The 63-year-old philanthropist said this while speaking at a forum in Washington on Monday.
He explained that Microsoft was “distracted” because it was engaged in a lengthy antitrust battle with US authorities at the time.
According to him, the company would be even more valuable if it had won the battle for dominance over mobile devices’ operating software against Google and its Android OS.
“The greatest mistake ever that I made was whatever mismanagement I did that caused Microsoft not to be what Android is. Android is the standard non-apple phone platform,” Gates said during an interview at the Economic Club of Washington (ECW) luncheon.
“Android is a huge asset for Google. We were clearly the company that should have achieved that, and we didn’t. That was a natural thing for Microsoft to win.
“We were in the field of doing operating systems for personal computers. We knew that mobile phones would be very popular.
Gates lauded Satya Nadella, the current chief executive of Microsoft, for helping the company to become the world’s most valuable with a market capitalization of over $1 trillion.
He, however, faulted it alongside other software giants for allowing Amazon take the lead in cloud computing.
Since quitting as Microsoft chairman — to take up a role as technology adviser in a management shake-up that saw Nadella become chief executive — Gates has spent a great deal of time with Bill and Melinda Gates Foundation, a charity reported to be the world’s largest.
He currently ranks as the second richest man in the world, according to Forbes.