Microsoft's market share now stands at 3.3 percent in the second quarter, according to a new report by research firm Gartner. It takes the number three spot in the global smartphone sales rankings when measured by a device's software. Google's Android increased its lead at the top with a 79 percent share, with Apple's iOS remaining in second with 14.2 percent.
"While Microsoft has managed to increase share and volume in the quarter, Microsoft should continue to focus on growing interest from app developers to help grow its appeal among users," Anshul Gupta, a principal research analyst at Gartner said in a press release.
The news piles even more pressure onto BlackBerry which has struggled to compete with the likes of Apple in recent years and with phones using Google's Android operating system. Its new BlackBerry 10 smartphones have failed to gain traction and the firm announced on Monday that it has set up a committee to explore strategic alternatives, including joint ventures, partnerships or even a sale of the company.
"This is not at all surprising." Daniel Gleeson, a mobile analyst at IHS Electronics and Media told CNBC. "The BlackBerry brand is very much in decline even in emerging markets like Indonesia and Colombia where it found significant success over the past couple (of) years. BlackBerry has simply fallen several steps behind its rivals as the new BlackBerry 10 OS was released much later than iOS, Android or even Windows Phone."
BlackBerry's key selling point is a rigid messaging system called BBM but many alternatives are now available such as WhatsApp, Viber and WeChat, according to Gleeson. He predicted that BlackBerry will shrink back to being a niche player used only in the business world.
Showing similarities to BlackBerry, Microsoft Windows Mobile devices ruled the roost in 2006 in the PDA (Personal Digital Assistant) sector before the rise of the smartphone. It enjoyed more than 50 percent of market share when measured against other operating systems, according to Gartner, but fell into steady decline with the emergence of Android and iOS.
Microsoft remains a long, long way behind Apple and Android, according to Neil Mawston, executive director at Strategy Analytics. Microsoft's leadership over BlackBerry can only be considered a minor battle in a much bigger smartphone war that Microsoft is fighting, he told CNBC.
And that battle is being fought hand-in-hand with Finnish mobile maker Nokia, which uses the operating software for its range of Lumia smartphones. Nokia's Lumia sales grew 112.7 percent in the second quarter of 2013, Gartner said, thanks to its expanded Lumia portfolio which now includes Lumia 520 and Lumia 720 devices. With the recent announcement of the Lumia 10 it expects sales to be boosted further in the second half of the year, which will surely offer further support for the American multinational.
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The Windows phone is a much more mature platform, Gleeson told CNBC. With devices such as the Nokia Lumia 520 it is able to produce a modern smartphone at prices BlackBerry simply cannot match, he said.
"Windows Phone however is yet to gain significant traction in the U.S. market. This will be an impediment to its overall growth as many app developers are based in the U.S. and develop primarily for the U.S. market. Despite being available for nearly three years, Windows Phone still lacks some important apps such as Instagram. Without a breakthrough in the U.S., IHS forecasts that Windows Phone will remain a distant third place to iOS and Android," Gleeson told CNBC.
By CNBC.com's Matt Clinch. Follow him on Twitter@mattclinch81