Gates said that he has no “doubt the antitrust lawsuit was bad for Microsoft” as the company would have otherwise focused more on developing the mobile operating system. The lawsuit ended up distracting him away from Windows Mobile and he ultimately “screwed that up“.
He also said that Microsoft was “three months too late on a release” that would have been used by Motorola on a smartphone. While he did not provide the specifics, it is possible that Gates is referring to the iconic Motorola Droid which launched with Android and made consumers in the US notice the OS thanks to the heavy marketing push from Verizon and Motorola.
I wouldn’t be surprised if this is actually quite close to reality. Had Verizon and an – at the time – influential phone makers like Motorola with its Droid phone and all the marketing blitz that accompanied it opted for a Microsoft product, I wouldn’t be so sure Android would’ve gotten the head start that it did.