While most folks don't search using quotes, the use of quotations is recommended for determining SEO competition.While the use of quotes isn't used by searchers, the proximity and order of keywords is used by the engines for relevancy.
A "normal" search without quotes is looking for documents that contain any of the keywords, in any order and any proximity.
However, the vast majority of these pages are not well optimized.
For examaple, let's look at the phrase:
retro sun glasses
Dressed in retro clothing from the 50s, Jim put on his glasses, started his car and drove due west, directly into the blazing sun.
This sentence contains all three keywords, yet isn't relevant to the keyword phrase "retro sun glasses".
For engines to be as accurate as possible, they will first look for the EXACT phrase and we should also assume that webmasters using just basic SEO (your REAL competition) will also use the exact phrase.
This is why you should use quotes when trying to determine your SE competition.
To take it a step further, I believe a better indication of your "SEO'd" competition is to use the three "in" attributes when performing a Google search, which looks for pages containing keywords in "the right places": in page title, in the body text and in anchor text. These are the three main areas of "on page SEO".
Here's a Google search for the pages that contain the EXACT phrase in ALL three places:
http://www.google.com/search?num=100&hl=en&lr=&q=intitle%3A%22retro%20sun%20glasses%22+inanchor%3A%22retro%20sun%20glasses%22+intext%3A%22retro%20sun%20glasses%22&btnG=Search
Note: There are only three pages in Google that contain the exact phrase in all three places.
Numbers for each type of search:
retro sun glasses = 1,470,000
"retro sun glasses" = 77
intitle:"retro sun glasses" inanchor:"retro sun glasses" intext:"retro sun glasses" = 3
I would use the "in" and/or the quoted version to give a much more accurate figure as to the number of sites that have done SEO on the keyword phrase.
-Boom boom boom boom.