Analysts at Goldman Sachs and Morgan Stanley predict that sales volumes will recover in the smartphone market next year, despite numerous warnings that the current downturn in this commercial space will be long-term and so far has no signs of ending soon.
The report, prepared by Morgan Stanley experts, suggests that in 2024, the volume of shipments of the specified category devices will show an increase of 4%. Analysts also predict that in 2025 this indicator will continue to exist within the positive dynamic range, which will result in its increase by another 4.4%. In this case, experts do not draw parallels with the state of affairs in the personal computer market, where a situation of deep downturn has been observed for several years.
Morgan Stanley analysts say that the driving force behind the growth of smartphone shipments will be new artificial intelligence capabilities integrated into these devices. In their opinion, the functions offered to consumers by machine intelligence systems will open up new demand.
The investment bank has improved its forecasts for 2025 regarding the state of affairs in the smartphone market. In this case, the reason for a positive vision of the future in the said commercial space was the capabilities of advanced artificial intelligence systems. AI can improve the efficiency of smartphones in many aspects. The integration of advanced technology into the appropriate devices can improve the quality of photography. AI can also make better smartphone speech recognition functions for users and at the same time guarantee the privacy of mobile phone owners.
Some manufacturers of the mentioned devices, including Apple, Vivo, Xiaomi, and Samsung, have already shown optimism about the possibilities of artificial intelligence. The high sales figures of the new Vivo X100 smartphone, which has integrated AI technologies, confirm the validity of forecasts that digital thinking systems can become a driver of growth in the mobile phone market. Nothing strengthens assumptions more than an example from the material world.
Xiaomi advertised a new flagship smartphone, which has built-in artificial intelligence tools, as part of a marketing campaign that, in terms of scale and intensity, is several times higher than similar activity concerning other devices of this company.
Samsung plans to integrate generative machine intelligence into its 2024 model-year mobile phones. This manufacturer intends to offer customers its smartphones features similar to the world’s most popular artificial intelligence-based chatbot called ChatGPT, developed by OpenAI.
The Morgan Stanley report also indicates that there is currently no understanding of when the so-called killer app will be created in the sphere of artificial intelligence. Experts note that the examples of desktop internet and mobile internet indicate that such a product appears about 1-2 years after the initial breakthrough in the industry. They say that the emergence of Microsoft CoPilot as a potential killer AI app for personal computers can become the basis for popularizing edge digital intelligence. In this case, it is assumed that the artificial intelligence functions will be installed on the device, and not delivered from the cloud. If this assumption about Microsoft CoPilot becomes a fact of virtual reality, investors will get a reason to be confident that a similar product for smartphones will be developed.
Goldman Sachs predicts that in 2023, global smartphone sales will decrease by 5% compared to last year, amounting to 1.148 billion units. The experts of this company remind that 2022 was also an unsuccessful year for the specified market. At the same time, they predict an improvement in the situation in the coming years. Experts expect that in 2024, global smartphone sales will increase by 3% and amount to 1,186 billion phones. In 2025, they forecast the growth of this market by 5%. In quantitative terms, this means 1.209 billion smartphones.
Goldman Sachs analysts also noted that global shipments of the said devices will gradually return to 2022 levels in about two years. They stated that they had revised their forecast on the dynamics of the situation in this market, taking into account factors such as constant replenishment of stocks and improved expectations regarding the supply chain.
The increasing level of positive expectations in the sphere of mobile technologies does not correspond to the widespread view that smartphones have been facing inertia and replacement threats in the last decade, which have become a reality for the personal computer industry. This is a very controversial opinion, given the fact that there is still no fully functional alternative to current-generation mobile phones. The prospect of replacement theoretically is fair concerning any devices but is not relevant at the moment for smartphones.
Morgan Stanley experts say that replacement cycles and use cases continue to favor mobile phones. They noted that tablets and smartphones have been replacing personal computers since 2011. Experts emphasize that this trend is due to the emergence of new devices, and not the disappearance of demand as such. Separately, they noted that technologies such as AR/VR will not begin to displace smartphones in the foreseeable future. Morgan Stanley employees say that mobile phone replacement cycles are shortening as these devices are used more often and have smaller batteries.
As we have reported earlier, Xiaomi and Huawei Lead China Phone Market.
