“In the short run, people gotta want these phones. I think they’re going to look pretty good. That’s the most important thing. If we start the popularity chain, and start kind of the buzz around these things, we’ll be able to make some money off of them.”

– Microsoft CEO Steve Ballmer

With the launch of Windows Phone 7 today, Microsoft is taking another shot at a market even its CEO, Steve Ballmer, concedes it stumbled in. “We were ahead of this game and now we find ourselves No. 5 in the market,” he said during our D8 conference in June. “We missed a whole cycle.”

Badly, too–as this exchange at the company’s 2009 Public Sector CIO Summit painfully illustrates.

Questioner: With platforms like the Google phone and iPhone coming out, it’s really tough to continue to stand behind Windows Mobile when our employees are bringing these consumer devices into our environments,” the questioner explained. And in your presentation you put Windows Mobile right in the center there, but it was a phone that doesn’t work in America and an operating system that you haven’t released. I’m wondering what your commitment is to continuing to get newer versions of the operating system in our hands so that we don’t have to fight this battle on the ground.”

Steve Ballmer: We have a significant release coming this year. Not the full release we wanted to have this year but we have a significant release coming this year with Windows Mobile 6.5….We still don’t get some of the things that people want on the highest-end phones. Those will come on Windows Mobile 7 next year. Certainly I’m not, um–there’s opportunities for us to accelerate our execution in this area, and we’ve done a lot of work to really make sure we have a team that’s going to be able to accelerate. With that said, we did sell more Windows Mobile devices last year than Apple did iPhones–just an important factoid to have. Blackberry was a little bit ahead, and Google was nowhere to be seen, except in Silicon Valley, I’m sure. But we’ll do our best to help you with that challenge.”

But Microsoft’s “best” at that point wasn’t nearly enough.

Intended as a stopgap, Windows Mobile 6.5 ended up being another damning monument to Microsoft’s failure to innovate in mobile and the ugly strategic misstep that made it an afterthought in a market that had already lapped it once and was well on its way to lapping it a second time. Just last week Verizon (VZ) President and COO Lowell McAdam dismissed Microsoft as a player in the mobile market. “We like our relationship with Microsoft,” he told News.com. “But clearly in the U.S. there are three major mobile operating systems: RIM, Google, and Apple….Microsoft is not at the forefront of our mind.”

If Windows Phone 7 doesn’t put it there, Microsoft (MSFT) might as well hand its fast-diminishing portion of the smartphone market to Apple (AAPL), Google (GOOG) and RIM (RIMM), because they’ll take it soon enough.

But that’s not likely to happen. Because from what I’ve seen, Windows Phone 7 is as slick an OS as has ever come out of Microsoft–easily enough to keep the company in the mobile game, assuming it hasn’t lost it already.

For one thing, WP7 is not simply a rejiggering of Windows Mobile 6.5, it’s an entirely new OS. For another, its interface is unique enough to differentiate it in an already crowded market. It’s smart, too–perhaps even smart enough to give it a leg up on some rivals. Its hubs and tiles GUI, which aggregates applications and content according to subject and delivers real-time information to the home screen without the need for user involvement, is elegant and intuitive.

Add to this a media experience basically identical to Zune HD, very smart social media management, seamless Xbox live and SharePoint/Office integration and high minimum hardware requirements for OEMs and you’ve got a pretty compelling OS–even if it doesn’t yet support cut-and-paste and true multitasking (the company tells me those are coming). The challenge for Microsoft will be to convince a market that saw Windows Mobile made a laughing stock by iOS, Android and webOS, that Windows Phone 7 isn’t just more of the same.

That shouldn’t be too hard given the nearly half-billion dollars in marketing the company is rumored to be throwing at it (check out one of the first ads below) and the quality of the OS itself.

My colleague Peter Kafka will be covering the New York City launch of Windows Phone 7 later this morning. Join him here at 6:30 am PT/9:30 am ET for live coverage.

And just how does the company propose to “make things happen”?

Well, that’s not entirely clear, but make no mistake, things are definitely going to happen.

“We’re working with our hardware partners, we’re tuning Windows 7 to work on slates,” Ballmer explained. “We’ve got the user base, we’ve got the user familiarity. We’ve got everything on our side if we do things really right.”

Of course that’s often the case with Microsoft (MSFT). The problem is, it doesn’t always manage to do things really right. Certainly, it didn’t manage it with Windows Vista. Or Windows Mobile. Or Zune. Or, more recently, Kin. Who’s to say this time will be any different?

Not that it even matters if it is, as Jefferies analyst Katherine Egbert wrote in a note to clients this morning: “If you stop thinking of Microsoft as an innovator and start thinking of them as a fast, low cost, mass market follower, you’ll stop being disappointed in their inability to divine new markets and realize they are staring at some of their largest growth opportunities ever.”

Amazon’s MP3 store now has 12 percent of the digital download market in the U.S., according to NPD Group. That’s up from eight percent a year ago. But those sales don’t seem to have come at Apple’s expense: NPD puts the iTunes market share at 70 percent, compared with 69 percent a year ago.

So who’s losing market share? NPD hasn’t explained (yet). But based on previous surveys from the data company, I assume it’s some combination of Rhapsody, Microsoft’s (MSFT) Zune marketplace and Napster. And if I had to guess, I’d point to Napster, which has really struggled since Best Buy (BBY) purchased it in 2008.

UPDATE: I was wrong! Looks like Amazon’s gain stems primarily from Rhapsody’s loss. The music subscription service, which also sells downloads, saw its share drop from four percent to 1.3 percent within the last year (see table below; click to enlarge).

In any case, the new data show Amazon making steady, grinding progress. Which makes reports of Apple strong-arming music labels that gave exclusives to Amazon a little more interesting.

Meanwhile, Apple (AAPL) remains the biggest player in music retail, period. NPD says it now owns 28 percent of the U.S. market, up from 24 percent a year ago. Amazon (AMZN) is also up, from nine percent to 12 percent, which ties Wal-Mart (WMT) for second place.

[Image credit: Paolo Camera]

More interesting: Wouldn’t it be weird if the President of the United States gave a speech about the education gap, made a passing reference to technology’s ability to distract us, and then the short-attention-span media made it look like he was coming for your Twitter account?

Not weird, you say? Just kind of predictable?

Okay. So here, for the record, are Obama’s prepared remarks for his commencement address at Hampton University yesterday (below). They clock in at more than 2,000 words (the speech he actually delivered was a tiny bit longer), but if you slug your way through it, you’ll find that your iPad is probably safe.

Don’t like to read? No problem–you can also watch the 22-minute speech. The White House posted it on its Web site last night.

Good morning, Happy Mother’s Day to all the moms here today, and thank you for inviting me to share this special occasion with the Hampton community. Before we get started, I just want to say, I’m excited the Battle of the Real H.U. will be taking place in Washington this year. You all know I’m not going to pick sides. But it’s been, what, 13 years since the Pirates lost. As one Hampton alum on my staff put it, the last time Howard beat Hampton, The Fugees were still together.

Let me also say a word to President Harvey, a president who bleeds Hampton blue. In a single generation, Hampton has transformed from a small black college into a world-class research institution. That transformation has come through the efforts of many people, but it has come through President Harvey’s efforts, in particular, and I want to commend him for his leadership.

I also want to recognize the Board of Trustees, faculty, alums, family, and friends with us today. And most importantly, I want to congratulate all of you, the Class of 2010–I take it none of you walked across Ogden Circle.

We meet here today, as graduating classes have met for generations, not far from where it all began, near that old oak tree off Emancipation Drive. I know my University 101. There, beneath its branches, by what was then a Union garrison, about twenty students gathered on September 17, 1861. Taught by a free citizen, in defiance of Virginia law, the students were escaped slaves from nearby plantations, who had fled to the fort seeking asylum.

After the war’s end, a retired Union general sought to enshrine that legacy of learning. With collections from church groups, Civil War veterans, and a choir that toured Europe, Hampton Normal and Agricultural Institute was founded here, by the Chesapeake–a home by the sea.

That story is no doubt familiar to many of you. But it is worth reflecting on why it happened; why so many people went to such trouble to found Hampton and all our Historically Black Colleges and Universities. The founders of these institutions knew, of course, that inequality would persist long into the future. They recognized that barriers in our laws, and in our hearts, wouldn’t vanish overnight.

But they also recognized a larger truth; a distinctly American truth. They recognized that with the right education, those barriers might be overcome and our God-given potential might be fulfilled. They recognized, as Frederick Douglass once put it, that “education…means emancipation.” They recognized that education is how America and its people might fulfill our promise. That recognition, that truth–that an education can fortify us to rise above any barriers, to meet any tests–is reflected, again and again, throughout our history.

In the midst of civil war, we set aside land grants for schools like Hampton to teach farmers and factory-workers the skills of an industrializing nation. At the close of World War II, we made it possible for returning GIs to attend college, building and broadening our great middle class. At the Cold War’s dawn, we set up Area Studies Centers on our campuses to prepare graduates to understand and address the global threats of a nuclear age.

Education, then, is what has always allowed us to meet the challenges of a changing world. And that has never been more true than it is today. You’re graduating in a time of great difficulty for America and the world. You’re entering the job market, in an era of heightened international competition, with an economy that’s still rebounding from the worst crisis since the Great Depression. You’re accepting your degrees as America wages two wars–wars that many in your generation have been fighting.

Meanwhile, you’re coming of age in a 24/7 media environment that bombards us with all kinds of content and exposes us to all kinds of arguments, some of which don’t rank all that high on the truth meter. With iPods and iPads; Xboxes and PlayStations; information becomes a distraction, a diversion, a form of entertainment, rather than a tool of empowerment. All of this is not only putting new pressures on you; it is putting new pressures on our country and on our democracy.

It’s a period of breathtaking change, like few others in our history. We can’t stop these changes, but we can adapt to them. And education is what can allow us to do so. It can fortify you, as it did earlier generations, to meet the tests of your own time.

First and foremost, your education can fortify you against the uncertainties of a 21st century economy. In the 19th century, folks could get by with a few basic skills, whether they learned them in a school like Hampton, or picked them up along the way. For much of the 20th century, a high school diploma was a ticket to a solid middle class life. That is no longer the case.

Jobs today often require at least a bachelor’s degree, and that degree is even more important in tough times like these. In fact, the unemployment rate for folks who’ve never gone to college is over twice as high as it is for folks with a college degree or more

The good news is, all of you are ahead of the curve. All those checks you wrote to Hampton will pay off. You are in a strong position to outcompete workers around the world. But I don’t have to tell you that too many folks back home aren’t as well prepared. By any number of different yardsticks, African Americans are being outperformed by their white classmates, and so are Hispanic Americans. And students in well-off areas are outperforming students in poorer rural or urban communities, no matter what color their skin.

Globally, it’s not even close. In 8th grade science and math, for example, American students are ranked about 10th overall compared to top-performing countries. African Americans, however, are ranked behind more than twenty nations, lower than nearly every other developed country.

All of us have a responsibility, as Americans, to change this; to offer every child in this country an education that will make them competitive in our knowledge economy. But all of you have a separate responsibility, as well. To be role models for your brothers and sisters. To be mentors in your communities. And, when the time comes, to pass that sense of an education’s value down to your children. To pass down that sense of personal responsibility and self-respect. To pass down the work ethic that made it possible for you to be here today.

So, allowing you to compete in the global economy is the first way your education can prepare you. But it can also prepare you as citizens. With so many voices clamoring for attention on blogs, on cable, on talk radio, it can be difficult, at times, to sift through it all; to know what to believe; to figure out who’s telling the truth and who’s not. Let’s face it, even some of the craziest claims can quickly gain traction. I’ve had some experience with that myself.

Fortunately, you’ll be well positioned to navigate this terrain. Your education has honed your research abilities, sharpened your analytical powers, and given you a context for understanding the world. Those skills will come in handy.

But the goal was always to teach you something more. Over the past four years, you’ve argued both sides of a debate. You’ve read novels and histories that take different cuts at life. You’ve discovered interests you didn’t know you had, and made friends who didn’t grow up the same way you did. And you’ve tried things you’d never done before, including some things I’m sure you wish you hadn’t.

All of it, I hope, has had the effect of opening your minds; of helping you understand what it’s like to walk in someone else’s shoes. But now that your minds have been opened, it’s up to you to keep them that way. And it will be up to you to open minds that remain closed. That, after all, is the elemental test of any democracy: whether people with differing points of view can learn from each other, work with each other, and find a way forward together.

I’d also add one further observation. Just as your education can fortify you, it can also fortify our nation, as a whole. More and more, America’s economic preeminence, our ability to outcompete other countries, will be shaped not just in our boardrooms and on our factory floors, but in our classrooms, our schools, and at universities like Hampton; by how well all of us, and especially us parents, educate our sons and daughters.

What’s at stake is more than our ability to outcompete other nations. It’s our ability to make democracy work in our own nation. Years after he left office, decades after he penned the Declaration, Thomas Jefferson sat down, a few hours’ drive from here, in Monticello, to write a letter to a longtime legislator, urging him to do more on education. Jefferson gave one principal reason–the one, perhaps, he found most compelling. “If a nation expects to be ignorant and free,” he wrote, “it expects what never was and never will be.”

What Jefferson recognized, like the rest of that gifted generation, was that in the long run, their improbable experiment–America–wouldn’t work if its citizens were uninformed, if its citizens were apathetic, if its citizens checked out, and left democracy to those who didn’t have their best interests at heart. It could only work if each of us stayed informed and engaged; if we held our government accountable; if we fulfilled the obligations of citizenship.

The success of their experiment, they understood, depended on the participation of its people–the participation of Americans like all of you. The participation of all those who’ve ever sought to perfect our union. Americans like Dorothy Height.

As you probably know, Dr. Height passed away the other week at the age of 98. Having been on the firing line for every fight from lynching to desegregation to the battle for health care reform, she lived a singular life. But she started out just like you, understanding that to make something of herself, she needed a college degree.

So, she applied to Barnard–and got in. Only, when she showed up, they discovered she wasn’t white like they’d thought. You see, their two slots for African Americans had already been filled. But Dr. Height was not discouraged. She was not deterred. She stood up, straight-backed, and with Barnard’s acceptance letter in hand, marched down to NYU, where she was admitted right away.

Think about that for a moment. A woman, a black woman, in 1929, refusing to be denied her dream of a college degree. Refusing to be denied her rights. Her dignity. Her piece of America’s promise. Refusing to let any barriers of injustice or inequality stand in her way. That refusal to accept a lesser fate; that insistence on a better life is, ultimately, the secret of America’s success.

So, yes, an education can fortify us to meet the tests of our economy, the tests of citizenship, and the tests of our time. But what makes us American is something that can’t be taught–a stubborn insistence on pursuing a dream.

The same insistence that led a band of patriots to overthrow an empire. That fired the passions of union troops to free the slaves and union veterans to found schools like Hampton. That led foot-soldiers the same age as you to brave fire-hoses on the streets of Birmingham and billy clubs on a bridge in Selma. That led generation after generation of Americans to toil away, quietly, without complaint, in the hopes of a better life for their children and grandchildren.

That is what has makes us who we are. A dream of brighter days ahead, a faith in things unseen, a belief that here, in this country, we’re the authors of our own destinies. And it now falls to you, the Class of 2010, to write the next great chapter in America’s story; to meet the tests of your own time; and to take up the ongoing work of fulfilling our founding promise. Thank you, God Bless You, and may God Bless the United States of America.