Microsoft Is Losing Market Share It Can't Afford To Lose

NEW YORK (TheStreet) -- Microsoft (MSFT) is losing valuable Windows Phones market share, according to Kantar WorldPanel, a negative mark for the company, as it tries to expand the use of Windows amongst all devices.

According to the latest figures from the May 2014 Smartphone OS Market Share infographic Microsoft's Windows Mobile OS is declining, coming in at 3.8% for the latest survey, down from 4.7% last year, a decline of more than 20%.

In the United States, Google's (GOOG) Android operating system now stands at 61.9% of the market, up from 52% a year earlier. Apple's (AAPL) iOS registered 32.5% in May down from 41.9% in May 2013. BlackBerry (BBRY) came in holding 1.3% of the domestic market.

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Similar results were seen in Germany, Europe's largest smartphone market. Android now commands 80.9% of the market there, up from 77.9% in the year ago period, while iOS slipped to 12.1% from 13.7%, and Windows Phone fell to 5.9%, down from 6.2%. In Brazil, Android is up to an 87.3% share, iOS is down slightly to 4% and Windows Phone's share remained flat at 5.5%.

In the world's largest market, China, Android now powers 82.6% of all smartphones sold while iOS handsets dropped to 14.7% from 23.8%, and Windows Phones nearly dropped off the chart going to 0.6% from 3% a year ago.

Outside of the United States smartphone buyers pay full price for handsets, as opposed to the U.S., where carriers subsidize phones for customers on contract. As such, the relatively inexpensive Android phones have been gaining market share at the expense of the unsubsidized prices being charged for the iPhone, according to Kantar.

Microsoft has bet a lot on its smartphone operating system. So much so that it bought Nokia, the number one purveyor of Windows Phones, so it can control both the software and hardware sides of the equation - just like Apple does with the iPhone and iOS.

However, the act of incorporating Nokia's phone division may be taken Microsoft way too long to accomplish. There have been almost no new Windows Phone models announced in recent months in an industry which thrives on a constant stream of new, updated designs. And, the long-awaited version (8.1) upgrade of the Windows Phone operating system has yet to be officially released.

Carolina Milanesi, Kantar Worldpanel's Chief of Research, notes a new generation of Windows Phones are about to be released by Microsoft, which may help regain market share. "I think they will reinvigorate the opportunity for Lumia," Milanesi said in an email. "That said, selling Windows Phones in a market that mostly has love for iOS and Android remains a battle."

As this year progresses experts think Apple's market share to rebound. With the rumored release of two, larger designs iPhone sales are expected to rebound the closer it gets to the holiday shopping season.

-- Written by Gary Krakow in New York.

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Gary Krakow is TheStreet's Senior Technology Correspondent.

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