My Guess: 4.5"
My first smartphone was a T-Mobile G1 with a 3.2" display. I re-upped the next year and grabbed a Nexus One with a 3.7" AMOLED display. When that phone died in a horrific concert-related accident, I dumped my T-Mobile contract and went with Sprint's HTC Evo and its mighty 4.3" display.
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So what does all this illustrate, other than the fact that I spend way more money on phones than a sane person should?
Smartphone displays are getting larger. DisplaySearch recently released their Quarterly Mobile Phone Shipment and Forecast Report. Most of it is boring to anyone who doesn't eat, sleep and breathe mobile phones.
There are some interesting factoids, however. For instance- the average mobile phone diagonal display size is now at 2.3", the largest it has ever been. That's 3% growth over Q2 2010 and 8% year-over-year. High-end displays, AMOLED and LTPS TFT LCD, ballooned by 7% quarter-over-quarter and 15% year-over-year.
Smartphone screens are getting larger, even as the phones themselves become thinner and more compact. Look at this list of the top five highest-selling US handsets. Number one is the iPhone 4 (duh) and number two is the Curve 8500 (lots of business customers out there)- but #4 and #5 are the Droid X and Evo. Both of which have 4.3" displays.
If you look at all the Galaxy S variants together, you have more than 5 million sales. All of them for phones with a 4" Super AMOLED display. Samsung has a new AMOLED factory opening next year as well. Once production gets cheaper, a 4.3" AMOLED display device can't be far off.
4.3" may be the smartphone display sweet spot, the size category a majority of "high-end" devices aim for in the future. But I think things need to get a little larger. Having played with a Streak, I can say with confidence that 5" is too large for optimal comfort. But 4.5" may strike the perfect balance of screen real-estate and comfort.
While there will never truly be one "perfect" screen size, I think we're going to see most of the successful devices in the next year-and-change hover at or over the 4" mark. Including the iPhone. Apple's retinal display is beautiful, but browsing and texting on an iPhone 4 feels quite cramped compared to an Evo (the latter's crappy keyboard notwithstanding). I'd be very surprised if we don't see that display bump up a level in size for the next iteration.
The smartphone is as much a media consumption device as it is a communication device. The Evo has a freaking kickstand to make for more comfortable viewing. A larger display means better-looking video and more comfortable browsing of the web. It opens your phone up as a tool and allows it to act more like a full-sized computer. Less eye strain, less finger strain and heavier pockets- that is the future of the smartphone.