Statistics tell us that there are already more than two million iPhones in China, and the number is expected to rise (at least a little) following the recent official launch of Apple’s (AAPL) iPhone 3G in the country through local telecom carrier China Unicom.

Both Chinese and foreign firms have been releasing apps targeting China’s iPhone users, even before the Apple smart phone was officially launched in China. Among the most popular apps are Chinese-English dictionaries and Chinese city maps.

Big local players have already flocked to the market. Leading Web portal Sina.com has promoted its offerings on the iPhone App Store to feed users with Chinese news and enable them to update their blogs via iPhone. Tencent, the Internet company that runs the popular Chinese instant messaging system QQ, also offers QQ for iPhone users in and outside China.

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The smart-phone wars are heating up. Handset makers are releasing a wave of new devices backed by a flood of advertisements, as some fight for survival in the fast-growing but increasingly crowded market.

Companies such as Motorola Inc. (MOT), Palm Inc. (PALM) and HTC Corp. are hoping new phones will help them reclaim market share from the reigning iPhone and BlackBerry. To do that, they will need a mix of impressive devices, shrewd pricing and aggressive marketing, analysts say.

Motorola has bet its future on a lineup of new phones that run Google Inc. (GOOG) software. On Wednesday, it is expected to unveil a highly anticipated device dubbed the Droid on the Verizon Wireless network. Verizon (VZ) has been touting the phone in TV ads attacking the iPhone.

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Nokia Corp. (NOK) unveiled its first cell phone developed with China’s homegrown third-generation mobile technology Tuesday, saying it would aim to “democratize” the smart phone market by aiming to sell lower-priced handsets at higher volumes.

The phone and others like it in the company pipeline could help Nokia, which has struggled globally to keep pace with Apple Inc. (AAPL) in the fast-growing, higher-margin market for premium smart phones since Apple’s iPhone was released in 2007, to close some of the gap by capitalizing on its strength in developing markets. But its look–a slider-style with a mirror-like screen, isn’t much different than what consumers have seen before.

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Ford Motor Co. (F) and Microsoft Corp. (MSFT) are teaming up to market the auto maker’s redesigned Taurus sedan.

Ford and Microsoft first teamed up a few years ago to launch the Sync telematics system, which enables drivers to hook Bluetooth entertainment and communications devices into the car. Now, Ford is using a technology from Microsoft–known as tags–in its print advertising materials in order to give potential car buyers a more interactive introduction to the car.

Looking very much like a bar code found on most consumer products, the black and white tags are integrated into the design of an ad and can be photographed by anyone carrying a camera-equipped smart phone, such as Apple Inc.’s (AAPL) iPhone, or Research In Motion Ltd.’s (RIMM) Blackberry. Once the image has been downloaded, it then links a consumer to a company-designed website.

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So here’s the thing about the smartphone market: there are way too many of them.

The year 2010, JMP Securities analyst Samuel Wilson asserted in a report this morning, “should be the year of the shakeout in smartphones.” He believes most of the market share and carrier focus will consolidate around three vendors. His view is that two of the winners “have effectively already been chosen.” In that group he includes Research In Motion (RIMM), “already a leader with its strong market presence” with a focus on the enterprise, and Apple (AAPL), driven by the App Store, iTunes and a strong Web browser.

So who will take the third slot?

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Two Australian girls, lost in a storm drain, recently used their cellphones to update Facebook to alert people about their predicament rather than calling emergency services. Some reports indicate they also took the time to complete a “Which Smurf Are You Quiz,” and got the result “Dangerously Oblivious Smurf.”

This could be a trend.

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A 12-year-old was expelled from school after having his cell phone confiscated and searched by authorities. What did they find? Pictures of him dancing. Now, the ACLU has taken up the case, arguing that even students are protected from unreasonable search and seizure.

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This weekend the New York Times (NYT) published a piece called Using ‘Free’ to Turn a Profit. The piece focused on Evernote, a web-based and smart-phone based application for taking notes, snapping pictures, and storing stuff you want to remember later.

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Has Nokia (NOK) finally come up with a smart phone that can take on the Apple (AAPL) iPhone?

This morning, the company launched a new model called the N900 which is based on the company’s Linux-based Maemo 5 operating system. Not everyone is going to be convinced, but Davenport & Co. analyst F. Drake Johnstone is. Late this afternoon, he raised his rating on Nokia to Buy from Hold, setting a price target of $18.

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For two Canadian guys who’ve spent the past 17 years together building one of the world’s most important tech companies, Research in Motion (RIMM) co-CEOs Jim Balsillie and Mike Lazaridis have surprisingly little in common.

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Recently, Palm (PALM) came under fire when programmer Joey Hess discovered the Pre’s smartphone OS was sending users’ GPS locations back to Palm on a daily basis. Although this information was disclosed in the company’s privacy policy, the majority of the phone’s owners were unaware. The incident raised questions about consumer privacy and the extent to which both handset makers and developers were gathering data on mobile users.

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Since Palm (PALM) to date has refused to give any hard data on sales of the much-ballyhooed Pre smartphone, the Street has resorted to some alternative methods to get a read on how sales are going. While the company still has plenty of fans, the sharp run-up in the stock combined with the lack of information has created a large pool of skeptics. The bears on the stock contend the evidence suggests demand has slowed considerably since the launch in early June–and that the stock is due for a fall.

Palm could clear up the speculation and rumor-mongering by simply providing hard numbers. But they haven’t done that. So as a public service, I’m passing some of the more cautious chatter about Palm now making the rounds on the Street:

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On June 6, Palm (PALM) will release the Pre, a smartphone many hope will fuel a resurgence of a company long since fallen from grace. But numerous miscalculations and missteps endanger this hoped-for turnaround.

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Collins Stewart analyst Ashok Kumar this morning upped his rating on Apple (AAPL) to Buy from Hold, setting a $170 price target.

Kumar contends that Apple will gain share in the smart phone segment from both Research In Motion (RIMM) and Microsoft (MSFT) Windows Mobile. He also writes that Google (GOOG) Android is “positioned to be a winner” in the sector.

So back to Apple. Kumar says that a low bill of materials should enable Apple to hit a $99 price point on an 8GB iPhone, stimulating demand. He says a launch with China Mobile (CHL) “is an additional near-term catalyst.” Further out, he thinks the launch of what he calls the “iPhone nano” in the first half of 2010 should help Apple further expand its share of the smart phone segment.

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To say Palm has a lot riding on the Pre smartphone is an understatement. Amid stiff competition from Apple (AAPL) and Research In Motion (RIMM), Palm’s very survival may hinge on the success of the device, expected to reach Sprint Nextel (S) store shelves no later than June 30.

And while it’s hard to predict demand for the Pre, preliminary analysis suggests Palm (PALM) will make a healthy profit from the units it does sell.

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