Microsoft last week said it has no plans to launch a dedicated platform for mobile gaming, with one executive adding the Windows Phone 7 is “[the company’s] mobile platform for games.” And in a cut-throat smartphone space increasingly dominated by Apple and Google, Redmond could indeed differentiate its mobile offering by leveraging its video game expertise and providing a superior gaming experience. But to gain a real edge in gaming, Microsoft needs to offer a device that appeals to both casual and console-type gamers, and to do that, the company needs to offer hardware built for both styles.

Amazingly, that isn’t happening, despite the exploding mobile gaming business already in place. Microsoft does a good job attracting the attention of app developers, and there’s no denying that the 23 million-plus Xbox Live users could give the company an enormous competitive advantage. Indeed, the Windows Phone 7 platform is tightly integrated with the Xbox Live, enabling users to message fellow members, invite them to engage in multiplayer sessions and access and compare performances on the phone. The strategy is underscored in this new commercial from Microsoft that touts the platform’s gaming capabilities and a feature that lets gamers use their Xbox avatars on the handset.

And while the initial version of Windows Phone 7 has its shortcomings, Microsoft has created a slick, eye-catching operating system that stands in stark contrast to its antiquated (and abandoned) Windows Mobile. But Windows Phone sales stumbled out of the gate at the retail counter, and sales figures are still a question mark. It’s far too soon for Windows Phone 7 to be considered a disappointment — Microsoft has the bankroll to make sure it sticks around for quite a while — but early results aren’t promising.

A great piece of gaming hardware could help its prospects substantially. As far as gaming goes, the Windows Phone doesn’t offer the sophisticated controls that make devices like the Nintendo DSi and Sony’s PSP so compelling to hardcore gamers. Touchscreens are great for casual titles like Angry Birds or Cut the Rope, but they’re tough to use for a first-person shooter or high-action football game. A true gaming phone needs at least a half-dozen keys (for navigation, various actions, etc.), and those keys need to be raised enough that they can be easily used.

A gaming-specific device would also have to be larger than almost every smartphone on the market. It must be easier to grip and control with two hands, should sport a screen of at least 4.3 inches, which is currently the largest screen available on a Windows Phone handset. And it should rock one of the dual-core processors that are just beginning to come to market and can deliver a faster, more immersive gaming experience.

Microsoft would also be wise to do everything it can to bring a gaming tablet to market as soon as possible. The nascent tablet space has predictably proven that increased screen real estate equals an improved gaming experience by offering superior hardware, better graphics and more comfortable navigation. But as company executives said at CES, Microsoft has no plans to deploy its new mobile platform on tablets, opting instead to offer the PC-centric Windows 7 on tablets beginning next year. (Next year!) Meanwhile, Apple’s iPad continues to gain traction and a host of new tablets are coming to market. And Microsoft loses ground every day.

I’ve questioned Microsoft’s move to focus on gamers at the expense of the business users that had been the company’s bread and butter in mobile, and I still think it was a mistake. But Microsoft is clearly gambling that Windows Phone can compete with Andriod and iOS by appealing to gamers. For that gamble to pay off, it will need to support the platform with some hardware that is attractive to gamers.

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