NEW YORK (TheStreet) -- What will be the next "wow" factor in smartphones? Where will the next battles be fought? Let's go through the list:1. Bigger display? Not really. At around 5 inches, hands aren'tgetting any bigger and the bezel is approaching zero. No more roomfor expansion here. We have reached the limit. 2. Better display resolution? Not really. The first 1080p displayis here ( HTC Droid DNA on Verizon ( VZ)), but 720p was already good enoughfor high-end phones. Going beyond 1080p? No way, not useful for thehuman eye. We have reached the limit. 3. Thinner phone? No way. People want more battery life, notthinner phones. At some point, too thin becomes uncomfortable tohold. We have reached the limit. 4. Better battery life? Absolutely. There is plenty of headroom onthis one. A source of perennial potential improvement. Infiniteimprovement ahead. 5. Faster networks? Sort of, but they are already here. The LTE standard will improve, but Qualcomm ( QCOM) has the requisite chips and they will upgradeevery year. We have reached a plateau for the next five years. 6. Integration/simplification? Yes, always. A major goal forSKU-reduction and cost reduction is to enable more radios on one chip. This is where Qualcomm leads the way today. Continuous improvementahead, but largely invisible to the end user. 7. CPU/GPU processing power? Yes, sort of. There will always beimprovement here, but for most people right now, the hardware is farahead of the software being used. 8. Camera? Yes, for sure. But how many people care? How manypeople think the current high-end smartphone cameras are good enough? So what's the bottom line from this list? Smartphone hardwareevolution will focus on improving battery life, and to wait forQualcomm to put more radios onto one chip, so that they can achievethe goal of eventually selling one phone around the globe. Therefore, imagine this headline/advertisement: "New smartphone fromBig Carrier XYZ! It's got 14% better battery life and the manufacturer is able to have you buy the same SKU that he sells in Nigeria and Japan." Doesn't that make you thrilled to spend $349 or $649 to upgrade yoursmartphone!?
7 inch tablet: $200 or less.One of these four does not look like the others. The smartphone priceis so much higher in relation to the basic hardware content. You canbuy a Nexus 7 tablet and a Google ( GOOG) laptop for $400 combined, or 35%less than a single iPhone 5! It makes absolutely no sense. Then add the fact that all the Microsoft ( MSFT) PC licensees are feeling theheat from a failing Windows ecosystem, and are seeking new revenueopportunities. Microsoft is making its own PC now -- the Surface --and perhaps soon its own smartphone. If you are Acer, Asus and Lenovo, just to mention a few obvious ones, why not focus more on Android smartphones as you did on Windows PCs? Yes, it was hard until now because keeping up with the spec war wasdifficult, with Apple ( AAPL), Samsung, HTC and a few of others such as Nokia ( NOK), RIM ( RIMM) and Sony ( SNE) duking it out for the high end in a fast-moving spec race. But if the race is now reaching something of a plateau? Then the game changes. The hardware race to radically cut the relative high-end smartphoneprice will be mated by a reduction in service cost. Why and how?There are two reasons: 1. At some point, the hardware becomes so relatively cheap --unsubsidized high-end Android smartphones probably approaching $199 ayear from now -- when subsidies won't seem as attractive anymore.
10 inch tablet: $400 or less.
Laptop: As low as $200.
High-end smartphone: $350 to $650 (unsubsidized)