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Rise of GenAI-Powered PCs and Smartphones

The exponential growth of Artificial Intelligence (AI) applications will create demand for new devices that are purposely enabled and enhanced to deliver superior end-user experiences.

Worldwide shipments of AI PCs and Generative AI (GenAI) smartphones are projected to total 295 million units by the end of 2024 -- that's up from 29 million units in 2023, according to the latest global market study by Gartner.

Gartner defines AI PCs as devices equipped with dedicated AI accelerators or cores, neural processing units (NPUs), accelerated processing units (APUs), or tensor processing units (TPUs), designed to optimize and accelerate AI tasks on the device.

GenAI-Enabled Device Market Development

This new device platform provides improved performance and efficiency in handling AI and GenAI workloads without relying on external on-prem servers or public cloud services.

GenAI smartphones are designed and equipped with hardware and software capabilities that enable integration and efficient execution of GenAI-driven features and applications.

These smartphones are capable of locally running a base or fine-tuned AI model that generates new derived versions of content, strategies, designs and methods.

Examples of this include Gemini Nano from Google, ERNIE from Baidu, and OpenAI GPT-4.

"The rapid adoption of on-device GenAI capabilities and AI processors will eventually become a standard requirement for technology vendors," said Ranjit Atwal, senior director analyst at Gartner. "This ubiquity will pose challenges for vendors in differentiating themselves from competitors, making it harder to create unique selling points and drive increased revenues."

Gartner estimates that 240 million GenAI smartphones and 54.5 million AI PCs will be shipped by the end of 2024. This will represent 22 percent of basic and premium smartphones, and 22 percent of all PCs in 2024.

However, the integration of AI into PCs is not expected to drive end-user spending beyond anticipated price increases for these enhanced devices.

Business device buyers will demand compelling reasons to invest. Moreover, it will take time for software providers to harness the power of on-device AI and clearly demonstrate its benefits.

According to the Gartner assessment, the PC market returned to growth in the fourth quarter of 2023 after eight consecutive quarters of decline. Gartner estimates overall PC shipments will total 250.4 million units in 2024 -- that's a 3.5 percent increase from 2023.

On-device AI should rejuvenate the marketing of PCs through 2024 and help sustain existing anticipated replacement cycles, negating some of the negative effects of a disruptive socioeconomic environment.

Like AI PCs, GenAI smartphones will not bolster smartphone demand until 2027.

"The enhancements to smartphones evolve the current experiences with cameras and voice integration, but these capabilities are expected by users rather than demonstrating a new groundbreaking functionality. Users have the same expectation for the functionality of GenAI on their smartphone," said Atwal.

Regardless, they are unlikely to pay a premium for GenAI-enabled smartphones without the availability of any groundbreaking new software applications.

The catalyst for transformative shifts in user experience lies in the advancement of smaller versions of large language models (LLMs) specifically tailored for smartphones.

This evolution will transform smartphones into even more intuitive companions capable of comprehending and responding to human language and visual cues, which will elevate the overall user experience to new heights.

Outlook for GenAI Device Applications Growth

Gartner reported the smartphone market reached its first quarter of growth in 4Q23 after nine consecutive quarters of decline. In 2024, worldwide smartphone shipments are expected to grow 4.2 percent, totaling 1.2 billion units year-over-year.

"We should not interpret the growth in smartphone shipments as a full-fledged recovery,"  Atwal concluded. "It is more accurate to view it as a stabilization of lower level of units, which are nearly 60 million lower than in 2022."

That said, I'm convinced that GenAI-powered PCs and smartphones could unlock innovative use cases. Imagine a device that anticipates your needs, proactively assisting you throughout your day. GenAI, with its ability to learn and adapt, can personalize app user experiences.

Beyond personal use, GenAI-powered devices have commercial potential. In healthcare, imagine AI-equipped wearables that monitor vitals, detecting and preventing health issues. In education, AI tutors create personalized learning plans that cater to individual student needs.

The possibilities are truly endless, limited only by our imagination to apply these GenAI tools.

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