• by Mark Walsh  @markfwal, May 10, 2010

Thanks to the popularity of phones like the Motorola Droid, devices running Google's Android operating system outsold the iPhone in the first quarter of 2010 for the first time, according to new data from market research firm NPD Group.

Android's 28% market share of smartphones sold in the U.S. during the period outpaced the iPhone's 21% share and was second only to BlackBerry-maker Research In Motion's 36% portion of sales. The Android surge highlights the proliferation of the open operating system across more than 20 handset models and the four major U.S. wireless carriers.

In addition to the Droid phones, sold by Verizon Wireless, Android devices also include the HTC Hero from Sprint and the G1 and myTouch phones from T-Mobile, along with Google's own Nexus One.

"As in the past, carrier distribution and promotion have played a crucial role in determining smartphone market share," said Ross Rubin, executive director of industry analysis for NPD. "In order to compete with the iPhone, Verizon Wireless has expanded its buy-one-get-one offer beyond RIM devices to now include all of their smartphones."

The 2-for-1 deal helped boost Android phone sales in the quarter, but it doesn't mean the Google OS has permanently displaced the iPhone. With Apple releasing the iPhone 4.0 platform this summer, and a new handset expected to go with it, the momentum could swing back again in the company's favor.

"There's still only 30% smartphone penetration in the U.S., so there's still a lot of ground there for all the players to go after," said Rubin.

Among carriers, Verizon claimed a 30% share of smartphone sales, close on the heels of AT&T, with 32%, driven largely by its exclusive deal to distribute the iPhone. T-Mobile had 17%, and Sprint, 13%.

The upcoming launch of the BlackBerry 6 operating system, Microsoft's announcement of Windows Phone 7 and HP's acquisition of Palm show the industry's willingness to make investments based on strong demand for smartphones and other mobile devices, according to NPD.

Smartphone shipments worldwide surged 57% to 54.7 million in the first quarter compared to a year ago, technology research firm IDC reported last week. As a manufacturer, Apple ranked third behind Nokia and RIM, with a 16.1% market share.

NPD doesn't provide actual unit sales; its mobile sales estimates are based on more than 150,000 completed online consumer surveys each month.

Rubin said carriers have helped fuel sales by subsidizing smartphones, but will have to provide more data-plan options to attract more customers in the future. As an example, he cited recent moves by Verizon and AT&T to offer mobile broadband "day passes" for $15. "It's like getting Wi-Fi at a hotel," he noted -- not cheap, but an option if you need it.

The continued popularity of messaging phones and smartphones led to slightly higher prices for all mobile phones, despite an overall drop in the number of mobile phones purchased in the first quarter.

The average selling price for all cell phones in the first quarter was $88, a 5% increase from the year-earlier period. Smartphones, by comparison, averaged $151, reflecting a 3% drop in the last year.