Samsung turns to artificial intelligence to revive stagnant smartphone market
Access the Editor's Digest without any cost
Every week, Roula Khalaf, the chief editor of FT, chooses her top picks and shares them through her newsletters.
Samsung Electronics introduced smartphones that can support generative artificial intelligence features "on-device". Mobile phone manufacturers aim to revive the smartphone industry after experiencing its worst year in a decade in 2023.
At an event in Silicon Valley on Wednesday, the South Korean technology company released the newest versions of its leading Galaxy smartphone series that will be available in 2024. The devices come equipped with the latest Snapdragon processor from Qualcomm, an American chip manufacturer that has AI capabilities. Along with this, the Galaxy smartphones also have their own AI software and services.
Samsung seems to have an advantage over Apple in terms of technology with their S24 Android phones. Apple, on the other hand, usually takes a careful approach to embracing new advancements. The launch of the S24 in January also means that Samsung will have approximately a nine-month head start before the next iPhone is released.
Bryan Ma, an analyst at the IDC research group, pointed out that Google, as an Android developer, has a great advantage in AI due to their vast experience and data in this field. However, Apple has been quite silent about their work in this area, which may present an opportunity for Samsung to set themselves apart from their main competitor.
In 2023, Samsung's position as the leading global smartphone manufacturer was dethroned after a 12-year-long reign, as reported by IDC. Apple replaced them and this was influenced by people opting for pricier top-tier devices.
The spread of generative AI via OpenAI's ChatGPT has resulted in mobile phone manufacturers investigating the possibility of incorporating AI capabilities into their devices. To make this a reality, they must find ways to make the large language models behind AI more compact and utilize more powerful processors.
Solving these technical problems will enable AI chatbots and applications to operate on the phone's built-in hardware and software, eliminating the need for cloud services at remote data centres. This will result in quicker response times, enhanced security, and increased personalization for consumers, and reduced expenditures for AI providers.
Google has been working on making artificial intelligence available directly on its Pixel smartphones, while Samsung has recently made its Gauss model available for use on phones and other electronic devices. This trend is also being followed by a number of Chinese smartphone manufacturers, including Honor, Oppo, and Xiaomi.
Samsung unveiled a series of advanced capabilities powered by artificial intelligence (AI) on three latest phone models on Wednesday. These features include live translation while taking phone calls, automatically converting voice recordings to text, searching desired scenes in videos, and editing photos. The Samsung Galaxy S24, S24 Plus, and S24 Ultra will be available in the US for a price bracket of $800 to $1,300.
TM Roh, the leader of Samsung’s mobile division, has stated that the Galaxy S24 series has implemented mobile AI in a unique manner that surpasses any other phone on the market. Their goal is to showcase the advantages of mobile AI to Galaxy users and enhance their daily experiences.
According to analyst Sheng Win Chow from Canalys, Samsung considers Generative AI as a crucial aspect of their future product strategy, particularly in the premium and top-tier categories. To compete with Apple and maintain their market dominance within the Android ecosystem, Samsung must explore new approaches to product innovation and business models beyond their traditional focus on hardware.
According to Canalys, around 5% of smartphones that will be shipped this year will come with AI capabilities. This is expected to rise up to 45% of the total smartphone market by 2027, with an estimated 635 million units to be sold. Meanwhile, Counterpoint Research predicts that Samsung will soon dominate almost 50% of the market for phones with AI features.
According to IDC, the worldwide mobile phone market is expected to experience a growth of 3.2 per cent this year following a ten-year low caused by a 4 per cent shrinkage in the previous year. However, Ma has pointed out that this upturn is mainly attributed to the better financial prospects of the economy rather than AI technology.
Experts have suggested that numerous smartphones have already integrated certain capabilities of artificial intelligence, making it unlikely that Samsung's fresh additions will prompt users to upgrade their devices.
Park Kang-ho, an analyst at Daishin Securities, expressed his view that the extra AI features may not be persuasive. However, connecting AI-enabled phones to other devices such as cars, household appliances, and PCs, may boost the demand for IT devices in general.
