Engineers in Microsoft’s Windows Phone division have revealed the extent of the crisis sparked by the release of the iPhone by Apple in 2007, including a seven-hour meeting which resulted in an entire platform being scrapped that is now referred to as ‘the cage match’.

In an interview with the New York Times, Microsoft engineer Joe Belfiore tells of how Apple ‘created a sea change in the industry’ with the release of the iPhone.

Until that point Microsoft’s efforts had been functional but not fun; as soon as the slick, snazzy iPhone came out, drastic action was required.

At the end of 2008, mobile group boss Terry Myerson called a meeting to frankly examine a new Windows Mobile prototype; seven hours later, the decision was made to ditch the platform and start completely from scratch.

Fellow Microsoft manager Charlie Kindel compares the move to that of Aron Ralston, the hiker who was forced to amputate his arm when it became trapped under a boulder in a climbing accident.

"This boulder comprised of Apple and BlackBerry rolled on our arm,” Kindel says.

The scrapping amounted to a temporary yielding the market to Apple and Google, which Myerson admits has been a tough position from which to recover.

"Entering the market so late with this experience has created some special challenges for us,” Myerson says.

The company is even reportedly considering offering cash commissions to sales staff who sell Windows Phone handsets in an effort to surpass the appeal of iOS and Android devices.

Critics have been impressed with the platform so far, though, and if the company can build some momentum with devices on display at the Consumer Electronics Show taking place in Las Vegas this week there is every chance 2012 could be a turning point for the mobile device market.