Android Shrugs Off Nexus One Setbacks

Despite recent setbacks for the Android-based Nexus One, Google's mobile operating system is increasing the heat on Apple.
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Story updated with information on Google's decision to close its Nexus One Web store.

MOUNTAIN VIEW, Calif. (

TheStreet

) -- Despite recent setbacks for the Android-based Nexus One phone,

Google's

(GOOG) - Get Report

mobile operating system is increasing the heat on

Apple

(AAPL) - Get Report

in the smartphone market.

Earlier this week, research firm

NPD Group

reported that Android had ousted Apple's OS from the No. 2 position in smartphone market. Android accounted for 28% of sales during the last quarter, it said, compared to Apple's 21%.

Research In Motion

(RIMM)

, however, remains the U.S. smartphone leader, with 36% of sales, according to NPD.

A separate survey by Avian Securities, also released this week, paints an equally rosy picture of the Android landscape. Avian's monthly survey of North American retail stores reports that Android accounted for five of the top 10 phones sold in April, up from four in the prior month. Apple's iPhone 3G-S was the top device according to Avian, followed by RIM's BlackBerry Curve. The Android-based

HTC Incredible

, which has been earning rave reviews, was the third most popular phone, with 8.5% share of the market.

Google's Nexus One

phone caused quite a stir when made its debut earlier this year, marking the search giant's entry into the booming smartphone space. Sold by

AT&T

(T) - Get Report

, Nexus One was touted as the next big thing in smartphones, but has struggled to woo other major carriers.

>>>Opportunity Lands in H-P's Palm

Earlier this week, for example,

Sprint

(S) - Get Report

revealed that it has scrapped plans to carry the phone, opting instead for

HTC's EVO

4G, the world's first 4G smartphone. This followed

Verizon's

(VZ) - Get Report

decision not to make the Nexus One available to its customers.

On Friday Google also announced that it is closing its Web store set up to sell Nexus One phones. Andy Rubin, Google's vice president of engineering, explained the decision in a blog posting. The Web Store, he said, "remained a niche channel for early adopters." He added that many customers clearly want a "hands-on experience" before buying a phone.

Google, according to Rubin, will increase the availability of Nexus One in traditional stores, eventually reducing its Web Store to a place where folks can see the latest phones advertised, but not buy them.

The Android operating system may nonetheless get a boost when

Dell (DELL) - Get Report launches its

Streak

handheld device, previously known as the Mini-5. The consumer tech giant will reportedly

release the scaled-down tablet computer in Europe next month

.

With

Android

apparently in the ascendancy, there has been plenty of speculation about the impact on Apple. The Cupertino, Calif.-based firm, however, recently unveiled the latest version of its

iPhone operating system

, and there has been chatter that Apple could launch new phone hardware at its Worldwide Developers' Conference (WWDC) in San Francisco next month.

There is also a big question mark still hanging over the prospect of a

Verizon iPhone

. Apple's exclusive iPhone partnership with AT&T was said to end this summer, although, in a surprise move, the telco extended the contract.

Verizon, which has 90 million customers, would represent a big opportunity for Apple, although the telco is already something of an Android champion, selling a number of

Motorola

(MOT)

phones and the HTC Incredible.

-- Reported by James Rogers in New York

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