Author: Lin Yi

Editor: Key Points Editor

After years of relative inactivity, the mobile phone industry is poised to embark on a new era.

Drawing on insights from multiple sources, including the supply chain, we've learned that the AI phone, a product of the collaboration between ByteDance and ZTE, is slated for an early December release. ByteDance is at the forefront, integrating the Doubao large model and defining AI interaction features, while ZTE is responsible for hardware definition, product design, and manufacturing.

Insiders reveal that, in contrast to prevailing mainstream AI phones, this model, born out of the deep collaboration between ByteDance and ZTE Nubia teams, has undergone comprehensive integration and restructuring at the hardware, software, and even operating system levels. It is hailed as an 'AI Native Phone.'

Its standout feature is its high-permission Agent capabilities. The phone's system incorporates an AI Agent with elevated system permissions compared to standard apps, empowering it to execute complex instructions across multiple applications and accomplish intricate tasks. This marks a substantial enhancement over the current 'smartphone + large model/AI application' experience.

Several industry analysts have forecasted that, with its unique interaction experience, this phone could emerge as an industry sensation by year's end.

Furthermore, industry sources disclose that the first-generation model is currently being distributed in batches, with a total inventory of approximately 30,000 units, and will be officially available for purchase post-launch. The second-generation model has also received approval for development and is anticipated to debut in the first half of next year, boasting further enhancements in AI capabilities and hardware specifications.

Why is ByteDance venturing into the mobile phone arena?

ByteDance's foray into the mobile phone business commenced in the first half of 2024. As per a previous report by LatePost, ByteDance initially positioned itself as a provider of large models and AI solutions. However, facing setbacks in this plan, ByteDance opted to take the reins and develop a phone that seamlessly integrates the Doubao large model.

ZTE Nubia emerged as the ideal collaboration partner. As a global leader in telecommunications equipment and terminal manufacturing, ZTE brings profound hardware R&D expertise and mature supply chain management to the table. For ByteDance, ZTE offers a holistic solution, from industrial design to manufacturing. Its Nubia brand also boasts extensive experience in imaging technology and performance tuning. ZTE's technological prowess in large-scale industrial manufacturing, differentiated hardware definition, and system-level expertise precisely address ByteDance's hardware implementation challenges.

The forthcoming AI phone signifies ByteDance's latest stride in the AI hardware realm. ByteDance CEO Liang Rubo articulated at an all-hands meeting in February this year that ByteDance's three primary AI objectives for 2025 are to push the boundaries of intelligence, explore novel UI interaction forms, and amplify scale effects. The AI phone serves as a pivotal vehicle for 'exploring new UI interaction forms.'

The AI phone project is led by ByteDance's AI hardware Ocean team, which is also venturing into multiple AI devices, including the Ola Friend smart earbuds already on the market and AI glasses currently in development.

Kayden heads the Ocean business, reporting to Zhu Jun (Alex Zhu), the head of Flow. The Ocean team comprises hardware product teams acquired by ByteDance over the years, such as Smartisan phones, VR headsets PICO, and smart earbuds Ola Dance.

ByteDance aims to forge a 'trinity' of terminal AI layout, amalgamating large model capabilities, super apps, and hardware terminals. With the AI phone's launch, ByteDance's multi-year endeavor to construct a full-stack AI layout has become even more comprehensive:

Computing Power Layer: Volcano Engine provides the underlying computing power;

Model Layer: The Doubao large model delivers the core capabilities;

Application Layer: Super apps like Douyin and Doubao offer scenarios and traffic;

Hardware Layer: Ola Friend earbuds, AI glasses, and AI phones establish physical entry points.

The merits of a full-stack AI approach are twofold. On one hand, it fosters deep software-hardware integration, such as designating physical buttons on the phone for AI functions or enabling more proactive AI interactions at the system level. On the other hand, it ensures robust control over the system and entry points, which is the primary impetus for ByteDance's entry into the mobile phone market.

ByteDance's trajectory closely mirrors that of Google. Google has erected a system-level AI barrier through its self-developed Tensor chips, Gemini models, Android system, and Pixel hardware. Similarly, ByteDance aspires to deepen its competitive edge by controlling hardware entry points and delivering large model capabilities to users.

AI Native Phones Reshape the Industry Landscape

2024 is heralded as the inaugural year of AI phones, with industry-wide predictions of groundbreaking AI applications emerging by 2026. Against this backdrop, the competitive landscape of domestic AI phones has initially coalesced into three tiers:

Pioneering Camp (Honor, OPPO, Huawei): Full-stack self-developed large models + operating system-level intelligent agents;

Ecosystem Collaborators (Xiaomi, Vivo): Emphasis on vertical scenarios and hardware innovation;

Cross-Border Entrants (ByteDance, ZTE Nubia): Exploration of high-permission AI Agents and novel interactions.

ByteDance's entry injects fresh dynamism into the otherwise stagnant mobile phone market.

Compared to traditional mobile phone manufacturers, ByteDance holds inherent advantages in recommendation algorithms, natural language processing, and user needs insight. If this AI native phone can indeed deliver a differentiated experience, it may furnish the industry with a novel evolutionary blueprint. This evolution implies a transition in mobile phone operating system interaction logic from the internet era's 'icon clicking' to 'intent recognition.'

For ByteDance's partner ZTE, this also presents a significant opportunity. ZTE stands a substantial chance of discovering new growth avenues in the AI era. Through deep joint R&D with ByteDance, ZTE Nubia can reshape its software and hardware capabilities and potentially ascend to a first-tier mobile phone brand in the AI era.

A retrospective glance at ByteDance's hardware journey unveils a consistent pursuit of 'identifying new traffic entry points.'

From its initial acquisition of Smartisan Technology to establish a foothold in the mobile internet era, to its substantial investment in acquiring PICO to capitalize on the metaverse entry point, and now to its intensive deployment of AI earbuds, glasses, and phones to seize the large model entry point, ByteDance's core rationale remains steadfast: they aspire not to remain mere app developers reliant on others' operating systems in the next computing platform era.

The AI phone is still in its nascent stages, representing both a challenge and an opportunity that ByteDance and ZTE must collectively navigate.

Nonetheless, ByteDance has once again secured its place at the hardware table. Unlike previous solitary ventures, this time, they bring their premier model and have identified suitable partners.