Neither in Barcelona, nor at its MIX10 conference, Microsoft has exactly outlined how it will handle firmware updates for its upcoming Windows Phone 7 platform. However, during the recent Microsoft DevDays in Den Haag, Charlie Kindel, Partner Group Program Manager at Microsoft, gave Dutch tweakers.net an interview and unveiled that Windows Phone 7 will support both methods for firmware updates: Side-Load and OTA (Over The Air). Furthermore Kindel confirmed that Microsoft itself, not hardware manufacturer or carrier partners, will distribute these firmware updates and that Kindel therefore expects, that today's Windows Mobile version-fragmentation will have an end since all Windows Phone 7 users will have (more or less) identical firmware versions.
According to Kindel, Microsoft will distribute smaller updates OTA (while I don't think OTA will only mean GSM or UMTS but also include WiFi - similar to webOS or Android updates), while major updates will be distributed via the Zune software as a side-load update (similar to today's Zune hardware updates or even today's Windows Mobile updates where - nevertheless - each manufacture has its own flash utility).
Cheers ~ Arne