(AAPL) Who Is the Smartest of Them All?

With the whole world increasingly going mobile, top phone makers such as Samsung, LG, Motorola, Apple (AAPL) and Research In Motion (RIMM) are scrambling to bring smarter devices to the market. In fact, phone makers are touting screen size, resolution, virtual or real QWERTY keyboards, video conferencing, recording and streaming, social networking, office integration and what not to boost sales.

While our parents may have considered a phone good if it offered noise-free, good-quality sound, we are more on the lookout for contacts management, social networking integration and media support, while our kids would rather be using the device to listen to music, capture and stream video and play games. Or that is what the phone companies would like us to do. And considering the level of competition in the market, we can’t really blame them.

But despite these efforts, handset makers are fast running out of these “special” treats that could enthrall the customer. This is because everyone knows that competition is at their heels and every new version of the phone has a very limited shelf life. They therefore have to balance their desire to bring out the best phone in a particular design cycle with the need to build further for the next version.

Judging the Book by Its Cover

A look at some of the latest devices from the leading handset makers would be enlightening. On the face of it, they are all pocket-size and similar in weight, although the ones based on Google’s (GOOG) Android OS generally use more plastic, are slightly bigger, sport larger displays that often come covered with Corning’s (GLW) Gorilla Glass. On the other hand, Apple’s iPhone is more compact and made out of solid stuff like glass and steel.

Therefore, dropping a Samsung device would be relatively less eventful than dropping an iPhone. On the other hand, the iPhone feels compact, looks pricier and is also kinder on the pocket seams.

Again, if you want variety, the many Android devices (HTC and others also make some hot-selling devices) could give you some. But if you want a status symbol, the iPhone is for you.

Let’s also not forget Blackberry, which looks plain and feels cumbersome in comparison to the others.

The Window to the Soul

All of the latest devices come with advanced displays and considerable focus on image quality. However, while the Android-driven larger devices come with AMOLED screens that pack more pixels overall, pixel density on the iPhone is slightly greater, enabling comparably beautiful images.

The problem with the Blackberry is that despite its TFT capacitative touchscreen (meaning that it requires less pressure), the screen size is not big enough to enjoy the experience.

The Brains Behind the Show

Processor power and speed are comparable across the entire lineup, with most of the devices using Qualcomm’s (QCOM) dual-core Snapdragon, running at 1.2 GHz. The Samsung Nexus uses a dual core chip at 1.2 GHz from Texas Instruments (TXN), while the Apple iPhone uses the dual-core A5 processor at 1 GHz.

Storage capacity is where iPhone is still slightly in the lead. It offers a minimum of 16GB and maximum of 64GB, while Samsung’s Galaxy Nexus comes in 16GB and 32GB models, but not in 64GB. Both of these and the recently-released DROID 4 (only 16GB) have much greater memory than other Android-based models that however allow additional storage on microSD cards. The latest Blackberry is somewhere in between, with 8GB of built-in storage.

iPhone’s 512 MB RAM and lack of card support lags the 768 MB RAM in the Blackberry and HTC Desire S, or the 1GB of RAM in the HTC EVO 3D, Galaxy Nexus and DROID 4, all of which also support SD cards.

Despite these differences, the iPhone’s performance is not remarkably different from the others. On the other hand, the higher in-phone memory comes in handy, since the majority of software still needs to be stored on the phone itself. Additionally, iPhone users can use iCloud services.

Another positive for the iPhone is that it doesn’t get easily run down, or not as easy as the others anyway. Only Samsung Galaxy Nexus offers comparable battery life.

The Heart of the Matter

Specs aside, what really drives users to a phone and keeps them there is the “coolness” of the device. This could come from a few things other than the look and feel, such as the user interface (ease of use), connectivity and social integration with the minimum of fuss. Thus we come to the operating system (OS).

Apple’s operating systems have just got better over time and the iOS 5 iteration brings the latest and greatest. It includes a new Safari web browser with superior browsing using HTML 5, Siri voice recognition, enhanced multi-tasking, an efficient iTunes app store and iCloud support.

In contrast, the Android 4.0, dubbed Ice Cream Sandwich (only available on Galaxy Nexus so far) has done a good job of improving the OS, and introducing multi-tasking and voice recognition. However, while apps for Android continue to thrive, Apple remains in the lead here.

Blackberry remains a good system, also offering most of the above features, but when we are splitting hairs, we’d have to say that it lags the other two.

From Ice Cream to Mango

Microsoft (MSFT) announced its famous Mango (WP7.5 OS) at a time when the existing players were already doing fierce battle. Mango appears to be a work of art, with a fantastic user interface that is second to none.

It also offers advanced multi-tasking, superior contact management, efficient image search, enhanced social networking and built-in document editing. The browsing experience is comparable to iOS 5. What’s more, the efficient use of resources and energy also extends the battery life significantly (better than iOS 5).

Although the company has next to no market share in the U.S., Microsoft is by no means a greenhorn. In fact, the company knows better than anyone else how to get kicked out (it’s been there). This time round it has partnered with Nokia (NOK), the once leading smartphone vendor, HTC and others. When Mango-based Nokia phones hit the shelves next year, Microsoft is going to win big time.

The Smart Move

A few years back, Nokia was the leading handset maker, with RIMM and Apple playing catchup. Microsoft was a non-entity, struggling with WinMo and Google was focused on search.

But today, Android is the hottest-selling OS, RIMM’s growth rates are negative, Apple’s growth rates are only slightly positive, Nokia is not a major player (ComScore) and Microsoft has introduced a dream OS. Also, Asian device makers are seeing phenomenal success.

It looks like the stage is set to make IDC and Gartner’s estimates a reality. Both research firms see Android as the leading platform in 2015 (with nearly a 50% market share) followed by WP (with around 20%), iOS (close on its heels) and then Blackberry. The only difference is that IDC’s estimates are a few points more conservative for Android and a few points more optimistic for Blackberry.

While some could baulk at the idea, we would bet on Microsoft as the one with the greatest growth potential. We think that although Apple has a slight edge right now, Microsoft, along with Google is likely to be the most significant beneficiary of growth in smartphones over the next few years.

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