it.
All iPhone problems aside, it's a version 1, and it is vastly superior to anything that we shipped up until version 5 of Windows Mobile. Hell, it took us 5 versions to just get it to the point where it would reliably receive calls - I was completely dumbstruck, I could not believe my lying eyes when it turned out that iPhone is a reliable cell phone in version 1.
But the reason I believe it has truly, really won is because I do not think that Microsoft will be able to keep up. You see, to keep up, they would need to write a lot of code, cool code, exciting code, code that the customers will love. And do it quickly.
But the culture in the company does not favor people who love to write code any more. It has become all about the release process, the planning, the schedulig. Fact: an average developer in Windows organization at Microsoft produces about 1500 lines of code per year. Sure, some kick-ass devs are still there, but there are now a minority, and they are leaving in droves. The Force is no longer with them...
NB: I have not worked in Windows Mobile division for the last 3 years. My observations apply to the company as a whole. It is theoretically possible that WM is an oasis of green in the otherwise bleak picture. We will know for sure when the next version comes out :-).