One welcome sign is an effort by companies trying to improve Microsoft Corp.’s (MSFT) Windows Mobile operating system, which has a reputation for confusing navigation and hasn’t had a major update recently. Kinoma Inc., for example, recently released an application called Kinoma Play that runs on Windows Mobile devices and gives users a markedly better way of handling photos, videos, music and Web browsing.

The HTC Touch Diamond, due out this month from Sprint, tries to hide Windows Mobile software.

This week, I tried yet another software program that is designed to run on top of Windows Mobile software. But this time, the software is at the heart of a device designed by the same company: HTC Inc. I tested the HTC Touch Diamond, due out from Sprint (S) sometime this month for $250 (after a $100 mail-in rebate) with a two-year contract.

Taiwan-based HTC started out in 1998 as a maker and designer of mobile devices for other companies. A year ago, HTC launched the first device under its own name in the U.S., and now, Sprint, AT&T (T) and T-Mobile (DT) sell HTC-branded devices. The Diamond incorporates HTC software, as well as software from Sprint, MobiTV, TeleNav and others. But it isn’t a stretch to imagine HTC trying to create a fully end-to-end model (hardware and all software) in the future.

The Diamond has a touch screen, but it’s smaller than Apple’s (AAPL) iPhone — 2.8 versus 3.5 inches. This screen lacks the iPhone’s multitouch functionality, and its smaller size robs space used for touch gestures like flicking or scrolling with a finger. Yet like the iPhone, it relies solely on an on-screen keyboard for all text entries. Even with the Diamond’s stylus, the keyboard felt small and cramped. Using just your fingertips was next to impossible.

After using the Diamond for a week, I can say that despite its handsome TouchFLO 3D software and animated icons like photos that flip from one to the next with a flick of finger, this device failed to disguise the frustrating interface of Windows Mobile often enough for my taste.

It reminded me of the brown paper bag book covers my Dad helped me make for schoolbooks when I was a kid: They looked great on the outside, felt sturdy and clean and created a blank canvas for homemade doodles that were often more interesting to me than the books they covered. But my book covers couldn’t change what was underneath; pages of frustrating algebra were just a flip away.

HTC’s sleek software tries to hide Windows Mobile, but menus from the Microsoft operating system are constantly popping up. HTC’s email program, for example, is represented by an animated envelope icon that, when selected, cleverly flips twice before sliding an email message half-way out and giving you a three-line peek at what’s inside. If only reading and responding to email were half as entertaining. Selecting the animated envelope opens the old, cumbersome Windows Mobile email program.

Also, the touch capabilities of the Diamond’s screen didn’t work as well as they should. Finger flicks that should have scrolled through lists instead seemed to select individual items in a list, as if they were sticky.

The Diamond isn’t all bad, of course. Plenty of people will like its smaller size because the iPhone and RIM’s (RIM) BlackBerrys seem too large and brick-like to hold up to an ear for phone calls. Next to my BlackBerry Curve, the Diamond was of comparable thickness but measured smaller in width and length.

Despite its size, the Diamond is packed with features. It has a 3.2-megapixel camera with autofocus that doubles as a camcorder, and comes with four gigabytes of internal memory and a removable battery. I taped short videos — something the iPhone can’t do — and found the sound and video footage to be adequate.

HTC touts the Diamond’s browser, which is based on the Opera browsing engine but is designed for HTC. It opens Web pages in views that fit the screen and text is automatically resized as users zoom in or out, though this resizing was sometimes slow.

Unlike the iPhone, Web sites that are opened on the Diamond’s browser don’t resemble the actual site as you would see it on your computer. I opened CNN.com (TWX) and WSJ.com (NWS), two sites that are packed with text and graphics on a regular browser. On the Diamond, they quickly were rendered in list format with mostly text-only. I easily touched the screen to follow links to full stories.

Like the iPhone, the Diamond has an accelerometer, though it’s called the “G-Sensor.” When it worked, this feature flipped the screen to match the horizontal or vertical direction in which the device was being held. Photos flipped instantly, but the Diamond’s G-Sensor took almost three full seconds to respond as I flipped from vertical to horizontal while using the browser. And some Web sites didn’t respond to the G-Sensor flips at all.

A special YouTube application developed by HTC was easy to find on the device and worked quickly. My videos were organized into categories for All, History, Bookmarks and Search, though this last category required using the finger-fumbling keyboard. In one step, I emailed a link from a YouTube video to a friend using the device, with a still shot from the video included in the message.

Overall navigation on the Diamond isn’t as intuitive as on the iPhone or iPod Touch, nor was it as easy as on a touch-screen Windows Mobile device running the Kinoma Play application. The iPhone and iPod Touch use quick double-taps on touch screens to zoom in or out, and multitouch capabilities resize images with pinching gestures; Kinoma Play uses a long touch to zoom in. The Diamond used double tapping on some screens, but not enough for me to grow comfortably reliant on it. A small, circular pad beneath the device’s touch screen provided a more dependable method for zooming in or out of screens: tracing the perimeter of this circle clockwise with a finger zoomed in; counterclockwise zoomed out.

The HTC’s software animation is put to good use on its Weather screen. Here, animated illustrations of each day’s weather appear on the screen: suns spin, clouds move in, rain appears to fall. Even moons appear on the device at night to accurately reflect the weather in a city at a specific time.

It is exciting to think about other mobile-phone companies giving better software a real try, especially those that attempt to improve Windows Mobile. But HTC’s Touch Diamond doesn’t hide the outdated operating system well enough or often enough for a user to want to buy a whole new mobile device.

Edited by Walter S. Mossberg

• Email us at mossbergsolution@wsj.com. Find this and other columns and videos online free at the All Things Digital Web site: http://walt.allthingsd.com

As technology continues to shrink, more features are being packed into these small mobile devices, making navigation and ease-of-use more important. This week, I tested the Motorola ROKR E8, which costs $199 with a two-year T-Mobile service agreement and makes a real attempt to be more user-friendly. The device, which comes out on July 7, isn’t much bigger than a typical cellphone but its standout feature is its keyboard, which dynamically changes to accommodate whatever you’re doing at the time, revealing only buttons that would be of use to that particular function.

The secret sauce on the ROKR E8 is its keyboard, which changes when it’s used as a phone, music device and camera.

The surface of the ROKR E8 has no physical keys at all. In its off or resting state, in fact, it’s just a black surface with rows of tiny, unlabeled bumps. But this surface is actually divided into two: The top half works like a typical cellphone display while the bottom half projects virtual keys onto its surface and uses the rows of bumps to give these keys a physical presence.

When making a call or sending a text message, the ROKR’s surface displays a regular phone keypad. But as soon as a music shortcut button is pressed, the surface morphs into five buttons for music navigation: play/pause, seek forward, seek backward, shuffle and repeat. Pressing another shortcut button to start the ROKR’s camera mode shows four buttons for zooming in or out, switching to playback mode or changing to video. Motorola (MOT) calls this its ModeShift technology. Though the lower half of the ROKR can be considered a touch device, objects can’t be manipulated with gestures like pinching or dragging as with the Apple (AAPL) iPhone’s multitouch screen.

Overall, I found that the ROKR E8’s dynamic keyboard gave me a real advantage in figuring out how to use the multi-functionality of the phone. Its changing keyboard eliminated a lot of guesswork and time that I may have spent hunting through menus for a command. And true to its name, the ROKR (pronounced “rocker”) is focused on its music phone functionality with an FM radio, a neatly organized music menu and a speaker that has convincingly simulated surround-sound effects.

But this ROKR didn’t always jam out in perfect pitch. A touch-sensitive semicircle in the center is meant to make scrolling through long lists easier — much like Apple Inc.’s iPod wheel. But because this tool on the ROKR isn’t a full circle, scrolling felt unsatisfying. You also can’t buy songs with the ROKR, or even mark songs for purchasing later on a PC.

And while the morphing buttons look futuristic and hip, I experienced a few instances when the phone was slow to react after I touched a button, as when I touched the seek forward button while listening to music or when I chose to open an MMS message I sent to a friend.

Twenty-two tiny bumps dot half of the ROKR’s surface, and the surface below each bump vibrates when it’s touched to provide sensory feedback. Nothing is ever physically pressed down, though the vibration response leads you to think otherwise.

A smart switch on the side can be held down to turn it on or off, or switched into the upward position to lock the device, preventing accidental calls or battery drain.

The ROKR E8 runs on T-Mobile’s (DT) GPRS/EDGE connection, which felt sluggish at times. And not even the dynamic keyboard on this device could help make email or instant messaging easier.

It has a two-megapixel still camera with an 8x digital zoom that can change into video-camera mode in one step. Two gigabytes of memory are built into the ROKR, and more memory can be added via a microSD card slot, which is hidden beneath a back panel. A one-gigabyte microSD card comes with the ROKR. Without this card, the internal memory will hold about 1,500 songs.

With help from a USB cord and Windows (MSFT) Media Player 11, I transferred over 200 MP3s onto my ROKR. Album art that transferred with my songs appeared on-screen as songs played, and the speaker gave off a powerful sound. Built-in stereo Bluetooth can send tunes to Bluetooth-enabled stereo speakers, and it took me just a few seconds to pair my ROKR with Motorola’s EQ5 speakers.

A preloaded program by Shazam lets users hold the ROKR up to any speaker playing a song, and in 30 seconds, identifies the track title, artist, and album art. I held the ROKR up to my alarm clock radio and it worked perfectly. But once these songs are recognized, the track data can’t be used to buy the song or even to transfer a request to buy that song to a PC for buying online at another time.

The ROKR’s FM radio will work only if its included stereo headset is plugged in because the headset has the radio antenna. But once the headset is plugged in, the radio will play via the ROKR’s speaker.

The ROKR E8 has an audio technology called Crystal Talk, which Motorola says allows your phone to perform better in loud environments. Even if the person on the other end of your phone is in a noisy place, the company says Crystal Talk will raise the volume to improve the call. I tested this by speaking to someone on the ROKR while turning a hairdryer on beside the phone. I then used a regular Razr cellphone. The person on the other end said that the ROKR sounded slightly, but noticeably, better.

Motorola’s ROKR E8 is a head-turning phone with many built-in advances that give it a smarter interface. One might wonder what other ModeShift functions the company will integrate into its devices in the future, such as a full QWERTY keyboard. The overall idea of a dynamic keyboard is a step ahead for small devices. It forces the phone to work more intuitively and improves navigation while looking stylishly sleek at the same time.

Edited by Walter S. Mossberg.

Write to Katherine Boehret at mossbergsolution@wsj.com