Windows Phone 7 launch and 4Q sales were anemic, warns report

There's more bad news for Windows Phone 7 sales: A market research group says that Microsoft's smartphone OS garnered only 2 percent of the market in the fourth quarter of 2010, lagging behind even Windows Mobile, Microsoft's legacy phone operating system.

The market research company NPD Group said that Windows Phone 7 had only 2 percent of the U.S. market in the fourth quarter, while Microsoft's legacy Windows Mobile had double that, at 4 percent. By contrast, Android had 53 percent of the market, and iOS had 19 percent, as did RIM.

NPD noted:

Despite buy-one-get-one promotions at both AT&T and T-Mobile, the Windows Phone 7 OS claimed less market share than its predecessor, Windows Mobile, for which handsets are still available at all four major U.S. carriers. Windows Phone 7 also entered the market with lower share than either Android or webOS at their debuts.

Overall, the combination of Windows Phone 7 and Windows Mobile was 6 percent, below the previous Windows Mobile market share of 7 percent. A report from Canalys also found that the combined market share of the two Microsoft phone operating systems was down from a year ago --- 8 percent in the fourth quarter of 2009, compared to to 5 percent in the fourth quarter of 2010.

In Windows Phone 7's defense, it wasn't available for the entire quarter. A report from Canalys notes, "Windows Phone 7 devices appeared too late in the quarter to take full advantage of holiday season purchasing."

Still, 2 percent market share is a dismal showing. The NPD report reflects many other reports that the phone OS is struggling to catch on.

NPD didn't pull any punches about what needs to be done for Windows Phone 7 to succeed. Ross Rubin, executive director of industry analysis for NPD, said in a statement:

"With its mid-quarter launch Windows Phone 7 entered the epicenter of competition between iOS and Android at AT&T. Both competitors offer mature feature sets and large app libraries. Microsoft has made the case for Windows Phone 7's differentiation and improved integration. Now, the company must close the feature gap, offer more exclusive capabilities, work with partners to deliver hardware with better differentiation, and leverage its extensive experience in driving developer communities to increase its app offerings."

That's a tall order, and we'll have to see if Microsoft can deliver.

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