Is Microsoft counting on mobile gaming to save Windows Phone 7?

A new study shows that Microsoft has fallen to practically a footnote in the mobile market, with only 5% of market share. Given that Microsoft has just launched a new mobile gaming studio, it may well hope that tapping into its Xbox market can save Windows Phone 7.

A report just out from Gartner found that Microsoft's Windows Mobile smartphone market share has dropped to 5% from 9.3% a year ago. During that same time, by way of contrast, Android's market share skyrocketed from 1.8% a year ago to 17.2% today.

Microsoft hopes to fight back, but with Android market share soaring, and iPhone sales showing no letup, it's going to be tough to do. Microsoft needs to find some way to offer something that neither smartphone competitor does.

It may be that it hopes gaming will do it. Job postings show that Microsoft is launching a studio it calls MGS Mobile Gaming, and doing aggressive hiring to fill its positions. Here's part of the job description for Executive Producer:

Microsoft Games Studios is establishing a new Studio --- MGS Mobile Gaming --- focused on bringing games and entertainment to the mobile life that people lead. Our vision is to deliver games and entertainment so good that people will want them always with them, on a service that makes them social, connected and relevant anywhere their life goes. The Mobile Gaming team is building industry leading products that showcase our Windows Phone platform as well as emerging mobile platforms, and will help realize Microsoft's connected entertainment vision. The Mobile Gaming studio will be the hub for MGS franchises and titles on mobile devices and a center of excellence for mobile games.

MGS Mobile Gaming will support first party development, evangelize mobile gaming across MGS, and drive technical platform and service requests back to the parent organization and other business units in phone development. In addition, as the Center of Excellence for Mobile Games, the studio will develop showcase internal mobile games and entertainment experiences, while acting as the technical hub and spearhead for mobile game technology.

There are other job openings for the studio as well, including for a Business Development & Strategy Manager.

Launching the studio is a smart move. As Todd Bishop points out in him Microsoft blog, Microsoft has sold 42 million Xbox 360s, and 25 million people now use the Xbox Live onling gaming service. If it can tap into that existing installed base, it could give Windows Mobile 7 a kick start.

Even more important than giving it a kick start will be giving it a niche. Microsoft will need some way to differentiate itself from Android-based phones and the iPhone. The gaming niche could be excellent way to do that.

Microsoft hasn't always done well in the consumer market, but gaming is an exception to that. We'll have to wait and see if it's able to bring its gamers from the Xbox to Windows Phone 7.

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