A Wave of Android Smartphones Outsells Apple

Devices that run Google's Android software outsold the iPhone in the first quarter, helping make Verizon Wireless a smartphone powerhouse

By Olga Kharif

This story has been updated to include a comment from Apple.

A storefront in one of the busiest shopping districts in downtown Portland, Ore., is painted black, with "Droid Does" in large letters over the doors.

Orchestrated by carrier Verizon Wireless, aggressive promotions such as this one for Motorola's (MOT) Droid smartphone, plus a blitz of direct mail, newspaper, and TV ads, and two-for-one deals on Android-powered handsets, lifted first-quarter sales of smartphones based on Google's (GOOG) Android operating system above sales of Apple's (AAPL) iPhone for the first time, market researcher NPD Group reported on May 10.

Android-powered phones accounted for 28 percent of all smartphones sold in the U.S., exceeding Apple's 21 percent share during the quarter, NPD said. Research in Motion's (RIMM) BlackBerry models led the category with a 36 percent share.

Leapfrogging Apple is an important milestone—and not just for Android, an open-source software developed by a consortium of companies led by Google. NPD's report also shows how quickly Verizon Wireless has become a central player in the fast-growing market for the pocket computers known as smartphones. In the first quarter, Verizon customers bought 30 percent of all smartphones sold in the U.S., nearly equaling the 32 percent share of AT&T (T), which has an exclusive contract to sell the iPhone, according to the report. AT&T also sells an Android handset from Motorola and plans to carry an upcoming Android smartphone from Dell (DELL).

Apple spokeswoman Natalie Harrison said in an e-mailed statement on May 11 that NPD's report is "very limited" and based on 150,000 U.S. consumers responding to an online survey. The survey "does not account for the more than 85 million iPhone and iPod touch customers worldwide," she said. The "iPhone has 16.1 percent of the smartphone market and growing, far outselling Android on a worldwide basis," Harrison said, citing data from market researcher IDC.

Verizon no longer seen as desperate

Until recently, Verizon was an also-ran in the smartphone market. It carried the BlackBerry, but didn't have a breakthrough consumer-oriented smartphone to compete with the iPhone. Analysts were calling for Verizon to strike a deal with Apple to distribute the iPhone. Last December, Verizon said it had effected network upgrades that would enable its network to handle extra traffic should Apple decide to expand the number of carriers authorized to sell iPhones.

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