The Microsoft founder has admitted the discontinued smartphone range failed to be a success because of Android taking off.
Speaking to The New York Times newspaper's financial columnist Andrew Ross Sorkin at the publication's DealBook Conference, he said: "We were just three months too late on a release Motorola would have used on a phone, so yes it's a winner takes all game.
"Now nobody here has ever heard of Windows Mobile, but oh well. "That's a few hundred billion here or there."
Gates also admitted that the firm getting caught up in the US Justice Department antitrust investigation also added to its failure.
He added: "There's no doubt that the antitrust lawsuit was bad for Microsoft, and we would have been more focused on creating the phone operating system and so instead of using Android today you would be using Windows Mobile.
"If it hadn't been for the antitrust case... we were so close, I was just too distracted. I screwed that up because of the distraction."
Earlier this year, Gates confessed that losing to Android was the "greatest mistake ever," and claimed it lost the tech giant $400 billion.