Analyst Angle: A game of inches

Editor’s Note: Welcome to our weekly feature, Analyst Angle. We’ve collected a group of the industry’s leading analysts to give their outlook on the hot topics in the wireless industry.
The first wave of handsets that U.S. carriers used to shield themselves from Apple Inc.’s iPhone juggernaut were primarily feature phones with touch screens like Samsung Electronics Co. Ltd.’s Instinct, and while they looked a lot like the iPhone, they didn’t act much like it. Toward the end of 2009 and the beginning of 2010, we saw Android devices such as the Motorola Inc. Droid and HTC Corp./Google Nexus One take on the iPhone with comparably sized (3.7-inch) screens.
Now every major carrier except AT&T Mobility has either announced or already added a smart phone to its portfolio with a 4.3-inch display. These include the HTC HD2 at T-Mobile USA Inc., the HTC Evo 4G at Sprint Nextel Corp., and the Motorola Droid X at Verizon Wireless. All four major U.S. carriers will soon add their own versions of the Samsung Galaxy S, with its 4-inch display, to their rosters as well. The pocket-busting Dell Inc. Streak, with its 5-inch display, is slated to make its entry into the U.S. later this year. When the Droid X launched, Motorola co-CEO Sanjay Jha noted that consumers will invariably choose a larger display over a smaller one with higher-resolution – a knock against the iPhone, since Apple has made the opposite tradeoff. Are handset screens are getting too large, though?
Since the debut of the iPhone, consumers have been embracing larger screens, often at the expense of physical keyboards and keypads. According to NPD’s Mobile Phone Track, in April 2010 the percentage of cell phones with screens that are larger than 3-inches grew 145% over the previous year. But even phones with a 3.7-inch screen are still manageable in smaller hands and fit in many of the “universal” cell phone cases that can also accommodate an iPhone or Research In Motion Ltd.’s Blackberry models. They fit well into the design philosophy that consumers want the largest possible screen in the smallest possible form factor.
That’s not so for devices with 4.3-inch screens. While relatively svelte (apart from the hump housing the camera) the Droid X is both taller and wider than the iPhone, so it won’t fit in many such “universal” cases. These phones are already so large that no manufacturer has yet dared to create one with a sliding keyboard, perhaps fearing it would make them appear even more ungainly (although, on the other hand, the extra screen real estate does make for easier on-screen typing). Android’s user interface – with its reliance on the distant “back” button – can feel like a pilgrimage to one’s thumb as it traverses a supersized display.
Carriers have sought to make function follow form in positioning these larger handsets, and video plays a large role in their messaging. The Droid X and HTC HD2 both ship with a video-rental app from Blockbuster Inc. The Evo 4G and Droid X can both capture high-definition video and display it via HDMI. And the Evo 4G can, of course, take advantage of Sprint Nextel’s WiMAX network, which should cover most major metropolitan areas by year’s end. Not only does this facilitate downloading of YouTube videos and other high-definition content, but it also serves to support the Evo 4G’s front-facing camera for videoconferencing – an exciting form of mobile communication that is for now being stymied on the iPhone 4 by a dependence on Wi-Fi.
With 4.3-inch devices testing the roominess of even prodigious palms, they will likely not emerge as the “new normal” any time soon. Indeed, a more practical target may be represented by the 4-inch screen on Samsung’s Galaxy S, at least one of which (Sprint Nextel’s Epic 4G) has a sliding keyboard. But 4.3-inch and larger devices are likely here to stay as handsets stray from the ergonomic constraints of being voice-centric devices.
Ross Rubin (@rossrubin on Twitter) is executive director of industry analysis at The NPD Group (@npdtech on Twitter). He blogs at The NPD Group Blog, as well as his own blog, Out of the Box.