Android Dominance Threatened by Windows Phone 7: NPD

Microsoft Windows Phone 7 could threaten Google's Android smartphone dominance, according to NPD Group's Connected Intelligence. Microsoft must boost its brand recognition.

At least one research firm believes Google's (NASDAQ:GOOG) Android operating system could face a stiff challenge from a competitor other than Apple's (NASDAQ:AAPL) iOS: Microsoft (NASDAQ:MSFT) Windows Phone 7 (WP7).

NPD Group's Connected Intelligence service said Android is the preferred platform among current smartphone owners as well as those who wish to buy a new smartphone in the next six months.

With a mindshare of 63 percent, Android generates more interest than any other OS and is the platform 36 percent of consumers claimed to be "most interested in."

For example, the firm said one-third of BlackBerry smartphone owners reported being most interested in an Android smartphone as their next handset. This makes sense with current market activity.

NPD said Android has accounted for at least half of all smartphone buys in the last three quarters. comScore, IDC, Gartner and Nielsen have all pegged Android as having around 40 percent or more market share.

However, Android's lead is far from assured. Connected Intelligence analyst Linda Barrabee said WP7 may pose a greater threat to Android's dominance. Barrabee said 44 percent of smartphone owners and intenders are considering  WP7 for their next purchase.

This is good timing for Microsoft, which is expected to see new devices from Samsung and HTC ship with its "Mango" OS, a considerable refinement over the current NoDo build. Microsoft CEO Steve Ballmer said he hoped WP7 would eventually become "a very strong third ecosystem in the smartphone world" alongside Android and the iPhone.

Unfortunately, Barrabee said, Microsoft must overcome some serious brand recognition issues. Some 45 percent of consumers Barrabee surveyed are still not aware of Windows Phone 7.

Also, the 50 percent of consumers who plan to purchase a smartphone in the next six months, but who are not interested in Windows Phone 7, 46 percent claimed they didn't know enough about the platform. Clearly, Microsoft is going to have to rev up its marketing machine to spread the word about WP7 beyond its "Really?!" ads.

"Windows Phone 7 has a way to go before consumers really understand what it is," Barrabee said. "But with the right marketing mojo, apps portfolio and feature-rich hardware, Microsoft could certainly improve its standing and chip away at Android's dominant market position."

Microsoft must love this report, but it can't bask in its glow; it needs to treat it as a cautionary tale that it has a lot of work to do to make WP7 a household brand. No doubt Nokia will play a big part in that when it launches WP7 phones next year.