The Apple iPhone's Top 5 Challengers

NEW YORK ( TheStreet) -- In three years, there hasn't been a phone bold enough or incredible enough to knock Apple's ( AAPL) iPhone from its perch as the design leader in smartphones.

But there certainly have been a few challengers.

The Google ( GOOG) Android-powered Motorola ( MOT) Droid has been one of the biggest threats -- and a solid seller -- but it hasn't quite matched the iPhone's star status. The Palm ( PALM) Pre arrived last year full of hope and promise. But all it took was a little Verizon snub to send Palm down the path to oblivion.

Apple's iPhone is strong, but it might not be invincible. If the iPhone has one key vulnerability, it's style. The iPhone is going into its fourth year with basically the same look and feel it had when it arrived in 2007. It's like having your DVR still set to record Survivor or styling your hair in that forward-jutting Rihanna 2007 bob. By fashion standards, the Apple iPhone design is dated. By gadget yardsticks, it's ancient.

A major iPhone makeover is expected in 2011. The new -- possibly 4G, possibly Verizon ( VZ) -- iPhone, will include an 8-megapixel camera from Sony ( SNE), TheStreet has learned. For now, however, the iPhone is a big fat target for rivals.

Here is the next round of up-and-coming phones due out this year that will attempt to outsmart the iPhone.

HTC Incredible

The situation. Verizon's follow-up to the successful flagship Motorola Droid is the stupendously named Droid Incredible by HTC. If this was a battle of spec sheets, Apple's iPhone might already be suffering a TKO. The Incredible, which arrives April 29, has the fast Qualcomm ( QCOM) Snapdragon 1-megahertz processor, an 8-megapixel camera and runs on the most recent version of Google's Android operating system.

The opportunity. Verizon's willingness to invest a reported $100 million in the Droid marketing suggests the Incredible's sales debut this spring will not suffer from a lack of advertising push. Verizon and Google have created a dynamic duo to fight the Apple and AT&T ( T) team. It looks like the HTC Incredible will be a top weapon in Verizon's skirmish with the AT&T iPhone.

The challenge. The anti-Apple, Android phones have gained a remarkable following as consumers jump on the touch-screen trend. If you didn't want to switch phone companies or you doubted you were cool enough to own an iPhone, the clear alternative is an Android. The Incredible has to live up to its name and be more than the second choice in must-have phones.

The stock. Verizon's timing with the Droid Incredible means it beats the new iPhone to the market by nearly two months. That could prove beneficial in the all-important market share game. The Incredible won't hurt Verizon's stock.

HTC EVO

The situation. Sprint ( S) unveiled the HTC EVO at the CTIA wireless trade show last month to a very impressed crowd. The 4.3-inch touch-screen phone promises to work on 3G and Sprint's limited 4G WiMax network sometime this summer.

The opportunity. Sprint's got a live one. Tech consumers love speed, and in certain portions of the handful of cities where WiMax is operational, the HTC EVO will be the fastest thing going. Given the network quality issues with AT&T and the iPhone, Sprint could play the tech card to its advantage.

The challenge. The HTC EVO is with Sprint. The most recent iPhone killer Sprint offered was the Palm Pre last year. The disappointments came early and helped color the entire Palm revival story. The question this time around is whether Sprint can convince people to buy a phone whose leading feature -- 4G -- is available only in a few markets.

The stock. Sprint's stock has gone almost nowhere in the past year while customers have fled by the hundreds of thousands. The HTC EVO could help slow the rush for the exits.

Research In Motion's BlackBerry slider

The situation. For all its hugeness, Apple's iPhone still lags behind Research In Motion's ( RIMM) BlackBerries in the U.S. smartphone market. This is due largely to RIM's loyal business users and a good initial reception among consumers who are smitten with the sync and email prowess.

The opportunity. RIM's smartphone success has come despite the fact that the BlackBerry operating system is still sunk in a bygone era of trackball scrolling and menu clicking. Touch-screens led by the iPhone have pushed the market toward swiping and poking by using fingertip controls. RIM needs to catch up with that trend and develop a full-page Web browser and application storehouse.

The challenge. The BlackBerry Storm has now twice failed at matching the iPhone's touch-screen prowess. The upcoming BlackBerry slider will be RIM's third attempt to make the Web-friendly touch-screen phone happen. As a slider, RIM delivers a big touch-screen and keeps the beloved BlackBerry keyboard. This has to work if RIM wants to keep growing with consumers.

The stock. RIM has to abandon its stance of characterizing phones as "just a small task handler," which co-CEO Jim Balsillie articulated in June. The era of mobile Internet computing might be happening on small devices, but the size of the tasks aren't necessarily going to remain small. RIM's growth -- and stock ascent -- ride on a successful transition.

Nokia N8

The situation. Nokia ( NOK) is the No. 1 smartphone seller worldwide. But the past two years have seen Apple, RIM and Google's Android phones chipping away at Nokia's smartphone business. Meanwhile, Nokia has been late, wrong and almost completely left out of the U.S. market.

The opportunity. Any gain in the U.S. would be a huge gain for Nokia and there's no sweeter spot than smartphones. Nokia's recent phones like the N97 have been solid, but far from sublime. Here's what Nokia needs: A winning touch-screen design and a standout feature like the 12-megapixel camera featured on N8, plus a robust operating system and a big telco partner like AT&T to support the sales effort.
N8
Nokia's N8

The challenge. First, Nokia needs to deliver the N8 in time for the holiday buying season. The phone was expected to arrive this spring, but recent analyst checks show it's looking more like fall. The iPhone version 4 arrives this summer. Shopping lists could be written early, and Nokia could once again be late to a losing game.

The stock. Nokia's inability to recapture its design leadership has dogged the stock for years. Without a breakthrough, expect the pattern to continue.

>> Who Owns Nokia?: Karen Finerman

Microsoft Windows Phone 7

The situation. Microsoft ( MSFT) hopes its success with the Windows 7 PC operating software can be repeated in the mobile phone market with Windows Phone 7. Like Google and Apple, Microsoft isn't content in selling just the software, but wants to put its imprint on the whole phone. Microsoft has been working with manufacturers like Asustek to bring a Windows Phone 7 touch-screen phone to the market this year.

The opportunity. Microsoft, like Motorola and Palm, was once a force in phones, and after a brutal decline at the hands of Apple and RIM, Microsoft seems ready to retake some lost turf. Microsoft's software has always been a little too bulky for mobile devices. But finally, the hardware has caught up and Microsoft has a shot at leading the next phase of mobile computing.

The challenge. Microsoft has to walk a troubling line between cultivating phone maker partnerships and competing against its partners. Google's had problems here, and Microsoft is certain to run into some hurdles. Microsoft needs outfits like Motorola and HTC to build sleek devices that run Windows Phone 7 software. Without that, Microsoft has to go it alone. The new Microsoft Kin phones made by Sharp suggest that a contract manufacturing path is an option. The success of Microsoft's Xbox game hardware could be the model for Windows smartphones.

The stock. Mobile Internet computing has been named the next stage of tech evolution beyond the desktop. If mobile is the future and desktop is the past, Microsoft has a make-or-break moment on its hands.

>> Who Owns Microsoft?: David Einhorn

--Written by Scott Moritz in New York.

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