Though this is not surprising, it does show the risk of Microsoft's strategy. Rewriting large, native code applications to meet the requirements of the new platform will be an undesirable task for many developers. Both Google and Palm eventually relented, and permitted native development for Android and webOS. Microsoft, for its part, says that the lack of native code is a technology issue rather than an immutable design philosophy—the inability to safely sandbox native code is the problem. This certainly leaves the door open to a future native code SDK. There are even claims that Microsoft will make an exception and allow Adobe to develop a (native) Flash for Windows Phone.
Third-party browsers are an important part of the Windows Mobile software ecosystem. In particular, Opera Mobile is excellent in all the ways that Pocket Internet Explorer is terrible; it is fast, accurate, finger-friendly, and standards compliant. Though Windows Phone 7 Series will include an improved Internet Explorer (one that should at least be finger-friendly), the browser experience is still set to lag behind its desktop counterpart for the forseeable future. The lack of native code is likely to be as unpalatable for Opera as it was for Mozilla, and if this turns out to be the case, it will mean that Windows Phone has no third-party browsers.
In turn, this puts even greater pressure on Microsoft to ensure that Internet Explorer in Windows Phone 7 Series delivers an acceptable browsing experience. While the current (old) platform could depend on third parties to provide browsing salvation, this will not be an option for the new platform. With a high quality Web browser as an essential feature of competing smartphone platforms, this could leave Windows Phone at quite a disadvantage.
Source: ars technica