The world’s two biggest smartphone makers, Samsung and Apple (NASDAQ:AAPL), are diving headfirst into generative AI. Samsung recently showcased its latest foldable smartphones and Galaxy AI platform at the Galaxy Unpacked event in Paris, while Apple focused on its Apple Intelligence generative AI software at its WWDC event in June. According to IDC, these companies made up a combined 36.6% of the global smartphone market as of the second quarter of 2024. However, their strategies for integrating generative AI in smartphones are distinctly different.
Samsung’s Broad Integration Strategy
Samsung aims to rapidly build a large user base for its generative AI services, enticing developers to create apps for its Galaxy AI platform. Galaxy AI features are available on this year’s Galaxy S24, last year’s S23, and 2022’s Galaxy S22, along with three generations of foldable phones. Samsung expects to have Galaxy AI on approximately 200 million devices by the end of the year. This expansive approach is designed to create a vast and engaged user base, encouraging developers to innovate and build useful applications.
Apple’s Selective Integration Approach
In contrast, Apple is adopting a more selective strategy. Only users who own its most powerful devices, the iPhone 15 Pro and iPhone 15 Pro Max, and future iterations, will access Apple Intelligence features. Apple is banking on this approach to boost iPhone sales in the near to medium term, encouraging users to upgrade to the latest models to experience the new AI capabilities. This strategy aims to generate immediate demand for its newest devices, leveraging the allure of generative AI to drive sales.
Market Implications and User Adoption
Despite their differing strategies, both companies face the challenge of proving to consumers that generative AI apps are worth the hype. Ryan Reith, program vice president for IDC’s Mobile Device Tracker suite, explained, “Through 2025, if not a little bit longer, most of the purchasing would be purchasing that would have happened anyway as opposed to people running out because they need AI features.” This suggests that while generative AI might not immediately drive new sales, it will be a significant factor for future growth.
Samsung vs. Apple: AI Features and Developer Engagement
Samsung launched its Galaxy AI platform with a variety of Google’s (NASDAQ:GOOG) AI apps alongside the Galaxy S24 line in January. Since then, 77% of S24 users have engaged with its AI capabilities at least once a week. Popular features include Google’s Circle to Search, AI-powered translation, transcription, text composition, and photo editing. Bob O’Donnell, president and chief analyst at TECHnalysis Research, noted, “Samsung is recognizing that they want to get Galaxy AI out there to as many people as they can… They want to get developers excited to create things for their platforms.”
Apple, focusing on immediate hardware sales, ties its generative AI features to its latest iPhone models. This selective approach ensures that only users of the newest devices can access Apple Intelligence, which may limit its initial user base but aims to create high demand for its latest products. This strategy is crucial for Apple, especially after sales declines in 2023 and a mixed start to 2024.
Consumer Understanding and Market Evolution
The success of generative AI in smartphones ultimately depends on consumer understanding and adoption. While Samsung’s early usage numbers are impressive, they indicate only weekly engagement with AI features. Anecdotal evidence suggests that many consumers are still unclear about the benefits of generative AI on their smartphones. This gap in understanding highlights the need for continued education and effective communication from both Samsung and Apple.
Conclusion
Apple and Samsung are taking different paths in the race to integrate generative AI into their smartphones. Samsung’s broad integration aims to quickly build a large user base and attract developers, while Apple’s selective approach focuses on driving sales of its latest devices. As both companies continue to evolve their strategies and messaging, the coming months will reveal how these approaches impact consumer adoption and the broader smartphone market.
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