Apple’s success with the iPhone: Why has Apple (NSDQ: AAPL) been able to move the market so rapidly and Microsoft (NSDQ: MSFT) hasn’t? Lees: “What Apple was able to do was integrate hardware and software very closely. It benefited from having the first-mover advantage. Our fundamental strategy and our choice is to drive innovation by having different form factors vs. having one phone out at the same time. This approach takes slightly longer to move an industry. You saw it in the early days of the PC, too. The same thing happened where Apple had 35 percent share of all the PCs sold, but they weren’t able to compete over the long-term.”

Name brand recognition: “The problem today is that people don’t know they are using a Windows phone. We want them to get to a point where they walk in and say I want a Windows Phone. Every phone will have a [physical] button to get to the start menu. People will know they want a Windows Phone for both business and consumer services.”

Windows Mobile sales projections: Can you tell me how many phones, or licenses you expect to sell? “No.” I thought at one point, Microsoft said they expect to grow by 50 percent year over year, and clearly you aren’t hitting those expectations. “We have been gaining share consistently and growing faster than the market. According to IDC data, smartphones might be growing at about 13 percent this year. As for 50 percent growth, we never said that, we always said we wanted to grow faster than the market…If the market does better, we’ll do better.”

The never-ending Zune phone rumor: Would you like to put to rest the speculation over a Zune phone? “We have tried, I have tried, and even Steve Ballmer has tried. We are not doing a Zune phone. But where I think some people get confused is that we are working much more closely with hardware vendors. As a result, they are going to produce a phone that integrates hardware and software much more closely. I’m very excited about the work we are doing with HTC and Samsung and others.”

Windows Mobile Layoffs?: Did any of the layoffs occur in Windows Mobile, can you say if that’s true? “No. There’s things we are bound legally that we can say. That’s financial predictions and employee things, so those are no-go zones…But rest assured that mobile is part of our key strategy. We talk about PCs, TVs. We talk about the cloud and software plus services, and mobile is an incredibly important part of that. For me, the industry is at such an exciting point. We’ve talked about convergence for a long time, and literally this is it. You have your PC, internet, TV, telecom, mobile and media companies, and they are all colliding. It’s a very exciting place with lots of change. It’s white hot.”

Why do a marketplace?: “We’ve let the ecosystem promote the ecosystem, and what we want to do is see if there are ways we can facilitate more. We aren’t like Apple and lock down everything.”