Sony has been doing a lot of research on its customers. The first thing it found was that "the consumer who’d prefer to have a smaller device doesn't want fewer features." So the company took the Xperia Z1’s flagship spec sheet and fit into a 4.3-inch handset. Then Sony learned that calling a device "mini" suggested it was somehow inferior, so the name Z1 Compact was born. Finally, consumers demanded more and bolder colors, to which Sony has responded with two new hues of lime green and luscious pink. Throw in an important (and overdue) upgrade to an IPS display and the Xperia Z1 Compact becomes the perfect hardware proposition.

Unfortunately, Sony’s software isn’t advancing as fast as its hardware. The Z1 Compact will go on sale in early February with Android 4.3 on board and won’t receive the already available Android KitKat upgrade for another "few weeks" after that. The full Z1 software suite will be available on the new handset, including the extra camera apps and Stamina mode for extending the battery life, but that’s just recreating an experience Sony has already been selling for months — the Z1 Compact should be ushering in Sony’s best of 2014 right from the start.

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Aside from patience, Sony’s new phone doesn’t ask for many compromises. It’s waterproof without covering up the headphone jack. It’s powered by a Snapdragon 800 processor, has LTE, NFC, and a 2,300mAh battery, and it’s just a millimeter thicker than the Z1. Sony describes fitting a battery of that size in the Z1 Compact’s footprint as a minor engineering miracle. The 20-megapixel camera, replete with the f/2.0 G Lens and BIONZ processor of Sony’s original 5-inch flagship has also been brought over.

The starkest difference between the Xperia Z1 and its Compact version is the IPS LCD on the newer model. Though it has a lower resolution at 720p, it represents a huge upgrade in terms of viewing angles and contrast, putting to rest a recurring shortcoming of Sony’s smartphones. What’s more, Sony says the Z1 Compact will cost less than the incumbent Z1, meaning you’ll be getting the company’s best phone for a less-than-premium price.

State-of-the-art hardware meets yesteryear’s software

Though 4.3-inch phones were once considered large, the Z1 Compact feels endearingly diminutive by modern standards. It’s incredibly easy to handle, and while it retains the chiseled linearity that’s now the signature of Sony’s smartphone range, its softened edges make for comfortable and pleasing ergonomics. What’s most satisfying, however, is that 2014 finally brings a real competitor to the iPhone in the sub-4.5-inch smartphone category — nobody other than Apple has cared to build a flagship device for that enormous market and it’s great to see Sony filling the void. The Japanese company isn’t shy about its ambitions, either, saying the Z1 Compact is very much intended to take sales away from Apple’s 4-inch flagship.