• by Aaron Baar , February 1, 2011

As Google's Android becomes the dominant operating system among smartphones, Microsoft -- which introduced its Windows Phone 7 system late last year -- still has a long way to catch up.

During the fourth quarter of 2010, just as the Windows Phone 7 models were hitting the stores, Android-powered phones increased the market share by 9 points over the previous quarter, according to the NPD Group. The market research company says Android phones accounted for 53% of the consumer smartphone market. Apple's iOS phones declined 4 points to comprise 19% of unit shares, and RIM's OS fell 2 points to 19% as well. Microsoft's Windows Phone 7, which accounted for only 2% of the market, was behind even the company's Windows Mobile OS, which fell 3 points to 4%.

Ross Rubin, executive director of industry analysis at the NPD Group, notes that the new OS's inability to gain traction could at least, in part, be blamed on limited carrier availability. The new system was available only through the AT&T and T-Mobile networks. "It would help to gain a presence on the other two major networks, specifically Verizon, the nation's largest carrier," he tells Marketing Daily. "That's why Windows Mobile outsold Windows Phone 7."

Of course, there's much happening in the first quarter of 2011 that could alter the picture. First, Verizon will begin offering the iPhone later this month, which will likely increase Apple's market share, Rubin says. However, if Microsoft wants to make any sort of significant gains, it will have to find a selling proposition that resonates with consumers.

"They've positioned it as in the middle between the choice and variation of Android phones and the user experience of an iPhone," Rubin says. "Microsoft [also] has some catching up to do with the App market. But unlike its competitors, it has experience managing developer communities."

One area that would seem wide open to this selling point -- tablets -- looks to be closed for Microsoft. The company has stated publicly that it will use the PC-based Windows OS to power tablets. "They're strategically saying that standard Windows is going to be their tablet play," Rubin says. "They're going to use a system that [already] has developer and driver support."