AI is stealing the show
How will vendors compete in the high-end smartphone market?
The high-end smartphone market remains competitive and complex, as new vendors have entered and the trend for delivering more personalized experiences is gathering pace. More competition comes from Chinese manufacturers, Huawei, Oppo and Vivo, which are improving their market shares in the premium smartphone segment, although, in the third quarter of 2017, Apple still led, with 33.7% of premium sales, followed by Samsung with 30.7%.
We expect Android-based smartphone vendors exhibiting at this year’s MWC — such as Samsung, which will reveal its new flagship smartphone, the Galaxy S9 — to announce further improvements to display and camera technologies, as cameras in particular remain key to differentiation. We predict more advanced dual-camera setups, improved low-light performance and better AI integration to deliver new experiences around object and face recognition. Still, AI use cases remain today at a very early stage on smartphones.
We also expect new and improved methods of biometric authentication. These should enable smoother, more natural ways of authenticating users not only on a single mobile phone, but across a range of devices.
When security technology combines with biometrics, machine learning and information about user behavior, usability and self-service capabilities greatly improve. This year, we expect manufacturers to release smartphones that learn from user behavior — such as patterns of walking, swiping and typing — and eliminate the need for frequent entering of passwords and active authentication. The ultimate goal is to make user authentication "continuous". It remains to be seen, however, whether manufacturers can persuade many users that gradual advances toward this goal warrant the purchase of a new phone.
The most compelling innovations this year will deliver more personalized smartphone experiences based on device ecosystems. In other words, the smartphone will interact with an increasing number of new types of device, such as sensors and intelligent "things", in the home, on the move and in the workplace.
What use is AI in smartphones?
AI in smartphones is not new, as it has powered some basic smartphone functions for years. But recent uses are more advanced, including face and object recognition and virtual personal assistants (VPAs) like Apple’s Siri and Amazon’s Alexa. We expect advanced AI-powered features to become crucial differentiators for smartphone vendors.
AI use cases on smartphones will proliferate through 2022, although, for the next two years, most will still exploit only a single AI capability and technology. In 2022, 80% of the smartphones shipped will have on-device AI capabilities, up from just 10% in 2017.
VPAs and other AI-based technologies used in conversational systems will multiply. They will improve the service experience by gaining a better understanding of context, aided by "emotional intelligence". Enhancing VPAs with understanding the emotional context of a user during a conversation will improve the overall experience.
Advanced AI could also improve the experience of augmented reality (AR). Today, furniture retailers, such as Wayfair, Ikea, Anthropologie offer customers an AR app that lets them place a virtual item anywhere in their home using a smartphone’s camera. Such an app could also have a "buy now" feature. By December 2018, Google expects almost every new Android smartphone to be AR-enabled, which will make new experiences and personalization more common. Will 5G play a role this year?
Qualcomm announced its first reference design for a 5G modem some time ago, and completed its first test of a 5G connection on a mobile device in October 2017. But although its modem is small enough to fit in a smartphone case, we are still a few steps away from the commercial launch of 5G products.
We expect 2018 to bring more tests and redesigns of 5G modems, before commercial 5G products enter the market in 2019. We forecast that 9 million 5G smartphones will ship in 2019, and 150 million in 2021.
Consequently, AI, not 5G, will be the main source of excitement at MWC 2018. It should be a different story next year, though.