The iPhone & iPod Touch have caused an influx of mobile web browsing the likes even Google had not seen. Many smart phones have an Internet browser, only Apple's has had the interface to make it desirable to use to non-geeks in a way that can be measured in server-log lines, and not in forum-posts by iPhone detractors.
Microsoft have a mobile-browser, how are they competing with this? They are not. Mobile IE is unusable compared to the development buzz surrounding mobile web-apps using Safari, which supports a full compliment of standards.
If Microsoft were to default to the IE7 rendering engine on their desktop browser, how would this affect the rapidly rising mobile browsing market? They would simply get left behind.
Their mobile browser would have to ship both IE7, and later engines to maintain compatibility with a web they were partly defining with their desktop client. Any new fancy features their mobile browser could offer to compete with Safari would be stymied by the fact that the majority of websites would be coded to the IE7 engine by unaware novice web developers and out of date web development packages; all the time while web developers explore new avenues of web apps using the full set of standards open to them on Apple's handheld via iPhone-only websites.
Microsoft are having to face their own irrelevance in this market. They could either stick to the age-old excuse of backwards compatibility, and in doing so totally jeopardise progress with Windows Mobile in comparison to swifter competition in the form of Apple, and Google's Android - or they could jettison the weight of 10 year old business Intranets and ship a lighter, quicker, safer and more competitive browser to help them shape how people view the web from both the desktop, and the mobile.
Microsoft are dropping the hint that lagging enterprise customers need to upgrade to standards or be left in the lurch. Ageing web apps will break. That is a massive change in attitude to "Microsoft of old" a week ago. They would only do that if the benefits absolutely outweighed any short term loss. Businesses can experience the usual upgrade headaches by changing a few web apps that haven't been touched in 10 years, they have no choice anyway - where the web matters is no longer the enterprise, it's in the pockets of individuals.