Tom Warren, writing on The Verge, reports that sources familiar with Microsoft's plans for Windows Phone have indicated that the platform will support 1080p (1080 x1920) resolution screens by the end of the year. The update, which will also include support for quad-core processors, is reported to be part of the General Distribution Release 3 (GDR3) for Windows Phone 8. GDR3 will follow in the footsteps of the yet to arrive GDR2, which is expected to restore FM radio functionality to the Windows Phone platform, and the already available GDR1 (Portico), which was the first platform software update for Windows Phone 8.

Support for higher resolution screens is part of the on-going smartphone specification arms race and is widely expected and logical addition to Windows Phone. The introduction of support for 1080p resolution screens would potentially enable physically larger screened Windows Phone devices (e.g. 4.5+ inches) to be competitive with devices running on competing platforms. 

The benefits of using a 1080p display rather than a 720p display on devices with screens under 4.5 inches in size is more open to debate. For any sized screen there is a point where, because of cost and energy usage, adding more pixels is not worthwhile, although that point will vary according to personal opinion. A higher resolution screen may look crisper and brighter, but it is important to note that this can be as much about the quality (i.e. properties) of the screen as the pixel count and density. 

Windows Phone currently supports three screen resolutions: 480 x 800 (from Windows Phone 7) and 720 x 1280 and 768 x 1280 (from Windows Phone 8). The latter resolution (known as WXGA) has the same aspect ratio, 16:10, as 480 x 800 screens used in the first generation of Windows Phone devices. The 720 x 1280 and the upcoming 1080 x 1920 resolutions have an aspect ratio of 16:9.

Note that the above graphic shows all pixels at the same size. In practise, higher resolution screens have a higher pixel density, with physical size only loosely related to screen resolution (e.g. Lumia 820 has a 4.3 inch 480 x 800 screen, Lumia 920 has a 4.5 inch 768 x 180 screen).