Terry Myerson, the Microsoft Corporate VP of Windows Phone Engineering who was recently called out on the Microsoft Kin phone debacle, had some good news to report yesterday.  Windows Phone 7 hardware and software has been released in beta form to developers and a handful of reviewers.

Myerson writes:

Starting today, thousands of prototype phones from ASUS, LG and Samsung are making their way into the hands of developers over the next few weeks. Combine that with the beta release of the Windows Phone developer tools, and I can’t wait to see how our developer partners take advantage of our new approach to smart design and integrated mobile experiences. I’m personally working on a flash card app for my daughter, and am consistently amazed by the ease with which Silverlight and Visual Studio make WP7 apps possible.

Early impressions of the phone boil down to that Microsoft seems to be nailing many key elements, but in other places presents conspicuously broken or missing functionality. 

First let's get the bad out of the way.  As widely rumored, Microsoft has not included copy and paste yet.  There is a small chance that this will be included in the final version.  Early reviewers say that text selection is working well -- so it seems baffling that Microsoft would not include it.  But at this point that appears to be the case.

Also missing is third-party multitasking, which both Apple's iOS 4 and Google's Android OS currently support (and something that previous iterations of Windows Mobile supported).  That's not to say updates won't be available to various apps, but it does mean that transitions to them may be significantly clunkier.  And Flash web media plugin is missing -- and even stranger still, Microsoft's own Silverlight also isn't implemented.

Finally, perhaps the most egregious sin is that for those with Facebook accounts, if you use your account on the phone, it will pull in your contacts -- all of them.  This makes the contacts list -- an essential part of the phone experience – nearly unusable.

Moving on to the okay, Microsoft has reportedly done an okay job squeezing a hybrid Internet Explorer 7/8 browser into the phone.  Nothing fancy, but it gets the job done.  It doesn't, however, support HTML5. Likewise Microsoft Office is decently implemented, with collaboration functionality.  However, Office programs lack key functionality (no font selection in Word, etc.) and PowerPoint editing is absent.

Likewise SMS/MMS texts and email appear to be done proficiently.  The messaging interface is a bit hard to follow as all the text bubbles are the same color -- whether you sent them, or received them.  And email has no threaded organization, though it does have a helpful filter for unread messages.

Then there's the good.  The home hub seems to be very well integrated and more innovative and informative than Apple's home screen (at least), if not Android's.  Likewise the camera is receiving a lot of TLC, which results in both faster image capture times and a nice interface for pictures.

The touch keyboard is also reportedly fantastic -- at least as good as the iPhone's, which is saying something.  Likewise the built-in Zune player could also be viewed as a fantastic addition.  If you aren't into music, don't use it.  If you are, pony up the $14.95 a month and you'll be treated to an almost limitless library of on-demand music -- a true value.

A lot of how people are reacting to Windows Phone 7 appears to be based on their own preconceptions.  Boy Genius Report wrote a rather scathing review of the OS.  Paul Thurrott's Windows SuperSite, an obvious Microsoft supporter, on the other hand, wrote a praise-filled review of it.  And Engadget -- somewhat of a neutral party -- wrote a mixed review.

Ultimately, customers will likely react to the phones in a similar fashion if Microsoft is unable to fill in the holes before its holiday launch.  The promise is certainly there, but is it worth passing up Apple and Google's compelling options?