Android Passes RIM in Smartphone Race

NEW YORK (TheStreet) -- Just a day after the launch of Research In Motion's(RIMM) BlackBerry Torch 9800, research reveals that Google's(GOOG) Android has overtaken RIM as the most popular OS on U.S. smartphones.

Android accounted for 33% of all smartphones purchased during the second quarter, ahead of RIM's 28%, according to figures released on Wednesday by the NPD Group. Apple's(AAPL) OS featured on 22% of smartphones sold during the quarter.

"While the Google-developed OS took market share from RIM, Apple's iOS saw a small gain this quarter on the strength of the iPhone 4 launch," explained Ross Rubin, NPD's executive director of industry analysis, in a statement. Android's gain also marks the first time since 2007 that RIM has fallen into second position in the OS race.

Based on consumer purchases of mobile phones, NPD lists the top five Android phones as Motorola's(MOT) Droid, followed by HTC's Droid Incredible, EVO 4G, Hero and Droid Eris.

Faced with stiff competition from Google and Apple, RIM is desperate to ramp up its smartphone sales, launching its first touchscreen phone, the BlackBerry Torch, and BlackBerry 6, its new mobile OS.

"BlackBerry 6 will soon offer features that have been popular in recently-launched handsets, such as support for capacitive touchscreens and a WebKit-based browser," said NPD's Rubin. "However, the BlackBerry Torch lacks the large-screen allure that has characterized the best-selling Android devices at its price point, including the Droid Incredible and EVO 4G."

RIM will begin selling the 3.2-inch touchscreen Torch via partner AT&T(T) later this month, and the telco is already touting the device as the best BlackBerry ever.

Whether this is enough to seriously challenge Apple's iPhone and the growing number of Android-based smartphones, however, remains to be seen.

"The Torch should enable RIM to hold onto BlackBerry's installed base," explained Charlie Wolf, an analyst at Needham & Company, in a note released on Wednesday. "But it's less likely to appeal to users new to the smartphone market, who place less value on BlackBerry's superior messaging capabilities than do enterprise customers."

Needham has maintained its 2010 and 2011 RIM earnings targets of $5.75 and $6.35, respectively, but Wolf warned that the phone maker faces battles, both in the U.S. and overseas.

"A major risk in the story is that the Torch and its successors will not be able to stem BlackBerry's market share losses in the U.S.," he explained. "RIM is moving downstream into emerging international markets, increasing the risk that its margins could be squeezed as it battles Nokia(NOK) and Android phones.

RIM shares plunged $1.79, or 3.22%, to $53.74 on Wednesday, reversing the modest advance in tech stocks that saw the Nasdaq gain 0.50%.

-- Reported by James Rogers in New York

Follow James Rogers on Twitter.

>To order reprints of this article, click here: Reprints