Windows Phone 7 is getting closer to its market release, with Microsoft sending out its mobile operating system to carrier labs for beta testing. App developers are also getting an early look at the OS, which is slotted for a fall release, in time for the holiday shopping season. But as the mobile space continues to heat up on all fronts, can Microsoft make a big enough splash too cool critics?

Microsoft has already made some pushes this year for its mobile OS, launching the HTC HD2 and the already-forgotten Kin. While both devices had their own shortcomings, they both hint at Microsoft’s long-term goals in the mobile space. While the HD2 brought a decent iteration of Windows to a smart phone, the Kin’s social networking focus failed to attract the sales Microsoft had hoped for.

The upcoming Windows Phone 7, on the other hand, has already been touted as one of Microsoft’s major projects this year. At the WPC, Microsoft includes Windows Phone 7 in its overall toolkit for IT managers, business users and regular consumers. Having a market-ready phone for Microsoft means creating an OS that taps into the company’s other products and services, while still addressing the rising smart phone standards put forth by Apple’s iPhone and the never-ending release of Android-supported devices. PC World notes some of the shortcomings of such an approach:

“In attempting to emulate Apple and Research in Motion by encapsulating its new ecosystem in a silo, Microsoft apparently hopes to emulate the success of those other vendors in the mobile market. That could be shortsighted. Some analysts believe the reason phones based on Google’s Android operating system have surpassed the iPhone is because that ecosystem is open. They argue that semi-closed systems like Apple’s will have to open up to stay competitive. If that’s the case, the WinPho paradigm may be a step behind the market before it’s even out the door.”

Yet for Microsoft, it may be a necessary move at this point. The company has been seeking more ways to combine its products for a cohesive front, making cloud access and service distribution an afterthought instead of an unaddressed demand. From Silverlight to Bing, Windows Phone 7 is expected to be a rather complete experience for smart phone users.

Given the PR nightmare Apple is currently dealing with, testing is also an important part of Microsoft’s process prior to releasing Windows Phone 7 on the market. Other competition comes from RIM’s upcoming OS update, and HP’s possible “silo” approach thanks to its Palm acquisition. PC World has an interview with Joe Belfiore, vice president and director of Windows Phone program management, discussing the goals of the mobile platform and lessons learned from Apple and Android (video embed below).