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How smartphones are evolving in an AIaaS era

Connected Corners

This post aims to highlight few ways the humble smartphone is evolving in an era where consumers are seemingly shifting their focus away from ‘iterative hardware improvements’ and towards enhanced services the device enables (AIaaS, VR/AR, etc.)

AIaaS takes center stage

Rapid advances in Artificial Intelligence (AI) and myriad of underlying AIaaS (Artificial Intelligence-as-aService) solutions are promising unique user experiences as well as limitless opportunities to its value chain players

Use cases range from consumer voice assistants through cloud-based enterprise AIaaS to complex Edge-AIaaS for autonomous vehicle operations and everything else in between (more on this topic in a separate post)

Examples of (front-end) consumer AIaaS experiences include conversational commerce, smart chatbot help agents, real-time language translations and most notably… personal voice assistants (Siri, Alexa, et al.) amongst others

Myriad of Consumer Electronic makers alongside (or in partnership with) key tech industry players are betting that AI (particularly AIaaS experiences) will soon play a key role in adoption & differentiation of their products (incl. smartphones)abundantly evident from the recent CES 2018 show

Smartphones in an AIaaS era

AI; more specifically AIaaS experiences were front & center at major smartphone events throughout 2017; most notably from Apple, Google & Samsung… and is set to only pick up pace in 2018 & beyond

Smartphone makers are hard at work leveraging any & every asset they possess (User/age behavior, Machine Learning, NLP, Neural Networks, et al.) to design their next iteration of devices around unique AIaaS experiences

Leveraging ‘AIaaS-on-a-smartphone’ experiences such as voice assistants, real-time object / signage identification, real-time language translation, et al. smartphone makers are also banking on re-inventing user personalization 2.0 (Read: differentiation factor)

Smartphones are evolving in an AIaaS era

Connected Corners

#1. Smartphones will be a key component… but not the center of the AIaaS ecosystem

Amazon – arguably the current market leader (U.S) in consumer AIaaS in the form of Alexa voice assistant – doesn’t make a single smartphone!

Early AIaaS experiences such as voice assistants (Siri, etc.) may very well have had their debut on smartphones… but no longer depend (solely) on them to thrive

On the contrary, the success of AIaaS experiences is largely dictated by their ability to remain omni-present & agnostic of any single device / platform

Thats the reason some AIaaS experiences are rapidly making inroads into alternative platforms such as ‘smart’ speakers / headphones, white goods, TVs, laptops, vehicles and even the odd home robot

Instead of being at the center, smartphones are increasingly becoming an integral part of the broader AIaaS ecosystem that include these alternative platforms

Smartphones will continue to play 2 key roles within the broader AIaaS ecosystem –

  • Input (AI learning) – As the most accessed personal device (home & mobile); smartphones play a big role in ‘strengthening‘ the provider’s AI system (more user inputs = better AI learning)
  • Output (AI services) – Being a ‘multi-trick pony’ enables providers to serve combination of AIaaS experiences (photo, audio, video, assistant, etc.) on a single device

Additionally, the speed of transition away from smartphones as central platform to access AIaaS experiences would depend largely on the mass adoption of aforementioned alternative devices as well as global availability of the same

#2. Traditional ‘tech-specs’ differentiators will gradually lose their significance

Since the birth of modern smartphone a decade ago, majority of smartphone makers have largely relied on their device’s tech-specs credentials (camera, processors, display, etc.) as key differentiators (Read: marketing lever)

Initially, this strategy worked for myriad of reasons, but mostly because the ‘specs delta’ between each iterative model was significant enough to encourage device upgrades (Think: 8MP dual lens vs. 2MP single lens camera, 4GB vs. 1GB RAM, etc.)

But over the last few years (iterations) this ‘specs delta’ has narrowed (largely insignificant); creating a challenge for smartphone makers in differentiating their devices solely on iterative tech-upgrades

To quote Rick Osterloh (SVP of Hardware) from the recent Google hardware event – “Moore’s law and Dennard scaling are ideas of the past. The playing field for hardware components in smartphones is leveling off. Core features are table stakes now. Smartphones are reaching parity on their specs

Almost every smartphone (Android & iOS) from last few years are capable enough of performing core tasks (Apps, Mail, Web, Maps, Music, Video) effortlessly with most even supporting AIaaS experiences such as Virtual Assistants without any issues

Handful of smartphone makers have already begun moving away from marketing their devices’ differentiating factor solely on tech-specs, instead focussing on unique AIaaS experiences

#3. Future smartphone hardware innovations will be aligned to provide seamless AIaaS experiences

On the other end, fewer consumers are actually making smartphone purchase decisions squarely on the device’s iterative tech-specs improvements; specifically those on EIP plans (or fully paid off) with yester-year flagship devices

What can be expected is that future smartphone tech-specs battle will shift from traditional components (cameras, storage, etc.) to the sum-of-components that specifically support complex AIaaS experiences (including Edge-AI applications)

Though for most part, AI ‘resides’ on (provider’s) cloud & network edge infrastructure, in certain instances (latency-critical, privacy, etc.) select AIaaS tasks will be performed on the terminal device itself (device edge)

It is the seamless provisioning of the latter where smartphone’s hardware innovation is largely headed towards… predominantly (but not limited) related to advanced chipsets (Think: Apple’s A11 Bionic chip) that power the onboard AI-processing of complex tasks such as localized photo enhancements, advanced facial recognition, instant-voice assistant and more

So…

Whilst smartphone makers may still have a few more ‘hardware tricks’ up their sleeves (improved camera/display, foldable/bendable screens, et al.)… these iterative hardware improvements alone aren’t sufficient enough to sustain long-term revenue margins (especially in markets where device upgrade intervals are growing longer)

Generally speaking, not all mobile phones will evolve to support AIaaS experiences… but those smartphones serving AIaaS experiences will most certainly evolve!

Initially, this evolution maybe limited to select high-end devices from smartphone makers who’ve already waded deep into AI… gradually making its way to entry-level devices in due time through various models (partnerships, licensing, etc.)

AI’s proliferation itself will rely on consumer acceptance… which in turn relies on the underlying AI platform’s scalability, regionalization & personalization potential as well as its privacy & security credentials

In an AIaaS era, there may be 2 distinct groups of smartphones makers – 

– Those who’ll own both the AIaaS & smartphone platforms (e.g. Apple, Samsung) AND

– Those who’ll need to partner / license AIaaS solutions from established providers like Amazon for lack of their own AI solution

It seems certain that AI & its underlying AIaaS experiences are here to stay for the foreseeable future and its provisioning thereof would entail the evolution of every consumer electronic device it touches… including smartphones

AIaaS experiences in different forms could present limitless opportunities to value chain players beyond smartphone makers; particularly Wireless Carriers which will be covered in future posts

Stay tuned!