Android-powered smartphones kicked Apple’s iPhone to the curb in the first quarter of this year, according to a new report from market researcher The NPD Group.

NPD’s wireless market research reveals that based on unit sales to consumers last quarter, the Android OS slid into second position at 28% behind RIM’s OS (36%) and ahead of Apple’s OS (21%).

Smartphone Marketshare

Android phones did well mainly because carriers dropped serious money to promote the handsets, Ross Rubin, executive director of industry analysis for NPD, told CMSWire. For example, Verizon backed the launch of its phones with advertising support of at least US$ 100 million and a two-for-one price promo.

“As in the past, carrier distribution and promotion have played a crucial role in determining smartphone market share,” Rubin said. “In order to compete with the iPhone, Verizon Wireless has expanded its buy-one-get-one offer beyond RIM devices to now include all of their smartphones.”

Strong sales of the Droid, Droid Eris and Blackberry Curve via these promotions helped keep Verizon Wireless’s smartphone sales on par with AT&T in Q1, Rubin said. According to NPD’s Mobile Phone Track, smartphone sales at AT&T comprised nearly a third of the entire smartphone market (32 percent), followed by Verizon Wireless (30 percent), T-Mobile (17 percent) and Sprint (15 percent).

Rubin said he expects carriers to keep up the marketing pressure, but sooner, rather than later, carriers will need to come up with more data plans that will continue to lure in consumers.

Handset Sales Drop, but Dollars Go Up

The continued popularity of messaging phones and smartphones resulted in slightly higher prices for all mobile phones, despite an overall drop in the number of mobile phones purchased in the first quarter, NPD reported. The average selling price for all mobile phones in Q1 reached US$ 88, which is a 5 percent increase from Q1 2009. Smartphone unit prices, by comparison, averaged US$ 151 in Q1 2010, which is a 3 percent decrease over the previous year.

NPD’s numbers jibe with research from other market researchers and industry followers.

Three Reasons Android Tops iPhone

Three reasons have contributed to Android OS phones outselling the iPhone, wrote Peter Farago, VP marketing at Flurry, on his blog recently. Flurry is a mobile app analytics platform provider:

  1. Consumer perception and demand. Apple spent millions of dollars training and educating consumers about the possibilities of a mobile computing devices. Now that they get the big idea, they’re more receptive to these devices.
  2. Relative subscriber base. Droid launched on Verizon, a larger network with more subscribers than AT&T. Additionally, there was pent up demand among the Verizon subscriber base for an iPhone killer, Farago said. Finally, Verizon backed the launch with advertising support of at least US$ 100 million and a two-for-one price promo.
  3. Holiday season sales. Android phones, notably Motorola’s Droid launched during the holidays, the hottest selling season for handsets. That momentum carried over into the first quarter.

 So does this change in smartphone preference mean mobile developers are going to start flocking to Google Android to build their mobile apps? Or this just a temporary blip in Applie's plans for the iPhone?