Consumers are embracing Artificial Intelligence in the smartphone market, with preliminary data suggesting that successfully messaging and marketing ‘halo’ AI features in devices can help influence consumer behaviour, according to the latest Worldpanel ComTech study from marketing data and analytics company Kantar.
Kantar says that in January 2024, its Worldpanel ComTech began tracking Artificial Intelligence as a driver for smartphone purchasing across its global markets – including Australia, European and the US markets.
“Since OpenAI, the makers of ChatGPT, released its generative Artificial Intelligent chatbot back in 2022, the world has repeatedly been warned of the promise and perils the technology will bring. Generative AI harnesses great power – it can pass the exams required for people to enter careers in law and medicine in America and is quickly surpassing the understanding of its creators,” notes Kantar.
“Much as the gen AI hype has driven global stock markets to record highs, Smartphone manufacturers are hoping that the technology can give their handset sales a similar turn of fortune. Sales volumes remain – 30% down v pre-pandemic (12-month sales to December 2019 v December 2023).
“Can a raft of new software innovations powered by gen AI convince consumers to buy a Smartphone? In January 2024, Worldpanel ComTech began tracking Artificial Intelligence as a driver for Smartphone purchasing across its global markets. Preliminary data suggests that successfully messaging and marketing ‘halo’ AI features in devices can help influence consumer behaviour.
“Samsung announced its latest Flagship Galaxy S24 series would be ‘Powered by Galaxy AI’ (Samsung is using Google’s Gemini AI). It went as far as to promote a sleugh of AI features ahead of the device’s latest hardware, think camera and screen, during the launch event.
“The strategy is influencing consumer behaviour, 1 in 4 Galaxy S24 buyers said that AI was a key reason they chose their phone (27% amongst Australian buyers) vs 6% of total Smartphone buyers. Amongst this group, 28% wanted real-time translation, 24% wanted camera enhancements and 17% wanted ‘circle to search’ (circle an image and instantly trigger a web search) – all features that have been marketed heavily by Samsung ahead of and during launch.
“Moreover, Google announced a range of AI features in its latest Pixel 8 range. Its 2024 Superbowl advertisement promoted ‘Guided Frame’ (AI generated audio cues assist those who have low vision with taking photos). There is evidence that this too has had an impact on consumer motivation, Pixel buyers over-index +112 citing AI as a feature that they wanted vs the Smartphone average.
“This evidences that educating consumers on AI features and the benefits that they bring can influence the motivating factors behind decision making. But would these consumers have purchased their handset anyway, the AI features only offering a residual benefit? Looking at Apple consumer behaviour can shed light on this.”
Kantar notes that whilst Apple ostensibly remains an omission from the space, it has in fact “already developed and embedded its own AI neural engine as early as 2017”.
“For example, Siri (the manufacturers’ voice assistant), learns user’s behaviour and provides a series of ‘smart prompts’. The camera application identifies people & pets in photographs. However, most consumers are unaware that these features are powered by AI and Apple is yet to embed and promote ‘halo’ AI features in its devices. This is reflected in consumer behaviour, recent iPhone buyers under-index -82 seeking AI features vs the Smartphone average.
“Despite this, iPhone sales are at record highs in most markets – its decision not to rush into gen AI doesn’t appear to be affecting sales yet.
Commentating on gen AI, Jack Hamlin, Global Consumer Insights Director at Worldpanel Division, Kantar, said: “As more manufacturers develop, embed, and convince consumers of the benefits that generative AI can bring, we will begin to see a shift in consumer awareness and subsequent behaviour. I am not yet convinced that this will drive greater sales volumes, but consumers motivated by AI features will behave differently when buying a new device. Moreover, manufacturers may package exclusive AI features
into subscription packages, charging consumers to access them and building a new revenue stream.”
Kantar says it will continue to track the impact that AI is having on consumer behaviour across its global longitudinal panels, “providing insights into successful AI product innovations, AI motivated consumers, and OEM winners and losers”.
“Ultimately helping answer if AI can convince consumers to buy? Perhaps unsurprisingly, ChatGPT believes so: “Yes, new software innovations powered by AI can certainly influence consumers’ decisions to buy smartphones”.