The shuffling of top handset makers continued in the third quarter as Sony Ericsson took over the number-three slot in global phone shipments at the expense of Motorola and LG Electronics, according to research firm Gartner. Nokia’s position as top dog is still unchallenged, however, as it led the pack by far with 38.2% market share in the third quarter; its closest competitor Samsung had 17.1%. But according to Gartner, a three-way race is forming at the bottom of the top five, pitting LG, Motorola and Sony Ericsson against one another, each with roughly 8% of the worldwide market.

Third is the highest rank Sony Ericsson has achieved since it was created from Ericsson and Sony’s struggling handset divisions, but Gartner cautioned that the company’s third-quarter performance isn’t necessarily indicative of a new status quo in the market. Sony Ericsson actually fared worse last quarter than it did a year earlier, when its share was 8.7%. Motorola did worse than that, giving up 5 full percentage points of share. Compared to last year, LG is doing much better, shipping 3.5 million more handsets in the third quarter. It had overtaken Sony Ericsson earlier this year but gave up its spot in the top 4 last quarter with only 7.8% market share.

It will be difficult for Sony Ericsson to keep its new ranking in the coming quarters, Gartner predicted. The vendor’s strategy focuses heavily on mid-range and high-end feature phones and smartphones, while the current economic climate favors cheaper phones, which LG has in spades. Furthermore, the high-end market is being pressured by Apple as it rolls its iPhone out to new markets and builds up inventory for the iconic device. Research in Motion is also targeting its new BlackBerry lines at the same market.

The competition for market share may be fierce, but everyone is fighting for a larger piece of a shrinking pie. Nokia has projected that mobile phone shipments between 2008 and 2009 will actually contract, marking the first time that growth in emerging markets hasn’t driven volumes ever skyward. Though we haven’t seen an outright fall in sales yet, growth is certainly being arrested. According to Gartner, phone sales in the third quarter came in at 309 million units, up 6% year-over-year, compared to growing 16% between the third quarters of 2006 and 2007.