http://arstechnica.com/microsoft/news/2012/02/leaked-windows-phone-8-vid-windows-8-kernel-and-integration-multiple-cores.ars

Windows Phone 8 will be based on the same kernel as Windows 8, and will support multicore processors, NFC, and full device encryption according to a leaked video seen by PocketNow. This in turn inspired Paul Thurrott to reveal a little more about the software too. In the video intended only for internal consumption by Microsoft and its partners, Joe Belfiore, director of the Windows Phone program, describes the extensive features that Windows Phone 8, codenamed "Apollo," will contain.

Addressing widespread concerns about Windows Phone's mid-range hardware specification, Apollo will support processors with up to four cores, four different (and unspecified) screen resolutions, NFC for contactless payment, and removable microSD storage.

In a move that will make Windows Phone a better option for enterprise users, Windows Phone 8 will include full device encryption, based on the same technology as desktop Windows' BitLocker encryption. Apollo will sport richer support for Exchange ActiveSync policies, and Systems Center inventorying and management. There will also be greater support for private deployment of custom line-of-business applications.

Under the hood, the operating system will be built on the same foundation as Windows 8. Belfiore mentions that the kernel, networking stacks, security subsystems, and multimedia support will heavily overlap between the two.

The Web browser, too, will be in common, with Internet Explorer 10 making its way to the phone. Microsoft also plans to follow in Amazon and Opera's footsteps, using server-side compression and proxying to reduce the amount of data needed to load webpages by a claimed 30 percent.

Full compatibility with current Windows Phone applications—expected to number 100,000 by the time Windows Phone 8 is launched—is assured, and there will be added support for native code development in addition to the current Silverlight-based model. Belfiore promises that "most" code will be portable between the desktop and the phone. We would expect this to mean that Metro-style applications written using Windows 8's WinRT will be readily portable.

Windows Phone 7 applications are currently completely isolated from one another. Windows 8 will include a system called "contracts" that enables applications to communicate with each other in certain standard ways: for example, a Twitter client might implement the "sharing" contact, so that links in the Web browser or photos in the photo gallery can be shared over Twitter. This same contract system will be included in Windows Phone 8.

Windows 8 includes smarter tracking of metered and unmetered Internet connections, and a similar capability, dubbed "Data Smart" will also be a part of the phone operating system. This may go further than the desktop feature, for example making phones preferentially using carrier-affiliated Wi-Fi hotspots when available. The Live Scout local search feature will also show the location of nearby hotspots.

Skype will be built-in, and hook directly into the phone's dialer, allowing VoIP calls to be made as if they were regular calls over the phone network. Hardware vendors will have more control over the camera application, enabling features such as smile detection and burst shooting.

Desktop integration is going to receive a substantial upgrade, too, with SkyDrive becoming a central part of the Microsoft's sync strategy. Windows Phone currently uses the desktop Zune client to sync music and video; this will be scrapped in favor of a broader sync feature between Windows Phone and the desktop via SkyDrive. In the video, Belfiore describes being able to listen to your music collection on a new Windows Phone 8 handset without ever having to pair it to the PC. This syncing will also extend to the Xbox.

In addition to using NFC for contactless payment, Microsoft will also implement a "tap to share" capability, to enable easy sharing of content between phones, desktops, laptops, and tablets.

We wrote that 2012 would be the year that many of Microsoft's long-standing goals come to fruition. The common Metro interface, coupled with the tight cross-device integration, unifying the "three screens" (desktop/tablet, phone, TV) with (and via) "the cloud" (using SkyDrive) is going to be a key part of the value of Microsoft's ecosystem in coming years.

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Looking good! I'm loving the integration they're bringing with the desktop.

Will current win 7 phones be upgraded to win 8 ?

Yes, current phones will be upgradeable to WP8. I really dig what they're doing with this platform. With Nokia' s Lumia line of phones doing extremely well in Europe, and the Lumia 900 set to release shortly in the states, WP is poised to really take off this year.

The phones being upgradeable to the new OS is great news indeed, I currently have a 7.5, so good to hear money have not been wasted in vain. The only thing that really bugs me about WP is the IE, it just pisses me off to no end as a browser.

I plan on getting a windows phone soon. Is there a way to make sure the model i get cna be upgraded later on when win comes out?

Since this is a gaming forum, I'll go ahead and post my speculation from several months back here too:

Serious first party Halo 4 related game to debut for new Windows Phone 8/Apollo devices in the fall of this year,

Im sick of so many ads about WP7 of Nokia Lumia and others WP7 Phones here in Portugal...

its getting ridiculous that those phones get so many ads and Xbox gets zero.

same in germany :) saw some this day alone on prime time they have to spend huge amounts for advertisement in europe (no clue about te rest of the world)

can't you use other browsers like firefox, opera and so on on windows phones? i use the opera on my android and i really like it but i think some other are even better but it's good enough for me.

I hate to say it, but Windows Phone is shaping up to a astonishingly good system. I'm expecting a market share of 7-8% at the end of the year. Android will continue to lead for the next years, though.