Microsoft Corp. (Nasdaq: MSFT) set out Tuesday to prove Apple Inc. (Nasdaq: AAPL) isn't the only one that can turn a fruit into mobile magic with Mango, an update to its Windows Phone 7 operating system featuring no less than 500 improvements. (See Microsoft Debuts Mango OS Update.)

Windows Phone VP Joe Belfiore explains the updates in the following video, but LR Mobile has broken out the most notable improvements below.

People-focused: Mango organizes a user's information around their contacts, rather than their apps. That includes having text, Facebook chat and Windows Live messenger in the same spot. Contacts can also be grouped by similarities, multiple email accounts are collocated and social networks are integrated into contact cards. Mango will also include support for Twitter Inc. .

Amped-up apps: Microsoft is making the apps process more intuitive by connecting its 17,000 apps to search results, enabling multitasking and providing real-time updates within its different Hubs without the need to fire up the apps.

Smartening the Web: Mango ties location, camera and app information to the mobile Web, making the Web more relevant and Bing searches more localized. Microsoft is promoting Internet Explorer as its browser of choice with full HTML5 support.

Why this matters
Mango is Microsoft's entryway back into smartphone relevancy, and the company knew it had to make a big splash. It is essentially responsible for reviving Nokia Corp. (NYSE: NOK) smartphones, so a complete overhaul of its OS was an important first step. It'll be important to other handset makers and carriers who have committed to the platform as well.

Microsoft said Tuesday that Acer Inc. , Fujitsu Ltd. (Tokyo: 6702; London: FUJ; OTC: FJTSY) and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) will build phones for the OS. It also promised 4G Mango phones from existing partners Samsung Corp. , LG Electronics Inc. (London: LGLD; Korea: 6657.KS) and High Tech Computer Corp. (HTC) (Taiwan: 2498), but didn't define what the "4G" speeds would be.

Pyramid Research believes Microsoft has the chops to pull off its Mango-led revival and may lead the OS pack as early as 2013. It will come down to how the software giant markets and executes the OS and how its partners price and promote the devices. (See Why Windows Phone Will Beat Android.)

For more
Mango will be available on new and existing Windows Phone devices this Fall as a free update. Read up on the journey to the unpeeling below.

• Analyzing a Busy Week for Microsoft
• Microsoft Plans a WP7 Skype Soiree
• OS Watch: Sprint Snags First CDMA WP7 Phone
• MWC 2011: Microsoft & Nokia Court Carriers
• Symbian Is Dead. Long Live Windows Phone

— Sarah Reedy, Senior Reporter, Light Reading Mobile