I agree with you if you're looking at phones as being useful just in their historical capacities. Apple touts its "retina display", but how many people really utilize the extreme end of the resolution capabilities where it makes sense to pay for that last mile of performance? Going forward, it will get even more ridiculous... would you want to pay an extra $200 for a display that has twice the resolution the human eye can even resolve, or a megapixel capability that you wind up compressing every time anyway?

I differ if you consider the rapidly expanding current and future uses of phones. As they get more powerful processors, they become more capable of handling tasks such as being an "automated assistant" ala Google Now and Siri. Also, I believe that various devices are merging into one, with the only differentiation being screen size. For example, if mobile phones get just a bit more powerful, they can do everything a tablet computer can, just on a smaller screen. With data synced and stored among devices using the cloud, you can move from a phone to a tablet to your primary computer (or even your TV and home automation/control device down the road) by doing nothing more than switching screens. You'll make phone calls from your TV just as easily as you'll turn on your home alarm from your phone. My point is that more powerful capabilities for the smaller devices give them more possibilities when integrated into broader uses.

I agree, and in fact, I've put money on it. The biggest revenue growth in mobile is the ad revenue. Google gets a cut of this regardless of which phone is being used, but they get more when it runs Android and/or a Chrome browser. That's why they offer so many things, including Android, free. It pays for itself later. Apple makes money from iTunes and applications, but it is dwarfed by online ad revenue, and this is becoming even more so each quarter. It won't be long before the subsidies and progression in technology combine to make very capable phones affordable. As that point approaches, Apple will be forced to cut their prices to compete, because even if they get their mojo back and start producing leading-edge hardware again, they won't be able to command the same premium.

See upthread. I listed advantages I believe the iPhone has. I think the earlier iPhones were phenomenal and I think Apple is a brilliant marketing machine. The fact that many disagree with my assessment that they've taken a turn for the worse and that Android phones are better doesn't mean I'm not objective.

Earlier versions (2.2 and before) of Android weren't efficient in hibernating applications running in the background, leading to poor battery management. That issue is gone with 2.3 and above, and especially with Jelly Bean (4.1). I can run several radios and a dozen apps with the standard OEM battery fully charged and still achieve several hours of use. With more modest (normal) use, I never have to recharge through the day. I think that the battery and "fragmentation" issues that plagued early versions of Android are still perceived by many to be issues today, but unless you are running a very old or low-end Android phone, they are now moot.