The smartphone industry is on the cusp of a seismic shift, driven by rapid advancements in artificial intelligence (AI). AI is set to introduce a plethora of advanced features, fundamentally altering how users interact with their devices. This transformation is not just a leap in technology but also a significant growth opportunity. According to a recent SkyQuest Technology Group report, the mobile AI market is projected to reach $114.36 billion by 2031, growing at a compound annual growth rate (CAGR) of 26.9% from 2024 to 2031.
“The mobile phone market is being transformed by AI,” said Lucas Ochoa, CEO and founder of Automat, a Y Combinator-backed AI startup. “It’s not an overstatement to say that AI is revolutionizing the smartphone industry,” Ochoa emphasized. He explained that while AI has been used in mobile devices for years through features like voice dictation and facial recognition, generative AI introduces exciting new functionalities. “It’s not just about AI passively recognizing a face in a photo or unlocking your phone when you raise it to your face. Instead, it introduces functionalities like creating custom wallpapers on the fly or altering someone’s expression in a photo.”
Michael Hasse, a cybersecurity and technology consultant, also spoke to PYMNTS about AI’s potential to enhance the smartphone experience. “Better speech recognition for assistants like Siri, higher quality translation services, and improved environmental awareness for automation, such as adjusting ring volume based on background noise or location, are just a few examples,” he noted.
Joshua Rickel, co-founder of Perigon, highlighted the role of personal data in this transformation. “Our smartphones have the most comprehensive, personal dataset about us, which means they have the opportunity to be instrumental in how AI can help enrich and improve our daily lives,” Rickel explained. He believes consumers will feel AI’s effects more profoundly on their mobile devices than in other industries.
AI’s potential to revolutionize mobile commerce is vast. Ochoa painted a vivid picture of the future: “Imagine walking down the street, you see someone with an amazing jacket — perfect cut, style, material, you covet that jacket,” he said. “In seconds, they have passed, a stranger you will never see again. But no matter, you’ve already captured the moment in your augmented reality glasses, with your AI assistant having done an image search to find the brand, style and pricing. Available in-stock selections in your size and preferred colours are already listed on your HUD [head-up display], with options for a few that are currently out of stock. You’ve made your selection and placed your order before you reach the end of the block.”
Rickel envisions AI as a proactive commerce agent. “I expect AI to be able to seek out the best deals and make recommendations based on your personal preferences,” he said. “It will have items you intend to buy or are on your ‘to buy’ list and will constantly watch for deals. It will be a commerce agent proactively helping you find the right things for you and making purchases on your behalf (if you let it).”
Hasse added that AI can act as a “super virtual assistant,” diving through millions of search results to find the exact product users seek. “The implications for commerce are limitless. Instead of flipping through a few pages of results and settling on something ‘good enough’ which has gotten prime placement due to advertising dollars, AI will find exactly what you need,” he explained.
Future innovations and challenges
AI’s impact on mobile devices extends beyond commerce. Ochoa foresees a future where smartphones are truly intelligent. “We’re heading into an era where smartphones are becoming truly intelligent. We’re transitioning from smart to intelligent devices,” he predicted. He highlights generative AI’s potential to fundamentally change mobile devices, with companies like Samsung and Google leading the way. “For example, Samsung and Google are showcasing this with the Galaxy S24 and Pixel 8, which have software that can create new content in images right after you take a photo.”
Rickel envisions profound changes in the user interface and mobile experience. “There is a world where apps exist in the background and are only called when a user needs to go deeper into them. For instance, you might have a blank screen with one button. This enables talking or texting, depending on the situation. When you want to see your social feed, it provides you with a feed, nothing more,” he explained.
AI-driven security features will offer robust protection against cyber threats, incorporating technologies like facial recognition and behavioural biometrics to ensure secure user data. Enhanced security will be crucial as mobile devices become central to personal and professional lives.
In mobile photography, AI is set to redefine standards. Advanced AI algorithms will enhance camera capabilities, enabling superior image processing and real-time enhancements. Users can look forward to higher-quality photos and videos, with features like automatic scene detection and AI-driven editing tools becoming commonplace.
Despite the promising future, the rapid integration of AI into smartphones brings privacy concerns to the forefront. As smartphones become more adept at collecting and analyzing personal data, ensuring user privacy and data protection will be paramount. Companies will need to adopt transparent and ethical data practices to maintain user trust.
As AI continues to revolutionize the smartphone industry, the balance between innovation and privacy will be crucial. The advancements promise a future where smartphones are not just smart but truly intelligent, transforming both user experience and commerce in profound ways.
