With wireless carriers not making as much money from smartphones as they would like, Verizon Wireless is putting its support behind Windows Phone in hopes of spurring on greater competition with iPhone and Android.

The problem for carriers such as Verizon Wireless is that their profits take a hit because they are forced to subsidize the price of the iPhone. A strong third competitor in the smartphone space could, carriers hope, attract customers who might have otherwise purchased an iPhone or Android device.

?Verizon definitely needs that third operating system,? said Rich Karpinski, senior analyst for mobility at Yankee Group, Boston.

?Other carriers can only benefit from Microsoft being a third operating system because this can help them drive down subsidies and other costs and open the market to new sources of potential customers,? he said.

?A third operator is certainly going to have some impact on both the iPhone and Android.?

Three?s company
During a conference call with analysts to discuss its first quarter financial results, Verizon Wireless said it will invest its marketing resources in Microsoft?s Windows Phone in order to increase competition in the smartphone space.

The company sees the Windows Phone 8.0 platform as a differentiator and is reportedly working with Microsoft on it. Windows Phone 8 is expected to be on phones in the fourth quarter.

Verizon Wireless did something similar when it put its marketing muscle behind Android, giving a boost to Android phones from several different manufacturers.

?I do think though it is important that there is a third ecosystem that's brought into the mix here,? said Francis J. Shammo, chief financial officer at Verizon Wireless, during the conference call. ?And we are fully supportive of that with Microsoft, and as we said that we created the Android platform from the beginning.

?And it is an incredible platform today that we helped to create,? he said. ?And we're looking to do the same thing with a third ecosystem.

For the first quarter, Verizon Wireless reported an increase in company earnings and revenues. The carrier reported that it sold 3.2 million iPhones ? 1 million fewer than in the previous quarter - and 2.1 million 4G LTE smartphones, up 30 percent from the fourth quarter.

While the Windows Phone has received good reviews, the smartphone market is so dominated by the iPhone and Android that it has been tough for the operating system to get noticed and gain ground.

Microsoft devices currently account for 2 percent of the worldwide smartphone market, according to Gartner.

With both AT&T and Verizon Wireless supporting Windows Phone, this could help give the OS a boost.

?AT&T and Verizon as a pair can create a third ecosystem that they could both benefit from,? Mr. Karpinski said.

?It is a little surprising that it took Nokia and Windows so long to get to this position to be considered a third ecosystem,? he said.

More than anything else, the reason why Verizon Wireless would want to support Windows Phone has to do with the fact that while iPhone sales have exploded, they are not as profitable for carriers as they could be. This is because carriers end up having to subsidize the cost of the iPhone in order to bring the price down to a level that consumers will pay.

?Apple is very harsh about passing over costs to the carriers,? Mr. Karpinski said.

Market dynamics
A third competitor ? and another low-cost competitor in addition to Android ? could attract some customers who might have bought an iPhone.

However, any shift will be gradual.

The key will be how long Microsoft can stay in the game.

?It is really hard to think that the Windows Phone is going to eat away at the competition quickly,? Mr. Karpinski said.

?Microsoft tends to do well in the long term,? he said. ?Whether it remains a distant third or can become an even player with iPhone and Android - that is really the big question.

It is likely to be market forces, such as the carriers getting behind Windows Phone that will determine how well the OS does in the long term.

?What is going to decide its fate are these kinds of market dynamics,? Mr. Karpinski said. ?Windows Phone and Microsoft are going to have to be very smart about how they put the elements together as they try to fight their way back into the game.?