Will Microsoft have a chance in the mobile space if they release cheaper and more powerful devices? 

I hope so, because I think Windows Phone 7 is a very interesting OS.

Microsoft's Windows Phone Challenge: Cheaper and More Powerful, Or Die - Mobile and Wireless - News & Reviews - eWeek.com

Microsoft is betting that cheaper phones, the Mango update, and more partners can help it succeed in the smartphone space. Is that possible?

Microsoft Announces a Host of Windows Phone 7 Updates - the new mobile IE9 is one

WP7 gets better and better. If the new mobile IE9 is as good as it sounds to be, then WP7 will be in the game.

At MWC 2011, Microsoft just announced a number of improvements for WP7 including the timeline for when its first update will be pushed to devices.

The update with app-loading performance improvements and copy paste support we demoed back at CES finally got a more specific release date - it's slated to launch in early March. A number of other updates are slated for 2011, though Microsoft wouldn't assign a specific date. Those updates include multitasking support for 3rd party applications, better cloud synchronization, more web-services built into hubs, and a completely new web browser. http://bit.ly/fxjbYg