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Tickers in this Article: MOT, AAPL, GOOG, NOK
While a trend can't be identified with a single snapshot of one moment in time, all new trends start out with one small - sometimes imperceptible - step. That's true for smart phones as well. So, though the market share shake-up within the smart phone market last quarter was modest, investors may want to heed them as possible early warnings. The underlying reasons for the repositioning isn't wiped away that easily.

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Just the Facts
Gartner's latest update on cell phone market share for 2009 (full year) didn't yield any major surprises. Nokia (NYSE:NOK) still owns 36.4% of the market, and Samsung is running a not-so-close second with 19.5% of the market. LG, Motorola (MOT), and Sony Ericsson are still annoyances to the two leaders rather than actual market share threats, though that may be changing soon.

When you dig down deeper, and into fourth-quarter sales, the picture changes somewhat.

Perhaps the most stunning stat is simply that Q4 smart phone sales were up a total of 41% on a year-over-year basis, and were up 23.8% for the year. Translation? The business is out there, if smart phone makers know how to get it. That, however, has been the dividing line between the winners and the losers (despite some of the losers suggesting otherwise).

Samsung is one of those winners, increasing its mobile phone market share last year from 16.3-19.5% (though it's still a small player in the smart phone market - more below). How'd the company do it? It certainly wasn't gimmicks or the unveiling of must-have technology. Samsung did it by working smarter with its partners - proof that slick marketing isn't everything. Korean-based LG Electronics was the only other major name to increase market share last year.

Along with Nokia, Motorola was one of 2009's biggest let-downs, allowing its mobile phone market share to shrink from 8.7-4.8%. It lost sight of its breads and butter - low-priced phones - yet simultaneously failed to make any real headway in the smart phone market.

Looking Ahead
Nokia isn't expected to break free of its problems anytime soon. For years, its reliance on the Symbian platform went unchecked or untested simply because there was little competition. With Apple's (Nasdaq:AAPL) continued proliferation and last quarter's wide scale rollout of Google's (Nasdaq:GOOG) Android OS though, Nokia/Symbian essentially got caught with its pants down. The revamps to Symbian won't be complete until the second half of 2010. In the meantime, investors have to wonder if the decline in market share in 2009 - from 38.6-36.4% - will get worse before it gets better.

On the flipside (and somewhat counter-intuitively), Nokia's cell phone market share actually increase from 35-40% last quarter. It remains to be seen if that's a permanent condition.

Motorola isn't likely to inspire investors anytime soon either. The company was fortunate to have Android-powered Droid smart phones to sell in the last quarter of last year, though that edge won't last long, CEO Sanjay Jha suspects.

Jha says smart phone sales should fall this quarter. In fact, Motorola will be spending this quarter developing new smart phones that are presumably even more compelling than Droid. He doesn't expect profits for the division again until the fourth quarter of this year, however.

And the Winners Are...
So, if Nokia and Motorola are limited in product until later in the year, and if Apple's luster has been tarnished by a wave of recently unveiled Android-based phones, then who wins? Definitely not the investors.

You don't have to read between the lines here. Samsung and LG Electronics are chipping away at their competitors' market share, for reasons that are tough to top. They're delivering phones people want at a price they can afford. Somehow, the other manufacturers haven't quite figured out that chemistry.

Will the market share carousel continue on as it is? Considering LG and Samsung are doing nothing special other than executing, while Motorola and Nokia are scrambling, there's no reason to think last year's trend is an anomaly. In fact, Samsung's plan to triple (yes, triple) its smart phone sales in 2010 has other manufacturers groaning with the knowledge the company might actually do it. Though Samsung only owns 3% of the smart phone market now, carving out 9% of it with a very plausible 2010 plan is going to cut into someone else's share of the market.

The problem (for investors)? There's no way to trade LG Electronics or Samsung here in the United States - not even a pink sheet ADR. Yes, this redistribution of market share may end up being something U.S. investors can only be on the wrong side of, or not in the game at all. (For more, see Dial Into Cell Phone Profits.)

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