1. Sales of existing Windows Mobile phones will plummet.
2. Developers of current Windows Mobile OS apps will halt development and redirect efforts.
3. All current Windows Mobile phone owners will begin looking for a new phone.
The assumption that Microsoft is banking on is that people in the #2 and #3 groups above will all flock to Phone 7. However if that doesn't exist for 6 months at least, there's a lot of time for those groups to be looking at competitors.