- GenAI capabilities will become a hallmark of innovation that sets premium brands apart from their competitors.
- Growth rate for Android is forecast to be nine times faster than that of iOS, with a staggering 7.1% expected this year.
The smartphone market is on the brink of a significant transformation, fueled by advancements in Generative Artificial Intelligence (GenAI).
According to the International Data Corporation (IDC), the market is poised to witness an astonishing 344 per cent growth in GenAI smartphone shipments by the end of 2024.
The growth is expected to capture an impressive 18 per cent share of the total smartphone market, as more flagship models integrate on-device GenAI features to distinguish themselves in an increasingly competitive landscape.
The worldwide smartphone market is anticipated to grow by 5.8 per cent year-over-year, resulting in approximately 1.23 billion units shipped in 2024.
The growth presents an encouraging signal following the turbulence experienced in recent years. IDC’s research director, Anthony Scarsella, said that the integration of GenAI features in premium flagship smartphones will be a key differentiator.
“As manufacturers strive to provide unique selling propositions, GenAI capabilities will become a hallmark of innovation that sets premium brands apart from their competitors.”
However, he said the initial market entry of GenAI-capable devices is expected to come at a premium price. The average selling prices of GenAI smartphones will exceed double that of non-GenAI devices.
This trend not only reinforces the ongoing premiumisation in the smartphone market but also raises questions regarding accessibility and consumer behaviour towards higher-priced devices.
Renewed interest
The smartphone market can broadly be divided into two segments: premium and affordable devices.
Premium smartphones, typically offered by brands like Apple, Samsung, and Google, are increasingly embracing GenAI features to retain and attract affluent consumers who seek the latest technology.
The integration of GenAI is anticipated to generate excitement and renewed interest among tech-savvy demographics who are eager to leverage these new functionalities.
Conversely, the market for affordable Android smartphones is witnessing robust growth, particularly in emerging markets.
According to IDC, the growth rate for Android is forecast to be nine times faster than that of iOS, with a staggering 7.1% expected this year. The rapid expansion comes after a challenging two years for these markets, as consumers turn towards more economical options amidst economic uncertainties.
The distinction in growth rates between Android and iOS highlights a pivotal moment in the smartphone industry.
Apple’s growth has softened, partly due to increased competition in key markets like China and a high comparison base year. Yet, there remains an avenue for rejuvenation in Apple’s market presence, contingent on the successful implementation of GenAI features in the upcoming iPhone 16 launch.
Strategic opportunities
As the smartphone industry navigates this evolving landscape, the competitive dynamics are shifting. IDC’s senior research director, Nabila Popal, points out the potential for Apple’s iOS trajectory to improve by 4% year-over-year by 2025 due to emerging solutions like Apple Intelligence.
The excitement surrounding Apple’s foray into GenAI capabilities embodies the company’s commitment to innovation and indicates a strategic response to counteract growing competition from Android manufacturers.
Moreover, the prospects of local AI partnerships in China could significantly influence Apple’s ability to adapt and thrive in one of the most competitive smartphone markets in the world.
Local partnerships may allow Apple to tailor its offerings and find ways to better resonate with Chinese consumers, who are increasingly influenced by the available GenAI applications in competing Android devices.
The rise of GenAI smartphones is set to transform not only the competitive landscape but also consumer experiences. With advanced features enhancing productivity, personaliwation, and AI-driven functionalities, consumers can expect a shift in how they interact with their devices.
The emphasis on on-device GenAI capabilities will enable smartphones to perform complex tasks more efficiently and intuitively, leading to a more seamless user experience.
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