Mint Primer: Can AI ring in a change for smartphones?

A Samsung S24 Ultra smartphone during a Samsung Unveiled event in Las Vegas, Nevada, US, on Thursday, Jan. 11, 2024.  (Bloomberg)
A Samsung S24 Ultra smartphone during a Samsung Unveiled event in Las Vegas, Nevada, US, on Thursday, Jan. 11, 2024. (Bloomberg)

Summary

  • Can AI be a saviour for the stagnant smartphone market?

On 17 January, Samsung launched its new flagship smartphones under the Galaxy S24 moniker, claiming it was “the world’s first AI smartphone". Will such phones help revive a smartphone market that isn't growing? Mint explains.

Is this the first time that a phone has AI smarts?

No. Chipmakers such as Qualcomm and Mediatek, as well as Apple, have for a few years now had separate processor modules that seek to automate and optimize processes in smartphones. For instance, the battery optimization feature in your phone is an AI algorithm that assesses your smartphone usage pattern and adjusts charging speed and timing to increase battery longevity. However, most AI features were not ‘visible’ to most users—which Samsung has now done with live phone call transcripts, AI object erasers in photos, summary generator in voice recorder and more. As smaller AI models become affordable to create, such features will increasingly trickle down to mainstream smartphones.

Do these features come at an additional price?

Most AI features are free, but you would need active data connections. Samsung, in its fine print, said AI features will remain free until at least 2025 to lure in more users. However, market watchers believe that most brands would start charging some fee for AI features to offset running costs. AI features will also come in flagship devices to begin with, since chipmakers are introducing localized AI models and coprocessors in flagship chips. Brands will also incur higher costs for training and licensing AI models, which could lead to extra fees for users. Counter-arguments suggest brands get access to user data through AI features—a long-term gain.

Is Samsung the only brand to offer AI features?

No. In September last year, Google launched the Pixel 8 Pro with similar features as Samsung’s S24 lineup. A number of third-party mobile applications also offer generative AI features, which are compatible with both Android and iOS devices. However, Samsung and Google are presently the only two brands that offer AI features integrated into its user interface and default apps—and aren’t dependent on third-party applications. The key difference is that with default integration, brands can offer localized, offline access to AI features.

Are these features compelling enough to attract new users?

In general, most AI features on smartphones can be accessed through third-party apps, such as ChatGPT. Many features aren’t the most refined yet. In the next two years, this will be crucial for brands. Addition of new features in smartphones have stagnated, and innovation in form factor, such as foldable and flexible displays, have not seen drastic market acceptance as yet. As a result, more users are holding on to their phones for longer—a factor that brands are trying to resolve. AI can make a difference here.

How could they affect smartphone sales, then?

Smartphone sales have slumped for multiple consecutive years. In India, the market dropped 10% YoY in 2022, and 2023 estimates also reflect a slight decline. Shipments in India continue to remain at pre-pandemic levels. However, the premium market is growing—devices priced above 50,000 grew at 75% YoY in H1CY23 as per IDC. Brands are expected to introduce AI-first smartphones in this segment. But, the AI experience isn't uniform and ubiquitous yet. If this is solved, brands could see premium phone users upgrade more often.

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
more

topics

MINT SPECIALS

Switch to the Mint app for fast and personalized news - Get App