Smartphone Sales Are Spiraling, But Manufacturers Believe AI Could Come To Their Rescue – The Average Joe

    Smartphone Sales Are Spiraling, But Manufacturers Believe AI Could Come To Their Rescue

    Victor Lei — Head of Research

    November 26, 2023

    November 26, 2023

    When was the last time you upgraded your smartphone? Like most people, it’s probably been way too long. Good for your wallet but bad for phone companies. Since peaking in 2018, smartphone sales have steadily declined — accelerated by supply chain disruptions and a weaker global economy. But things are finally looking up.

    The long-awaited turnaround: Per Counterpoint Research, global smartphone sales have increased after 27 consecutive months of decline — driven by Huawei’s return, the iPhone 15 launch and larger discounts. But smartphone makers will need to provide more reasons (and features) for consumers to upgrade, and manufacturers are hoping AI can bring them back:

    • Google is integrating its AI chatbot Bard into the voice assistant of the Pixel 8 — along with features to summarize text, filter spam calls and edit images.
    • Chip manufacturer Qualcomm (NASDAQ:QCOMM) is pushing out new chips that can handle generative AI features on both premium and affordable smartphones.

    PC makers want in on the AI action, too

    Computer sales have also struggled over the last three years, facing problems similar to those of smartphones. But, manufacturers are optimistic that AI will also be a game-changer for PCs. On its earnings call last week, HP’s (NYSE:HPQ) CEO said that he expects AI-PCs “will start a new cycle of market expansion and refresh” — which could double PC sales.

    • The CEO of the world’s largest PC maker, Lenovo (OTCMKTS:LNVGF), says they’re “investing a lot of money on AI-optimized devices. In the next year, you will see AI-PC and AI-smartphone” (YF).
    • The chiefs of AMD (NASDAQ:AMD) and Intel (NASDAQ:INTC) cited the benefits of AI — adding that they expect AI to drive future growth in PC sales (WSJ).

    Not so fast: WSJ’s Dan Gallagher warns that AI devices could “turn into another empty hype cycle like 5G.” And it’s uncertain how useful generative AI inside phones will be or whether people will trust it enough to use it since 62% of people are concerned about the growth in AI.

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