We view the upcoming AI-enabled phones as a significant leap forward in technology compared to their predecessor “smartphones.” Already the technological advances from the early feature and flip phones to today’s 5G-enabled smartphones have taken what was once a luxury and turned it into a global necessity. We expect the adoption curve of AI phones to be faster than the adoption curve of smartphones and note that the aging installed base of smartphones will only accelerate the IntelliPhone adoption trend.
A pocketful of intelligence
Perspectives from BofA Global Research’s Leading Analysts
August 27, 2024
Wamsi Mohan, Senior Research Analyst, IT Hardware and Technology Supply Chain
“IntelliPhones”: the next step up in technology
What can an IntelliPhone do that’s different?
Context awareness will be the key differentiator. IntelliPhones will leverage advanced machine-learning and AI technologies to offer superior personal assistance, language processing, health monitoring, photography, security, battery management, AR/VR experiences and customizable user experiences. As AI technology evolves, the gap between IntelliPhones and traditional smartphones is likely to widen further by offering even more sophisticated and personalized functions, driving the desire to upgrade.
Which AI agent will you summon?
The world has gone from physical trips to travel agent offices to online research and online booking. The next step is intelligent itinerary planning through AI where the “AI agent” mimics the travel agent of the past. It will be possible to have a conversation to express preferences and pick up a conversation where you left off (through understanding and saving the context). Similarly, AI could take on the “expert” role in health, fitness, tutoring (languages, music, science, art, etc.). We see developers building these agents and creating a new layer of monetization.
Software and hardware monetization will grow
We see phone makers and platforms monetizing IntelliPhone software and hardware through 1) better targeted services, 2) enhanced convenience and privacy, 3) AI-optimized apps, 4) higher-priced hardware, 5) an aging installed base that needs to be replaced and 6) increased differentiation of paid tiers in software and hardware. We believe even more opportunities will develop as consumers use and direct the evolution of IntelliPhones.
