Microsoft Set to Outshine Apple iPhone

NEW YORK (TheStreet) -- For the first time since its introduction in 2007, Apple's(AAPL) iPhone is going to take a backseat at AT&T(T) as Ma Bell prepares a glitzy launch of three Microsoft(MSFT) Windows 7 phones.

AT&T is expected to unveil phones from HTC, Samsung and LG, according the The Wall Street Journal. These will be the first phones in the U.S. to run on Microsoft's long-awaited Windows 7 operating system. Given what's at stake for Microsoft and the size of its bank account, the Windows 7 event at AT&T will not be a low-key affair.

The timing of the announcement, reported to be Oct. 11, and the media blitz leading up to the launch of the Windows 7 phones at AT&T in November, will attempt to put Microsoft phones center stage during the holidays.

AT&T declined to comment.

This prized year-end showcase has always been Apple's turf.

Meanwhile, stealing some of the attention over at the enemy camp, Verizon(VZ) is preparing a very Android Christmas. And those plans do not include the mythical Verizon iPhone.

In the works: A faster, global-ready Motorola(MOT) Droid Pro, a new HTC Droid with global, or multinetwork connectivity and another Samsung Android called Continuum, according to the phone snoops at Engadget.

So what does the smartphone invasion mean to Apple? Lost market share, for one.

Morgan Stanley predicts that Apple will fall to fourth place from third in the smartphone operating system race in the fourth quarter due to the strength of Google(GOOG) Android and the arrival of Microsoft's Windows 7.

It's all the more important that Apple's iPad was a hit with consumers, giving the iPhone a little cushion during a crowded phone buying season.

--Written by Scott Moritz in New York.

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