For many years now, the new product launches in the mobile phone industry, which feature grand venues, stunning stage designs, top-tier stars, and scathing comparisons with competitors, seem to be undergoing changes.

For instance, they can finally talk about something new at these launches...

As everyone knows, ever since the concept of AI large models gained popularity, listed companies could see their share prices soar simply by associating themselves the hot topic of large models, allowing "market manipulators" to cash out and indulge in luxurious lifestyles in the blink of an eye;

For individuals who cannot reap profits from the capital market, donning a dazzling aura and spreading anxiety can enable even an art major to earn a fortune by selling AI courses to gullible people.

Although the so-called revolutionary large models for the tech industry are still virtual toys that most ordinary users would rather not touch again after one try, their speculative magic far surpasses that of earlier trends like ecological counterreaction, blockchain, and the metaverse.

Facing such immense magic, smartphones, the epitome of technological entry points, have also rushed in without delay.

For example, in Xiao Chai's recent observation of multiple new product launches across brands, the scenes of introducing new phone colors or trumpeting over iPhone seem to have diminished, with large portions of the content now ceded to large models, to the point where AI is practically a prerequisite for a launch.

But then again, today's AI large models, much like the internet of yesteryear, are inherently infrastructural. As we delve deeper, we find ourselves unable to escape the embarrassing homogeneity. Some talk about productivity, others about the world's perception capabilities, and still, others about next-generation interactions... It seems that every launch introduces a new definition, creating a trend of various "models" dancing chaotically.

In this context, it gradually gives the impression that the smartphones in our hands are like antiques!

Naturally, on the other side, phone manufacturers are optimistically forecasting their futures. For instance, Apple has doubled down on preparations for the Phone 16 series within the past month, with shipments reaching 95 million units.

Moreover, Samsung, which was among the first to showcase AI capabilities but had little presence in the Chinese market, has unprecedentedly flooded the Chinese market with advertisements.

As for domestic brands, since hopping on the large model bandwagon, their confidence has overflowed, with price hikes in queue. "Are you ready? A new wave of smartphone price hikes is coming..." For instance, Honor, OnePlus, OPPO, and others have increased their starting prices by 200-400 yuan. Flagship phones that once sold for 1999 yuan have unwittingly entered the 5000 yuan range, pushing the average price of these third-tier brands from 1762 yuan in 2013 to nearly 4000 yuan today.

Not long ago, Honor even launched a new product with a starting price of 8999 yuan...

Seeing this scenario, Xiao Chai is genuinely confused. iPhone, with its substantial independent innovations and various "import-related" taxes, sells at this price point. How can our assembly-focused brands justify it? Some users have expressed, "If we don't work harder, we'll have to use iPhones."

Of course, where does this confidence come from? In fact, it stems from riding the wave of large models. Besides brands, various third-party institutions are also optimistically predicting that the arrival of the AI smartphone era will usher in a new wave of device replacements. For instance, Guotai Junan Securities stated in a report that Apple's release of "Apple Intelligence" will further stimulate the replacement wave. Morgan Stanley also predicts that with the support of Apple Intelligence, Apple's iPhone shipments will exceed 500 million units over the next two years, with an estimated 235 million units in fiscal year 2025 and 262 million units in fiscal year 2026.

Furthermore, regarding the overall smartphone market, IDC's latest report points out that the prevalence of Gen AI has infused new momentum into the long-dormant smartphone market, favoring a major outbreak in the AI smartphone market.

It simultaneously estimates that AI smartphone shipments will surge 364% year-on-year this year, reaching 234 million units, with a penetration rate of approximately 19%. Looking ahead to next year, it offers an optimistic forecast of a 73.1% increase. Extending the timeline to 2028, global AI smartphone shipments are expected to reach 912 million units, with a compound annual growth rate of 78.4% from 2023 to 2028.

Wow, seeing these strings of data, how could smartphone manufacturers not be thrilled with their confidence? It's worth noting that the current smartphone market, plagued by dwindling innovation and excess capacity, has increasingly turned users into "stubborn holdouts."

Data shows that the global average smartphone replacement cycle hit a new high in 2023, reaching a "historical longest" of 51 months, equivalent to using a phone for 4 years and 3 months before considering a replacement.

The latest CIRP data also reveals that iPhone users, who account for the majority of high-net-worth individuals, are also extending their replacement cycles. In the past 12 months, at least 71% of iPhone users and 68% of Mac users indicated that they have used their old devices for more than two years, a significant increase from 63% and 59% in 2020.

Recall that around 2010, most users replaced their phones annually. Now, with replacements happening every four years or more, manufacturers face immense shipment pressure. Data also shows that smartphone shipments have continuously declined for over 11 quarters, including 2023, only improving this year.

The reasons for users not replacing their phones are multifaceted. For instance, there's little innovation in phones or major iterations in application layers, and phone performance is severely excessive. A four-year-old phone can easily meet current demands, rendering users unmotivated to upgrade. Additionally, the penetration rate of high-performance smartphones is already high.

Moreover, due to the economic environment, people are tightening their belts, favoring continued use and cost savings as mainstream consumption values. Evidently, before the emergence of large models, this situation seemed unsolvable, even with the most significant innovation in recent years—foldable phones—failing to make much impact.

Furthermore, we can't overlook another market change. With limited market growth, the continued popularity of iPhones indicates a massive shift of Android users to iPhones. Behind this, industry insiders analyze that users are voting with their feet, choosing more durable phones.

In other words, before AI large models, users' desire to replace their phones was continuously decreasing. So, can AI large models truly remove more stubborn holdouts? If we delve into the application layer of large models, the AI smartphone functions heavily promoted by major phone manufacturers today essentially involve AI processing capabilities and technologies for text, images, languages, etc. We can accomplish these tasks by simply downloading relevant apps.

It's also evident that whether it's iPhone, Samsung, or domestic smartphone brands, they're all integrating existing large model applications from the market. This means that apart from smoother and silkier experiences, the results are all the same.

From a user perspective, compared to the current surge in AI-related phone prices and the cost of at least 5,000-6,000 yuan for a replacement, downloading relevant apps is much cheaper. It's typical of something being hyped up but delivering minimal practical effects... Moreover, and more importantly, while the concept of large model applications is currently popular, specifically on the consumer end, especially for the general public, the changes these models bring to our lives and work are very limited. On social media, most users express that they won't replace their phones just because of AI.

For instance, some users say that even if manufacturers hype up AI phones, they won't budge as stubborn holdouts. Others remark, "The initial versions definitely won't be mature products. Besides, what are the current mature AI applications? I have no idea."

Some netizens believe that while various large models exist, there haven't been any revolutionary changes. "I won't consider it for now. There haven't been any revolutionary changes, and my current phone is sufficient."

"What can it do? Just like phones with satellite calling, for most people, the satellite calling function has no usage scenarios, and no one talks about it anymore."

Perhaps, from these perspectives, it's not easy to persuade users to pay for AI phones. The high-end growth in AI phone shipments predicted by institutions is merely a reflection of AI capabilities becoming standard in future smartphone production, rather than users actively replacing their phones due to AI. JPMorgan Chase also noted in its analysis report that even for iPhones, AI upgrades might exhibit a two-year "staircase-like climb" rather than a one-year "super cycle." In fact, to stimulate users' desire for replacements, manufacturers have started to resort to devious tactics, essentially initiating planned obsolescence again. These AI capabilities won't appear in older phone versions through system updates.

The subtext is that manufacturers hope to coerce users into replacing their phones through "means," revealing their underlying anxiety amidst their surface optimism.

For instance, some institutions predict that over 90% of iPhones will be incompatible with Apple's AI features. Naturally, other brands are no exception, with AI capabilities primarily concentrated in new phones, effectively isolating older models. Some manufacturers explain that AI phones require high computing power, which older phones' hardware cannot satisfy.

However, this argument doesn't hold water. Their AI technologies are integrations of existing large models in the market, which can run smoothly on current phones. This is quite peculiar.

Looking at things realistically, it's not hard to see that so-called AI phones are essentially normal upgrades for smartphones alongside technological innovations, similar to upgrades in memory and imaging technology. Change is inevitable. But why has the upgrade of AI capabilities taken on a completely different connotation in today's context? Especially when numerous terminal brand manufacturers are taking advantage of users, cunningly raising prices. However, it can be predicted that as users gradually realize that so-called AI phones are ultimately just universal iterations of underlying technologies, the harvest will only be the first crop! So, would you replace your phone because of AI? Feel free to discuss in the comments section...

Chai Goufski ©️

Author | Xiao Chai Wuhao

Editor | Tan Song