Microsoft Smartphone Share Dipping: comScore

Microsoft's smartphone market share dipped between January and April, according to new data from comScore. That can't be good news.

Microsoft's (NYSE:MSFT) share of the smartphone market continues to dip, according to new numbers from comScore.

The research firm plugged the company's market share at 6.7 percent in April, down from 8 percent in January. That's not nearly as bad as Research In Motion, which saw its share plunge during the same three-month period from 30.4 percent to 25.7 percent. Google and Apple continued to enjoy upticks in their respective shares, with the former's Android operating system occupying 36.4 percent of the market by April, while Apple's iOS held 26 percent.

According to the firm's June 3 research note, some 74.6 million people in the United States owned smartphones in April, a 13 percent increase over January.

Microsoft is banking on several factors to increase uptake of its Windows Phone 7 smartphone platform, whose devices consolidate Web content and applications into a set of subject-specific "Hubs" such as "People" and "Games." This stands in contrast to the model embraced by Google Android and iOS, which offer grid-like screens of individual apps. Despite the innovation of its user interface, Windows Phone 7 lacks a number of features, something Microsoft hopes to correct with its wide-ranging "Mango" software update later this year.

Microsoft executives demonstrated some of Mango's more top-line features during a May 24 press event in New York City: Multitasking, a redesigned Xbox Live Hub, visual voicemail, the ability to consolidate friends and colleagues into groups within the "People" Hub, and Local Scout, which offers a view of everything to see and do in a particular neighborhood. The "People" Hub will also include data from Twitter and LinkedIn, as well as the ability to share and tag photos.

Mango's newfound enterprise functionality includes the ability to search a server for email items no longer stored on the device, and share and save Office documents via Office 365 and Windows SkyDrive. There's also an upgraded Internet experience, one that tightly bakes Microsoft's Bing search engine into the interface.

Mango will boost Windows Phone 7's version number to 7.5. But that's not Microsoft's only play: the company is also betting that its recent partnership with Nokia will help boost Windows Phone adoption over the next few years.

Under the terms of that agreement, Nokia will load Windows Phone onto its hardware, abandoning its homegrown Symbian operating system in the process. Given Nokia's prominent position in global smartphone sales, Microsoft stands to benefit tremendously from that switchover-however, some analysts suggest the two companies are about to hit a major speed-bump:

"We would continue to avoid the stock as Symbian smartphone sales are falling off faster than expected and we are skeptical that new Windows Phone (WP) models will be able to replace lost profits," Stephen Patel, an analyst with Gleacher & Company, wrote in a May 31 research note. "Our checks suggest mixed carrier support for Nokia's transition to WP."

Android is also threatening Nokia's traditional stronghold in lower-cost handsets. "We think sub-$200 Android handsets, including those from new entrants such as ZTE and Huawei," he added, "are hurting Symbian units, which largely target the same price range."

To top things off, Patel seems concerned about Windows Phone's ability to replace Symbian's market presence as the latter transitions to the dustbin of dead technology: "We remain concerned that WP industry sales remain below 2mil units/quarter and that [Nokia's] scale will not be enough to offset a faster than expected drop-off in Symbian phone sales."

Other analysts have voiced similar concerns.

"While we maintain our belief the Nokia-Microsoft partnership is best positioned to potentially create a third viable smartphone ecosystem" Canaccord Genuity analyst Michael Walkley wrote in a June 1 research note, "we are increasingly concerned about sales for Nokia's Symbian devices during the transition period."

In addition to HTC and Nokia, Samsung and LG Electronics have apparently committed to building new Windows Phone devices preloaded with Mango. Acer, Fujitsu and ZTE are also planning to produce Windows Phone devices for the first time. "We have some Windows Mango phones," HTC CEO Peter Chou reportedly told Reuters May 25. "We are very committed to Windows phone products."

Another likely dampener of Microsoft's smartphone share is the zombie presence of Windows Mobile, Windows Phone's antiquated predecessor. Those older devices could be dragging down Microsoft's overall share as users abandon them for newer offerings.