A report today from NPD shows that the face of the smartphone industry is changing, for the bigger.  “The explosion in Web and video content available for smartphones has caused consumers to rethink their phones’ sizes,” said Ross Rubin, executive director of industry analysis for NPD. “Larger displays offer a richer media experience, as well as a roomier surface for on-screen keyboards. Handset vendors are continuing to push the envelope of pocket real estate to complement the video capabilities of 4G handsets.”

Based on the latest information from NPD’s Mobile Phone Track, smartphones with 4-inch-or-larger screens, like Samsung’s Galaxy S, HTC’s EVO 4G and Motorola’s Droid X, which debuted in the second quarter (Q2) of 2010, quickly grew to encompass 24 percent of the market by Q4 2010. The market share for iPhones and other smartphones with screen sizes between 3.5 inches and 3.9 inches increased 2 percent over the prior year’s Q4; while the market share of smartphones with screens smaller than 3.4 inches, declined from 63 percent in Q4 2009 to just 36 percent of the smartphone market in Q4 2010.

The five best-selling handset models in 2010 that had screen sizes of 4 inches or larger were as follows:

• 1 HTC EVO 4G
• 2 Motorola Droid X
• 3 Samsung Fascinate
• 4 Samsung Captivate
• 5 Samsung Vibrant

One major criteria I use when evaluating phones is the amount of chrome, or frame on a mobile device.  That is, I look for manufacturers to put the biggest screen on the smallest device.  The HTC EVO, with a height and width marginally bigger than a typical 3.5 inch screen phone, somehow fits a 4.3 inch screen on it.  Motorola’s (MMI) ATRIX has a lot of screen for its size as well.

The cheaper Android devices like the T-Mobile Comet and other devices from Chinese manufacturer Huawei are the opposite. They are medium sized devices with small screens.  That is an immediate turn off –wasted important space.

In fact the perfect phone might be one that is 100% screen, though that would make it hard to hold without activating the touch screen.  Perhaps Google (GOOG), Apple (AAPL), and Microsoft (MSFT) will tweet their future mobile OSes to make the outer few pixels a dead zone for touch actions, or at least deaden those outside pixels when held.

Speaking of Apple, the designers in Cupertino might be listening to this trend.  There are rumors that the next iPhone will have a four inch screen on the same sized device.  Microsoft has 4+ inch phones with its HTC HD7 and Samsung Focus amongst others.