GenAI smartphones on track for meteoric market growth in 2024 – IDC

The global smartphone market is expected to grow at a rate of 6% year-over-year (YoY) in 2024 to 1.23 billion units shipped, according to research group IDC. GenAI smartphones, in particular, are forecast to experience significant growth, surging 344% by year-end.

Rising demand for GenAI smartphones

"Although GenAI smartphones are relatively new in the market, premium flagships will continue to adopt GenAI features to help separate them from the pack," Anthony Scarsella, research director with IDC's Worldwide Quarterly Mobile Phone Tracker, said in a statement. "IDC expects a robust 344% growth for GenAI smartphones capturing 18% share of the total market by end of 2024, as most flagships will adopt some on-device GenAI features."

While popular, GenAI phones will be expensive initially, with an average cost of over twice that of non-GenAI capable devices, explained Scarsella.

(Source: IDC)

Research firm Canalys defines GenAI-capable smartphones as including dedicated AI hardware such as ASICs, which can efficiently run generative AI models and support real-time, on-device inferencing with minimal latency. In a recent report, Canalys forecasted that 16% of global smartphones shipped this year will be AI-capable, and that number will rise to 54% by 2028. 

Among the top reasons for consumer interest in AI-capable smartphones are social value and productivity features, Canalys Research Analyst Lucas Zhong told Light Reading. Social value comes via "fun and engaging functionalities" and productivity features contribute to efficiency and time-saving capabilities for users.

For emerging markets, vendors tend to focus on fun AI features, whereas in mature markets the focus is on productivity features such as live translation.

Demand for affordable Android smartphones is forecast to grow quickly in emerging markets and China after a challenging two years. Meanwhile, GenAI devices are beginning to gain traction in premium markets, according to IDC.

Opportunities for Apple to get ahead

"The resulting growth for Android this year will be nine times faster at 7.1% than iOS at 0.8%," Nabila Popal, senior research director with IDC's Worldwide Quarterly Mobile Phone Tracker, said in a statement. "Apple's softer growth is a result of increasing competition in China but also a higher comparison base year."

Demand for iOS-capable devices will also be shaped by the upcoming iPhone 16 launch, scheduled for September 9, according to Forbes.  

"IDC expects the iOS trajectory to improve in 2025 with 4% year-over-year growth thanks to Apple Intelligence, which is already creating a lot of excitement and is expected to gain momentum next year and encourage faster upgrades," said Popal. She added that Apple's market share will also be shaped by how quickly the company can establish local AI partnerships in China.

Canalys' Lucas Zhong added that Apple will benefit from improving the device replacement cycle and encouraging consumers to upgrade to Pro models. Apple should focus on maintaining strong relationships with channel partners and securing solid inventory levels in preparation for its Q3 launch season, suggested Zhong.   

"However, given the broader context of growth bottlenecks in key markets, Apple is also increasing its investment in emerging markets to mitigate these challenges," he added.

GenAI smartphone adoption by region

Zhong also weighed in on the rate of GenAI smartphone adoption based on region.

"North America is set to lead globally with a 66% penetration rate in 2025, driven mainly by Apple's dominance and its advanced intelligence services," Zhong told Light Reading in an email, referencing Canalys' latest smartphone forecast. "Western Europe follows with a 43% penetration rate, with both Samsung and Apple playing significant roles in driving this adoption."

China comes in third with a 37% penetration rate due to market growth by domestic vendors in the premium smartphone segment.

In the US, smartphone market sales grew 5% YoY in July, mainly due to growth by Samsung and Motorola, according to Counterpoint Research. Motorola saw 42% growth YoY in July, and Samsung was up 23%. However, Counterpoint reported that Apple was down 4% in the US last month.

"While emerging markets like India are showing growing interest in AI-capable smartphones, as observed in our recent consumer survey, the market volume remains limited," added Zhong.

Overall, the global smartphone market grew 12% in Q1 and 9% in Q2, according to IDC.