Its camera may well pick up a few megapixels, but the big improvements in photography are likely to come from the software features Apple has already demonstrated. And however many millimeters thinner it might be, the iPhone will get much of its utility from iOS 5 features, such as improvements in notifications, Twitter integration and other niceties that Apple demonstrated earlier this month. And, of course, there’s the iCloud synchronization service that is also slated to debut alongside iOS 5.

The same holds true for the next version of Windows Phone. Although the hardware is yet to come from folks like Samsung, HTC and Nokia, Microsoft has said much about the next version of its software, code-named Mango. In addition, I’ve been playing around with a test build of Mango, running on a current generation Windows Phone, the Samsung Focus.

Microsoft is moving in some of the same directions as Apple, and some different ones. Mango, like iOS 5, also focuses on Twitter integration and improved notifications. And while it lacks the full iCloud experience, it will add the ability to share documents to the cloud. Both are also getting new types of messaging, with Apple introducing iMessage and Microsoft bringing together Facebook Chat, text messages and Windows Live Messenger.

Of course, Microsoft is starting further behind when it comes to features.

While iOS 5 is about keeping Apple ahead, Microsoft is still playing catch-up with Mango, adding things like visual voicemail and multitasking that have long been a part of rival operating systems. And one of Mango’s other key features is a vastly improved browser that is nearly identical to the desktop version of Internet Explorer 9, albeit without support for plug-ins like Flash. The operating system will also support direct access to hardware features such as the camera, a level of support needed to enable certain types of games and virtual reality applications.

That’s not to say that Apple isn’t picking up a few tricks from its competitors, including Windows Phone. The ability to take a photo straight from the lock screen is one grabbed from Microsoft’s playbook, while Apple’s new notification mechanism borrows deeply from the approach Google has taken with Android.

To those things, Apple is adding plenty of its own new tricks. Beyond the improvements to the camera and additions of basic photo-editing tools, Apple is adding a Newsstand showcase for newspaper and magazine apps, as well as a new reminder tool that can prompt the user to take action based on either a specific time or location.

Perhaps most notable is Apple’s move to enable the iPhone to work without ever connecting to a computer. Historically, one has needed a PC or Mac to both set up and to update their iPhone. With iOS 5, both steps will be possible without even owning a computer. For those that do have a computer, the cord will still be rendered less important, thanks to the addition of Wi-Fi synchronization.

There are also features that Apple didn’t get time to show on stage, things ranging from the ability to set a custom vibration pattern for different contacts to being able to tweak the dictionary to add shortcuts and those words the iPhone is constantly miscorrecting.

Microsoft, for its part, is trying to refine the notion that a truly smart phone need not have an app for each step a user wants to take. One of the notions introduced with Windows Phone 7 — and being expanded on in Mango — is the concept of hubs. The people hub, for example, brings together lots of different connections to a particular person, from their contact information to one’s recent contact history to the photos they have posted on Facebook. With Mango, Microsoft is adding Twitter integration, as well as the ability to create groups and interact with multiple contacts at once via text or email.

“Our friends aren’t apps — they are people,” Microsoft’s Greg Sullivan said in an interview last month.

Other Mango features include Facebook check-ins and the ability to tag photos from the device, as well as improvements to search that give users information on what is nearby, the ability to search using the camera, and a Shazam-like service for identifying a song that is playing nearby. Microsoft is also working with a group of enthusiasts to enable small “home brew” developers to allow them to add apps they have developed to their own device, in an effort to encourage even the smallest of developers to pursue an interest in the Microsoft operating system.

So, while I can’t tell you what the next Windows Phones or iPhones will look like on the outside, I think we do have a pretty good sense of what they will look like on the inside, thanks to the sneak peeks that Apple and Microsoft have both provided of their next operating systems.

Apple has said iOS 5 will show up this fall and be a free update for the iPhone 3GS and iPhone 4, as well as running on all iPads and the last two versions of the iPod Touch. Microsoft has said that Mango is also due later this year as a free update for existing Windows Phone 7 devices as well as on a new generation of hardware, including from its new best buddy Nokia.

“The year 2012 is when we’ll see a portfolio of [Windows Phone] products shipping in volume. The pressure is on all of us, myself included, to have those first devices this year but we haven’t announced a specific date yet.”

–Nokia CEO Stephen Elop

Looks like Nokia is on track to meet the unofficial mandate given by its new chief executive, Stephen Elop, earlier this year: Deliver a Nokia Windows Phone before 2011′s end.

In an interview with Forbes today, Jo Harlow, Nokia’s EVP of Smart Devices, while stopping short of saying definitively that the company will bring a Windows Phone handset to market in 2011, said she’s optimistic that it will do so.

“I’m quite pleased with our progress,” Harlow said. “Our target is absolutely still this year…and the target looks good,” adding the company is shooting for a “small portfolio” of devices, not just one.

And there’s little reason to doubt her. Nokia executives said last month that they already have test builds of Mango, the latest iteration of Windows Phone, running on prototype Nokia hardware.

Improved communications, along with better Web browsing and more powerful apps, were the key focal points as the company looked to make the first major update to its revamped phone software.

On Tuesday, the company is announcing a host of new communications options that are among 500 new features that Microsoft is adding to its phone operating system in the “Mango” update due out later this year. The company is outlining the changes and sharing other details at a press event in New York that is just getting underway. (It’s being Webcast and AllThingsD has live coverage here).

As part of its effort to be a better communicator, Microsoft is adding support for Twitter as well as tighter integration with Facebook and an integrated conversation feature that allows chats to move between Facebook Chat, Windows Live Messenger and text message all within a single “thread.” The company is also adding an option to let users combine contacts into various groups that can be reached en masse via email or text message. On the email side, customers will now have the option to combine views from various email accounts into a single inbox as well as view messages in either standard or conversation view.

While apps are important, Microsoft is hoping to convince friends that when it comes to keeping in touch, it is better to integrate multiple modes into a single hub than to have to open a different program for each means of communication.

“Our friends aren’t apps—they are people,” Sullivan said.

That said, even with Mango, users will have to do some switching. The feature that lets discussions move from chat to text message doesn’t extend to email, while Twitter users will still need a separate program to handle more advanced tasks.

Still, Microsoft hopes integrating more options into its People hub will help the company’s products stand out from rivals. Sullivan noted that Microsoft’s research shows people spend 2.5 hours a day socializing on their phone–more time than is spent eating. “It’s pretty dramatic,” he said.

The Mango release of Windows Phone is due to show up on phones later this year. In addition to current hardware partners that are planning new phones, Mango will work on existing Windows Phone devices and will form the basis for Nokia’s first crop of Microsoft-powered phones.

Microsoft CEO Steve Ballmer has promised that the “Mango” update will bring over 500 new features to Windows Phone, many of which are set to be announced on Tuesday at an event in New York.

Some of the details of Mango have already been announced, including plans for improved Web browsing, better multitasking and integrated Twitter support. The software is due to arrive on new phones and as an upgrade for existing Windows Phones later this year.

The event is also being Webcast and AllThingsD will have live coverage starting at 7 am PT.

6:53 am: (to alarm clock) OK, OK, I’m up.

(to faithful readers) Good morning all. So good to see you all before 7 am.

7:04 am: I don’t think the event has started but the press release is up.

7:05 am: As is our story on some of the new communications features.

7:08 am: Having some technical problems on my end getting into the press conference. Bear with me.

7:14 am: OK. FINALLY got Webcast going. Andy Lees is on stage demoing Mango.

7:15 am: He’s talking about the notion of “threads,” something I talked about in the story that just posted. It’s this idea that a conversation can move from Facebook Chat to Windows Live Messenger to SMS and stay threaded (at least on the Windows Phone).

“With Mango, the message always gets through,” Lees says.

7:16 am: Now he is talking about the benefits of Microsoft’s hub approach as opposed to just “a grid of icons and a sea of applications.”

Lees says rivals’ approach is kind of like having to go back through the front door every time you want to go from the living room to the kitchen.

7:18 am: One of those 500 new features is the ability to tag a face within a photo before uploading it to, say, Facebook.

In the Office hub, Microsoft now supports Office 365 and Skydrive online services.

7:19 am: Some more details from the press release. Acer, Fujitsu and China’s ZTE among the new hardware partners making Windows Phones.

7:21 am: New language support: Brazilian Portuguese, Simplified and Traditional Chinese, Czech, Danish, Dutch, Finnish, Greek, Hungarian, Japanese, Korean, Norwegian, Polish, Portuguese, Russian, and Swedish.

Dutch! Goed Zo!

7:22 am: Demo guy is showing support for avatars in Xbox Live. He’s dressed the same as his avatar and has brought it a monkey, but says, “no judgments, please.”

Um, okay.

7:24 am: Current demo is a British Airways app that lets users see a 3-D map of the plane to pick out their seat.

7:25 am: The developer tools, in beta form, for programmers to create Mango apps will be available for download within 24 hours, Microsoft noted in the press release.

7:27 am: Now Lees is talking about the inclusion of the IE9 browser in Mango.

IE9 in Mango not just similar to the PC version, Lees says, it’s the same.

7:28 am: Mango also has deeply integrated Bing in IE9, Lees says, with support for voice and “answers” as opposed to blue links.

7:29 am: Demo guy is back comparing various phones in an HTML5 speed test, including a Mango phone, Droid Charge Android phone, BlackBerry and iPhone.

Surprise, Mango is doing it the fastest.

7:31 am: Another new feature are “quick cards” that create an answer page for certain categories that not only provide data and search results, but also hand off to relevant apps on the phone.

7:35 am: Demo was getting a bit dull, so I went over to check in on Peter Kafka, who is live blogging about the new Nook from Barnes and Noble. It’s a touchscreen, e-ink device and will sell for $139, in case you were wondering.

7:37 am: Meanwhile, back in Mangoville, Andy Lees is summarizing everything we’ve seen today including new support for voice and image-based search.

“There’s a lot more than we have time to show today,” Lees says.

It’s a very big release and worth waiting for. Good news, he says, is that you won’t have to wait. (Well, you will, but not beyond “fall,” Microsoft says.)

Free update for existing Windows Phone 7 users.

7:40 am: With Mango, Lees says Microsoft expects significant boost in its momentum. Already have 18,000 apps for Windows Phone 7.

7:41 am: Skype coming to Mango (well, I should hope so, since Microsoft is paying all those billions).

7:42 am: In addition to new hardware partners, Mango will work on lower-priced phones, Lees says.

Existing hardware partners Samsung, LG and HTC doing Windows Phones in addition to the new guys–ZTE, Acer and Fujitsu. Not to mention Nokia.

With new geographic support, Lees says that the market will be four times as large with Mango as it was for the first release of Windows Phone.

7:44 am: Lees wraps up.

Flashy video playing. No, not a Flash video. Just a flashy one.

Speaking to developers in Tokyo, Ballmer noted that the “Mango” update later this year will have more than 500 new features. With Windows Phone 7, released last year, Microsoft essentially started over in the phone business, going with an entirely new approach. Though praised for its clean look, the company has acknowledged that it still has a lot of catching up to do on the feature side with rivals such as Apple’s iPhone OS and Google’s Android. With Mango, the company is hoping to close that gap, as well as to expand on some of what makes Windows Phone different, such as its hub-based approach to organizing activities.

“Not only is it a new release that is now much more global, but we’ve added over 500 new features to Windows Phone,” Ballmer said, according to a transcript that Microsoft posted on its press site. “We have a big launch event to talk about the next release of Windows Phone tomorrow. So, that information will be forthcoming, including some of the particulars about who is going to be building Windows Phones, and which carriers will be offering them here in Japan.”

Indeed, Microsoft has already said a fair bit about the next release of Windows Phone. Back at Mobile World Congress in Barcelona, Microsoft mentioned a few key features, including improved multitasking, Twitter integration and a version of its Internet Explorer 9 browser. Since then, the company has also talked about other features, such as better cloud services for Office and deeper access to hardware features to allow for applications like augmented reality.

The new release, due on devices by the holidays, is expected to be the basis for the first crop of Windows Phones from Nokia and new devices from a variety of other hardware makers. Nokia executives said last month that they already have test builds of Mango running on prototype Nokia hardware.

Microsoft will have more to say, for sure, at its event on Tuesday, which is also being Webcast. AllThingsD will be covering it live starting at 7 am PT.

The new pact, which stretches over hundreds of pages, details the financial commitments as well as delineating which company is responsible for which technical components as Nokia looks to make Windows Phone its “primary smartphone operating system.” The signed deal is being announced just as Nokia is set to report its most recent quarterly earnings and chat with investors and financial analysts.

In an exclusive joint interview late Wednesday night, Microsoft phone unit President Andy Lees and Nokia Executive Vice President Kai Oistamo talked about the contract and the technical work that has already taken place, as well as the work that remains ahead–including convincing the legions of Nokia developers not to jump ship as the company makes its huge leap from Symbian to Windows Phone.

Both executives stressed that things are ahead of schedule and that considerable progress has been made since the February announcement in London.

“We’ve gotten to where we have gotten to faster than we thought,” Lees said. “Now we know who is exactly writing each piece of code.”

To get to this point, there have been lots of flights back and forth from Finland to Redmond, as well as countless conference calls, e-mails and meetings as the collaboration has expanded from a small group of people talking about a deal to a larger team hammering out the details, and a vast effort at both companies to actually get started on the joint work needed to put all those terms and conditions into action.

The pace of progress is critical for both Microsoft and Nokia. Microsoft, of course, is still playing catch-up after essentially starting over with Windows Phone 7. The company is hard at work on a new version of the Windows Phone operating system, code-named Mango, due out later this year. That software aims to close key gaps with Android and Apple’s iOS, adding features like improved browsing and better multitasking while also giving software makers greater access to the phone’s hardware, allowing better applications for gaming and augmented reality.

Microsoft has said it is confident it can have the software on new phones and available as an upgrade for existing models this year, despite glitches with its first couple of software updates.

Nokia, meanwhile, wants to make this awkward transition time as short as it can, and also reduce the amount of time between committing to Windows Phone as its primary smartphone operating system and actually having products to sell.

Getting the contract signed was a milestone, but Oistamo said he is even more pleased with the technical work that has taken place in the past 60 days–including getting the first Nokia hardware running Microsoft’s operating system.

“A contract is just a contract,” he said during the joint interview with Lees. “The real thing is about creating something jointly together.”

Already, throughout the halls of Nokia offices worldwide, workers can be seen sporting Windows Phones alongside their existing Nokia devices. And some of them have working prototypes of Nokia hardware running early test versions of the next Windows Phone software.

Nokia has even posted some teaser concept photos on its Web site.

“The products are not done yet,” Oistamo said. “But you can already see the signs. Everything that we talked conceptually with you in London is actually coming into real fruition.”

Although the contract largely formalizes the same structure envisioned when the two companies announced the partnership in February, Oistamo said there have been some minor changes, as well as more details on how the partnership will extend beyond phones.

Microsoft, for example, plans to adopt Nokia’s mapping technology broadly beyond its phone business, while Nokia will use Microsoft’s Bing search engine on even non-Windows Phones.

As for the financials, Lees and Oistamo didn’t have much new to say, but reiterated Nokia CEO Stephen Elop’s assertion that the deal calls for billions of dollars to flow back and forth over the next few years.

Although Nokia doesn’t expect significant volumes of Windows Phone shipments until next year–and indeed will be making Symbian phones for some time to come–Elop has said that he wants the first Nokia device with Windows Phone on the market this year. And, while not offering any new details, Oistamo confirmed that those expectations haven’t changed.

“The preference and the ambition has definitely not changed, the sooner the better,” Oistamo said.

Doing so, though, means that the first Nokia smartphones running Microsoft’s software may not have as much distinctiveness as the company hopes to add over time.

“We are jumping into a moving train,” Oistamo said. “You can do more when you have a little bit more time.”

That said, even the first Nokia products running Windows Phone “are going to be very distinctly Nokia.”

Over time, Nokia hopes to bring a lot of its capabilities to both help Windows Phone as a platform and to make its Windows Phones stand out from the pack. Lees cited mapping as an area where Nokia will help the platform as a whole and imaging as an area where Nokia will try to differentiate itself from LG, Samsung, HTC and other phone makers developing Windows Phones. Even there, though, Microsoft had to do some work, noting that currently Windows Phone doesn’t give Nokia or any other hardware maker the access needed to truly stand out.

“Our platform is not fully optimized for that,” Lees said. “We need to make changes.”

Microsoft, for its part, is happy to have a partner as big as Nokia as it looks to better compete with Google and Apple in the smartphone battle. Lees noted that Nokia’s carrier billing relationships will mean that the company can sell apps even to those that don’t have a credit card, while its mapping prowess will make the phones more powerful in more countries.

“In the case of mapping, Nokia has far and away the largest global footprint,” Lees said. “Our mapping just got better everywhere around the world.”