A better Xbox Live to help Microsoft Windows Phone 7

With the third major mobile platform up for grabs, Microsoft continues to improve its Windows Phone 7 platform, which has seen a lukewarm response so far against Apple’s iOS (s aapl) and Google’s Android (s goog) systems. Microsoft (s msft) is betting on something it has and rivals don’t however: a thriving Xbox Live game community that boasts 35 million members who average 60 hours per month each on the service. In the upcoming Mango software update, Microsoft is expanding and improving the Xbox Live gaming integration in an effort to attract more consumers to its mobile handset platform.

Once Mango arrives on Windows Phone 7 handsets later this year, the Games hub will bring to mobiles more of the richness found on the Xbox Live console:

  • Get gaming faster. Instead of having to memorize or sort though a list of large game icons, the new collection of games is alphabetized and uses smaller icons. The game tiles appear on the left with titles on the right, which is consistent with the Applications list on the phone. Once 20 games are installed on the phone, Mango will create a new sub-list of the three most recent games that users play often.
  • Interactive avatars for all. One of the most fun optional features on Xbox Live for Windows Phone 7 becomes a default function with Mango. Current handsets running Microsoft’s software show a static 2-D version of a user’s personalized avatar. Installing the free Xbox Live Extras app from Microsoft’s Windows Phone Marketplace adds an interactive avatar. Tapping your digital persona makes the avatar jump around, gesture or dance around, for example. This feature becomes standard in Mango, with no additional download needed.

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  • Unified communications. Mango will enable more communications between Xbox Live members regardless if they’re on an Xbox console, the web or a Windows Phone 7 handset. Windows Live messages can be replied to on the handset, complete with emoticon support. And those emoticons will interact with your avatar: Enter a smiley face, and the avatar will reflect a happy emotion.
  • Find your friends. After the Mango update, Windows Phone 7 owners can see if their Xbox Live friends are online in the network. Friend requests can be managed directly from the phone as well.
  • Who’s the better gamer? My favorite feature on the Xbox Live console is comparing my gamer score and game-specific achievements against my friend’s scores. Being an amateur gamer, I don’t often have the higher score, but when I do, it’s a small celebration. This comparison comes to the handset in Mango and also shows the recent games friends have played.

Alone, none of these new game-centric features will help make or break the Windows Phone 7 platform. Together, however, they bring a console-like experience to the handset, which is something no other mobile platform yet brings. Sony Ericsson(s sne) (s eric) is trying it with the Xperia Play Android handset and support for PlayStation Portable games, but that’s just one phone, not a phone platform. Apple, too, is trying to win gamers with its Game Center functionality (s aapl), but it lacks the console side of the equation for now. That could eventually change with iPad mirroring to HDTVs, offering a two-screen gaming experience.

Microsoft has plenty of other gaps to address in Windows Phone 7, and Mango will hit some of them. While the upcoming improvements to Xbox Live features may be underrated in Mango as a whole, Microsoft knows that it has a massive user-base outside of mobiles that it can leverage for its smartphone platform, and it’s wise not to forget that key differentiator.