Microsoft made a big deal of the launch of three U.S. phones running its Windows Phone 7.5 software, the latest upgrade to Windows Phone 7, which represents a complete overhaul of the Microsoft mobile phone software. They built a giant model of a phone in Herald Square, New York City and had rappers and dancers performing around it on Monday, while pizza was handed out to bemused onlookers.

Andy Lees, who leads Microsoft’s phone business, was on hand to talk up the software, which he said has been very well received by consumers.

“When people use it they love it,” he told reporters. “We’re definitely on to something.”

But he was very cagey about how many phone sales exactly this translates to, in the first year of the revamped Windows Phone offerings.

“We sold more than Android in its first year,” Lees said, referring to Google’s Android launch in the fall of 2008. Research firm IDC estimated that about 3.6 million Android phones were sold in its first 12 months, starting in the fourth quarter of 2008. It did not give an estimate for Microsoft’s market share in the third quarter of 2011.

Comscore says Microsoft’s share of the U.S. market actually fell by 0.2 percentage points from the second quarter of 2011 to a 5.6 percent share in the third quarter this year, while Google’s share rose by 4.6 percentage points to 44.8 percent. So Microsoft has a long way to go to establish itself as a major player alongside Android and Apple’s iPhone.

Lees expects Windows Phone 7.5 to do better than Windows Phone 7 because the company now has more vendors on board selling devices in a wider geographic area. The OS supports 24 languages compared to the 6 languages supported by Windows Phone 7. But, again, he would not give a specific target.

Along with consumer acceptance, Lees said Microsoft has seen increased interest from manufacturers of phones that use Google’s Android software, especially since Google announced its plan in August to buy Android phone maker Motorola Mobility. The worry is that once the deal closes, Google would give Motorola handsets preferential access to Android software updates, putting other Android manufacturers at a disadvantage.

“Our phone has been ringing,” Lees said. “(Manufacturers are) saying I want to balance my portfolio. There’s too much risk now.”

While Lees would not discuss conversations with specific vendors he did note that Samsung had signed a new research and development agreement with Microsoft after Google and Motorola had announced their agreement.

(Photo: by Sinead Carew at Manhattan showcase Monday)