Strong growth forecasted for AI platforms and GenAI smartphones
The trust in AI’s ability to drive growth and profitability in the tech business is strong, according to two new reports. The AI platforms market shows no sign of slowing down and the future of the smartphone industry is set to be transformed as worldwide GenAI smartphone shipments are forecast to grow 363.6% year over year in 2024 to 234.2 million units, according to forecasts from market research firm International Data Corporation (IDC). This represents 19% of the overall smartphone market in 2024.
“The AI platforms market shows no signs of slowing down. Rapid innovations in GenAI is changing how companies think about their products, how they develop and deploy AI applications, and how they leverage technology themselves for reinventing their business models and competitive positioning,” says Ritu Jyoti, group vice president and general manager at IDC.
IDC says it expects this upward trajectory to continue and accelerate with the emergence of unified platforms for predictive and GenAI that supports interoperating APIs, ecosystem extensibility, and responsible AI adoption at scale.
The forecast for AI platforms predicts that worldwide revenue for AI platforms software will grow to $153.0 billion in 2028 with a compound annual growth rate (CAGR) of 40.6% over the 2023-2028 forecast period.
“AI adoption soared to new heights in 2023 with worldwide AI platform software revenue growing 44.4% year over year to $27.9 billion”, the IDC forecast says.
According to the forecast, half of the organisations currently deploying GenAI in production have already selected an AI Platform, while most of the organisations that have already initiated significant investments will do so in the next six months.
“AI has the potential to enhance user experience, optimise advertising, personalise content, and improve data analytics. These advancements can drive increased online activity and commerce, leading to positive economic impacts,” says Raghunandan Kuppuswamy, IDC research manager.
“However, AI also presents significant risks. Organisations need to identify patterns and anomalies, identify potential risks, and remediate problems before they become widespread. While not all risks can be removed, risk mitigation can be accelerated using AI itself, providing better security and resilience for customers.”
IDC expects cloud-based deployments of AI platforms software to grow at a faster rate than on premises deployments with revenue from AI platforms in the public cloud forecast to have a five-year CAGR of 50.9%.
“This trend is attributed to the advanced security measures, data and regulatory compliance, and the scalability capabilities that cloud vendors offer. With the rapid advancement of technology and the growing demand for AI solutions from businesses across industries, cloud-based deployment of AI platforms software is expected to continue expanding at a rapid rate.”
IDC says that despite the challenges of elongated refresh cycles and macroeconomic uncertainties, GenAI capabilities on the smartphone will drive upgrades and represent a significant opportunity for both vendors and application developers alike.
“The dramatic growth seen in 2024 will carry into 2025 with shipments of GenAI smartphones expected to grow 73.1% year over year. Moderate double-digit growth is expected for the rest of the forecast period.”
By 2028, IDC forecasts 912 million GenAI smartphone shipments, resulting in a 2024-2028 compound annual growth rate (CAGR) of 78.4%.
“The rapid incorporation of GenAI in smartphones is unprecedented in mobile history with market penetration expected to exceed 60% within the first three years,” says Nabila Popal, IDC senior research director.
“However, the most significant impact of this evolution is anticipated in 2026, when mid-range devices are expected to adopt this technology, making a momentous leap towards the democratisation of GenAI. While it is still too early to know all the use cases that will emerge in the coming years, one thing is for sure, GenAI will completely transform the way we interact with our smartphones.”
While the sales of GenAI smartphones in the first year or two will likely be limited to flagship devices, the future holds even more exciting developments. As phones capable of running GenAI on the device become more prevalent, the potential for more personalised and proactive AI assistants becomes increasingly likely. This evolution, driven by consumer demand, application developments, and overall industry growth, promises to make the next decade the most exciting period for the smartphone market, the forecast says
“GenAI smartphones are inevitable and look to be the next big thing the industry has to offer consumers,” says Anthony Scarsella, research director.
“The triple-digit growth in 2024 will be followed by four consecutive years of double-digit growth as device manufacturers look to incorporate GenAI capable features across their device offerings. The cost will remain a critical inhibitor initially as many of the capable chipsets don’t come cheap and are available primarily in the ultra-premium segment of the market. However, over time, we believe these components will enter the mid-market and more affordable models as competition grows among device manufacturers and AI applications.”
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