Is Windows Mobile's Relevance Gone Forever?

winmo htcNearly lost in all the hubbub about the Android/Verizon (s vz) tie-up today is the news that Microsoft (s msft) has launched Windows Marketplace for Mobile. But as the superphone phenomenon gets legs, has Microsoft’s opportunity to regain relevance already passed?

Take a quick survey of the smartphone OS space: Apple (s aapl) continues to gain momentum with the iPhone, which dominates traffic on the mobile web and will soon hit the shelves in China, the world’s largest mobile market. Research In Motion (s rimm) has deftly expanded beyond the boardroom with consumer-friendly devices and is garnering praise for its new App World. Android is beginning to gain traction in a major way and — in addition to its new partnership with the nation’s largest carrier — is drawing support from a host of handset manufacturers. Palm (s palm) has introduced premium apps for its impressive webOS and is looking to get a boost from the upcoming Pixi.

So where is Microsoft? Users are having to stifle their yawns over the new (but tardy) WinMo 6.5, which was released today, and the company is still at least a year away — a year! — from releasing version 7.0. Meanwhile, HTC and Motorola (s mot) are increasingly focused on Android, and Palm is killing support for Windows Mobile entirely. Even Microsoft’s Steve Ballmer has conceded that the software giant has dropped the ball with its smartphone business.

This is not to say that Windows Mobile is dead — it’s not (although I certainly don’t buy iSuppli’s recent forecast that its market share will triple by 2013). There are simply too many hardcore enterprise users out there who depend on Windows-based systems and are willing to tolerate the mobile platform’s shortcomings for its business-centric features. But the smartphone space has changed dramatically over the last few years, and the devices are no longer simply business tools deployed at the command of inflexible IT departments. The rise of the app stores demonstrates that consumers are driving the industry now, and that employees are demanding handsets that are as much about fun as they are about productivity. Windows Mobile appears relegated to its role as a niche player for strictly business users, but when it comes to the mass market, the window for Windows Mobile has closed.