NEW YORK ( TheStreet) -- Not all smartphone makers can be winners, says JPMorgan. Nokia ( NOK) and Research In Motion ( RIMM) were upgraded to buy at JPMorgan on the strength of smartphone growth. JPMorgan analyst Rod Hall also gave a thumbs up to mobile chip shop Qualcomm ( QCOM), initiating coverage with a buy rating. Hall, however, was less optimistic about Motorola ( MOT), which he launched with a sell rating. Ignoring Nokia's laggard status in the heated race over who has the best touchscreen-driven operating systems, Hall finds Nokia's advantage in size and price flexibility.
"Nokia's relative advantage in this cycle is its scale and distribution model which enhance its ability to derive high margins from lower-ASP products," Hall wrote. Translation: As smartphones go to the mass market, Nokia can make more phones at lower costs than most of its competitors -- an advantage as prices fall. For RIM, Hall is encouraged by the potential for broad success of the lower-priced BlackBerry Curve. The phone has been one of RIM's best-selling devices and a big hit in new international markets, particularly with consumers. This growth is supplemental to RIM's core business user market.
Motorola earned a sell rating from Hall for its lack of homegrown, in-house software. Unlike Apple ( AAPL) and even Palm ( PALM), Motorola can't distinguish itself with a unique operating system. Though it has enjoyed a remarkable success with Google's ( GOOG) Android software on its flagship Droid phone, Hall says Motorola's options are limited. This view is common among tech watchers that fear smartphones will follow the same value destructive course that undercut PC makers like Dell ( DELL). The hardware game tends to be a race to the bottom as the lowest cost player drives down prices and margins. In this scenario, Motorola is up against Taiwan's HTC and Korea's Samsung and LG, some of the other phone makers that have also embraced the Android movement. Nokia and RIM were up 2% to $15.55 and $74.85, while Motorola was down 3 cents to $7.21 in premarket trading Friday. --Written by Scott Moritz in New York Follow our tech coverage on Twitter and become a fan of TheStreet.com on Facebook.