Every time I am out with my friends and take out my cell phone, they laugh at me.

It’s not because I have an obnoxious ringtone or a funny plastic cover on it.

It’s because of the phone itself. It’s old.

In the 3 years I have had the phone, technology has grown by leaps and bounds. And my phone is now a dinosaur.

It’s a flip phone with a small color screen, maybe 1.5″ square. To write a text message, I have to tap the keys multiple times until the correct letters appear. It has Internet capabilities — but with such a small screen, I don’t even bother.

My friends have the latest phones. Huge, full-color touch screens. Complete wireless and Internet capability. They can update their Facebook pages while they drive down the road.

They are hardly alone.

The “smartphone,” as these phones are known, is an incredibly fast-growing segment of the industry. Third-quarter sales increased 95% worldwide, according to a report by Canalys, a technology analysis company. It is estimated that 81 million smartphone units shipped during the quarter.

The market is dominated by the big names: Nokia, Apple, and Research in Motion hold a combined market share of 65%.

Apple is probably the most visible one in this segment. In the last year alone, AT&T activated around 10 million new iPhones. And now that Verizon subscribers will finally be able to get an iPhone, it’s estimated that another 10 million will be sold.

And that’s not even the beginning for Apple.

With the launch of its wildly successful iPad tablet PC, Apple is selling another estimated 1 million units a month. Conservatively, that’s 12 million a year, but sales should jump when the iPad 2 is released later this year.

And sales of other tablet PCs are expected to increase dramatically. In China, sales are expected to go from 600,000 units last year to over 2.5 million this year, a 300% increase. Analysts expect 40 to 50 million tablet PCs to be shipped in 2011, with an annual increase in shipments of 57% through 2014. Most analysts expect the iPad to hold a dominant position in this market.

Let’s face it: The smartphone and tablet PC markets are where we want to invest. They are at the leading edge of technology, and their revenues are going to steadily rise.

But investing in Apple isn’t the way to make huge profits. First of all, it is too obvious.

Secondly, the price has already risen too far too fast. A few years ago, Apple was trading at $86 a share. Today, it is over $341, a 295% increase.

Tomorrow, I’ll discuss the best ways to play this technology trend, and share the details on one specific opportunity I think could go through the roof in the next few years.

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