Has the Window Closed for Windows Mobile?

Microsoft (s msft) CEO Steve Ballmer disappointed those looking for news about Windows Mobile at CES this week, leaving onlookers to speculate that the company will unveil version 7 of the aging operating system at Mobile World Congress next month in Barcelona, Spain. But I’m beginning to think that without a new operating system, it’s already too late for Redmond to get back in the smartphone game.

Microsoft’s winnowing importance in mobile is well documented, of course. WinMo has lost nearly a third of its market share over the last year, according to recent figures from Gartner, and AdMob traffic indicates that traffic from the OS on the wireless web has dropped off 70 percent during that time. Meanwhile, the iPhone (s aapl) continues to gain traction worldwide, Research In Motion (s rimm) is seeing strong demand for the BlackBerry and Google (s goog) has built on Android’s substantial momentum with its own branded handset (which, notably, is manufactured by HTC — a company whose focus is clearly shifting from Redmond to Mountain View). To make things worse, Palm (s palm) will soon make its webOS-based handsets available through both AT&T (s t) and Verizon Wireless (s vz).

WinMo 6.5 drew scathing reviews following its October launch, making it clear that the OS desperately a complete overhaul. But the mobile world has moved very quickly in the last year, and WinMo may simply be outdated beyond repair. Microsoft might regain its relevance in mobile with a brand new OS — I think Palm’s webOS is a great fit (GigaOM Pro, sub. required) — but anything less is likely to seal the company’s fate as a niche enterprise player. And that’s a lonely place to be in a smartphone space that is now all about the consumer.

Image courtesy of Flickr user Tijs Zwinkels.