By Dan Gallagher

As more wireless customers flock to smart phones, companies like Apple, Research In Motion, Motorola and Palm have the advantage over current cell phone giants such as Nokia and Sony Ericsson, according to a new report from Credit Suisse.

In a study issued Tuesday morning entitled "Smart phones ... smarter investments," the broker predicted strong growth in the smart-phone category, which includes popular devices such as the iPhone, BlackBerry and Palm Pre.

"We believe smart phones represent one of the most attractive secular trends in technology, given our projected long-term compound annual growth rate of 18%," lead wireless analyst Kulbinder Garcha wrote in his report.

But the growth will not benefit all players equally. Garcha downgraded Nokia (NOK) on worries that the world's largest maker of wireless handsets will not be able to hold onto its market share, given challenges with the company's software platform and strong competition from new players.

Research In Motion (RIMM) and Motorola (MOT) were upgraded to buy ratings in the same report. The broker also left its buy rating on Palm (PALM), which is expected to benefit from a new operating system launched this year.

Apple (AAPL) - maker of the iPhone - is covered by the broker's IT hardware analyst, but currently carries the equivalent of a buy rating.

"We conclude that secular share gainers will be Apple, RIM, and possibly Palm," Garcha wrote. "Nokia's 45% smart phone share is likely to decline given slow progress in software and services, and other vendors, including HTC, LG, Samsung and [Sony Ericsson], could struggle due to less focused software strategies and weak distribution."

 
    Winners

Credit Suisse believes unit shipments in the global smart-phone market are likely to grow by 11% this year and 19% next year.

The broker believes the total addressable market for smart phones is 1.5 billion units - leaving the market less than 22% penetrated at present. The corporate market is only 7% penetrated, the report found.

The opportunity in the corporate market was a big reason for the broker's improved view of RIM. The company's line of BlackBerry smart phones has proven to be especially popular with corporate customers, due to security and management features.

"We believe RIM's global corporate smart phone share of 63% in 2008 is sustainable in the near term given switching costs and RIM's tried and tested enterprise functionality," the report read.

Motorola was a surprise pick, given the company's troubles in its handset business. But Garcha expects Motorola will be able to turn around its performance with improvements in the business - which includes a new line of smart phones based on Google's Android operating system.

The first of those devices are expected to be unveiled next week at an event in San Francisco.

"The company has clearly articulated a multiple chipset sourcing strategy and an OS strategy centered on Android," Garcha wrote. "While a focused product strategy, coupled with the company's distribution and brand should allow Motorola to increase smart-phone share from 2% in 2008, questions remain on Motorola's implementation of Android, as well as the company's services strategy."

Palm remains at an outperform rating. The company launched its new Pre smart phone earlier this year with a new operating system called webOS. Garcha believes the system will become a successful platform for future models, but noted that the company's product cycle "is still in the early innings."

 
    Losers

Credit Suisse said Nokia is likely to retain a dominant position in the cell phone market in the coming years, but the company risks losing market share.

In particular, the broker pointed to challenges with Ovi -- Nokia's mobile Internet service -- as well as the company's Symbian operating system, which it said "still lacks the quality or the look and feel of several competing devices."

For Sony Ericsson, Garcha said that because of the company's "unfocussed software and product strategy, weakening brand and undifferentiated services offering," its smart-phone market share will likely remain in the 1% range next year.

Garcha also downgraded Qualcomm (QCOM) to a neutral rating. Qualcomm makes chipsets for wireless phones and develops CDMA technology, which it licenses to other manufacturers. The broker said the company's CDMA technology still faces strong growth potential, but the stock lacks any near-term catalysts to push it higher.

-By Dan Gallagher, 415-439-6400; AskNewswires@dowjones.com