Windows Phone 7 Sales Are Starting to Gain Traction: Canalys Report

Data from the research firm Canalys shows that Windows Phone 7 sales jumped by 277 percent in the second quarter, but the mobile OS from Microsoft still can't touch market leaders Android and Apple iOS.

Global sales figure for smartphones, ranked by operating system, show a major leap in sales for Microsoft Windows Phone 7 devices but that its market share is still tiny compared with top sellers running Google Android and Apple iOS.

The research firm Canalys reports that sales of Windows Phone 7-powered devices jumped by 277 percent in the second quarter of 2012 to 5.1 million units, from 1.3 million in the second quarter of 2011. WP7's market share grew to 3.2 percent from 1.2 percent a year ago.

But WP7 can't touch the market leaders. Phones running Android are the top sellers with a 110.4 percent increase in the second quarter to 108 million units for a 68 percent share, followed by iPhones running Apple iOS with a 28 percent increase to 26 million units for a 16.4 percent share.

Microsoft can at least take solace in the fact that it's not Research In Motion; sales of RIM's BlackBerry smartphones fell by 32.1 percent to 8.5 million units from 12.5 million in the year ago quarter. Its market share shrank to 5.4 percent from 11.6 percent in 2011. RIM has undergone layoffs and has delayed the release of the BlackBerry 10 mobile operating system.

Phones running Nokia's Symbian fared even worse than BlackBerry's numbers, but that is to be expected because Nokia is phasing out the Symbian OS in favor of Windows Phone. Symbian sales fell by 64.6 percent to 6.4 million units in the second quarter, and its market share shrank to 4.1 percent from 16.8 percent a year earlier.

Total global smartphone sales rose by close to 47 percent in the second quarter to 158.3 million units from 107.7 million in the year ago quarter.

Microsoft and Nokia both need each other to compete in the smartphone market. A decade ago, Microsoft with Windows Mobile was a sales leader along with Palm, BlackBerry and Nokia. Android and iOS didn't even exist. But Windows Mobile faded into irrelevance once Android and iOS caught on, Palm is now gone while RIM and Nokia are struggling. Windows Phone was Microsoft's big bet to get back into the smartphone race when devices running the OS were introduced in 2011.

Nokia, meanwhile, needs Windows Phone 7 and its soon-to-be-released successor, Windows Phone 8, to make it relevant again in the smartphone market. In June it announced that 10,000 employees were being laid off, spending would be slashed by $2 billion and factories would be shuttered in Canada, Finland and Germany.

While the Canalys numbers show Windows Phone still way behind Android and iOS, the triple-digit percentage point gain in the second quarter could be a sign that the Microsoft-Nokia deal is starting to pay off. As further evidence of that, the research firm IDC reported in June that it expects smartphones running Windows Phone to achieve 20 percent market share by 2015, surpassing the shares of iOS (16.9 percent) and BlackBerry (13.4 percent), although it will still trail Android whose share is forecast to be 43.8 percent that year.