Generative AI could drive 2024 smartphone sales, says IDC

Generative AI capabilities — or at least the perceptions surrounding them — are rewriting almost all of IT. But with generative AI ROI proving elusive in IT circles, is AI truly going to impact near-term revenue? With mobile devices, analyst group IDC thinks it very well might.

“Premium markets are starting to embrace gen AI smartphones, generating excitement and renewed interest in the industry,” IDC said in a statement accompanying the latest edition of its Worldwide Quarterly Mobile Phone Tracker study.

This forecasts that Android phone sales will grow 7.1% in 2024, while sales of phones running iOS will stagnate, growing just 0.8%.

IDC forecast that generative AI-capable smartphones will capture 18% share of the total market by the end of 2024, with most flagship phones including some on-device generative AI features. However, the average selling price for smartphones with generative AI capabilities will be more than double the cost of those without, it said.

Adoption of AI-capable smartphones is of relevance for enterprises wishing either to deploy the technology internally, or push AI capable applications to customers.

“There is a potential upside to the iOS forecast with a lot depending on how well the demonstrated gen AI use cases play out in the upcoming iPhone 16 launch and how soon Apple can establish local AI partnerships in China,” IDC senior research director Nabila Popal said in the statement.

The use cases Popal is referring to involve Apple Intelligence, which is Apple’s attempt to deliver generative AI functionality on-device instead of via the cloud. Apple is discovering that such a delivery is complicated; the company’s September launch event for new mobile devices may focus more on what capabilities will materialize later rather than what can be delivered on launch day.  

If buyers are disappointed by the first generation’s weaker-than-hoped-for functionality, that might depress sales of second-generation products — even if the functionality with second-generation is far superior: The perception game can have a nasty boomerang effect.

Generative AI is not yet delivering growth for mobile but it is “creating excitement,” Popal told Computerworld.

She sees a key driver of generative AI in mobile being not the capabilities — at least not initially — as much as the perception of better data privacy.

That perception comes from the argument that much of the new data from device-resident AI will stay on the device and not move to the cloud.

“I don’t want all of my data to be on the cloud” given that the new gen AI functionality will be accessing so much personal information, she said. “It will be context aware, history aware, aware of my schedule” and aware of who the user is visiting and their planned visits.

The privacy reality, though, is that some — and potentially all — of that data may wind up in the cloud anyway given backup choices.

“Some data will still be stored on the cloud,” depending on user setting choices, Popal said. “That’s where the consumer consent comes in.”

The bulk of the potential excitement comes from the theoretical ability of on-device generative AI to break down the barriers between applications. Instead of the user looking up information from the larger number of installed apps, the device could answer the questions directly as it will interrogate the apps seamlessly in the background. 

The mobile model used to talk about “there’s an app for that,” Popal said, but as the number of apps soared, there was more of an effort burden placed on users. In theory, she argued, on-device AI could change that.

“Gen AI smartphones will completely change the way we interact with our phones,” she said. “Whether it’s processing a return, buying a ticket, booking a hotel or making sure it is the best deal, it will make human suggestions such as ‘If you change that date one more day, you’ll save $500.’” 

But — lest buyers get too excited already — such capabilities may take years to appear, as software vendors will need to adapt to new APIs as well as wait for their customers to buy AI-capable phones.