Since Apple began using the term "Retina" to describe the high-resolution displays on its devices, smartphone companies have been involved in an arms race, pushing phone resolutions increasingly higher. The same resolution of standard high-definition TVs, 1080p, has now become the standard for large, flagship smartphones like the iPhone 6 Plus, and some phones have even pushed the envelope further.

Iphone

Source: Apple

Qualcomm (NASDAQ:QCOM), the largest seller of smartphone processors, wants to push these resolutions up even higher. The company has stated that smartphones with 4K resolutions, sporting four times the number of pixels compared to 1080p, will become available in 2015, matching the resolution of 4K TVs, which are only now starting to become affordable.

While Qualcomm provided various reasons why upping the resolution of smartphones to 4K makes sense, the reality is that flagship smartphone resolutions are already high enough that individual pixels can't be discerned. Increasing the resolution further would yield no visible difference to the user while requiring more powerful processors and graphics chips, something that Qualcomm would welcome. A 4K display on a smartphone is a gimmick, much like the octacore processors being hyped earlier this year, and the fact that it's being pushed could be a sign that we've reached the point where true hardware innovation in the smartphone market has come to an end.

Why 4K smartphones make no sense
The important number to consider when looking at smartphone screens is not the resolution itself, but the PPI, or pixels-per-inch. A 55-inch TV with a 1080p resolution has a far lower PPI than a 5-inch smartphone with the same resolution, and individual pixels would be visible on the TV at close distances.

Beyond a certain point, though, PPI becomes meaningless. A 300 PPI is commonly accepted as the highest pixel density at which the human eye can still detect individual pixels, although some companies dispute this number. LG, which recently launched its flagship G3 smartphone, argues that the cutoff is closer to 540 PPI. So a range of, let's say, 300 PPI-500 PPI, is a reasonable estimate of where increasing the PPI further starts to make no sense.

Here's a list of PPI values for various combinations of resolutions and screen sizes:

Resolution

Screen Size

PPI

Example Device

1136x640

4"

326

iPhone 5S

1334x750

4.7"

326

iPhone 6

1920x1080

5.5"

401

iPhone 6 Plus

1920x1080

5.1"

432

Galaxy S5

1920x1080

5"

445

Nexus 5

2560x1440

5.5"

534

LG G3

3840x2160

5"

881

Future 4K device

3840x2160

5.5"

801

Future 4K device

Source: Apple, Samsung, Google, LG 

A 5.5-inch 4K smartphone would push the PPI up to 800, a value which is well above the point where increasing the PPI doesn't matter anymore. The iPhone 6 Plus has one of the lowest PPIs of all the large, flagship smartphones available, and in all of the stellar reviews of the device, the screen not being sharp enough was never a complaint.

For the user, there is no benefit to raising the PPI any further. It's clear why Qualcomm is pushing 4K smartphones, though; the company makes more money on high-end parts compared to low-end parts, and a 4K screen would require a lot of processing power.

The future of the smartphone market
With Qualcomm pushing 4K displays and octacore chips, it seems that the smartphone market has reached the point where improvements will become more incremental going forward. Companies will attempt to differentiate themselves with gimmicks like ultra-high resolution screens, but improving the underlying display technology, not the resolution, is now the only way for smartphone screens to get any better.

I believe that the push for ever-increasing specs in the smartphone market is coming to an end. Much like the PC market, where processors get only modestly more powerful year over year, the smartphone market has reached a point where huge leaps in performance are getting harder to come by. The drive going forward, I suspect, will not be padding the spec sheet, but instead increasing efficiency and driving prices down.

This isn't good news for Qualcomm. There will always be a market for bleeding-edge, flagship devices, but mid-range phones are starting to become "good enough" for many people. Consider the Moto G from Motorola, a phone that costs just $180 off-contract, less than a third of the price of the typical flagship phone. The Moto G uses a mid-range Qualcomm processor, has a 5-inch screen with a PPI of 294, barely lower than the iPhone 6, and has received excellent reviews.

With the average selling price of smartphones falling, and with lower-end devices particularly popular in emerging markets where subsidization isn't standard, Qualcomm, as well as any smartphone company that relies on the high-end market, like Samsung, could be in for a rough ride. Qualcomm has turned to gimmicks to boost high-end demand, and that's not a sound long-term strategy.

Timothy Green has no position in any stocks mentioned. The Motley Fool recommends Apple, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Google (A shares), Google (C shares), and Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.