Gen Z drives demand for AI-powered smartphones, says Kantar data

Kantar, a global data and analytics firm, has released new data from their ComTech Smartphone Operating System (OS) project, revealing Generation Z's appetite for AI-powered smartphones. This demand appears to be driving sales of Samsung's AI-enabled Galaxy S24.

The rise in demand for AI capabilities in smartphones is currently favouring Android OS developers. Apple's iOS is yet to commit to AI integration, with expectation high for it to follow in Android's footsteps. The data also uncovered a significant upturn in smartphone sales across Europe, the United States, and Australia, led primarily by Android and iOS devices, and with the iPhone occupying eight of the top ten positions on the sales chart.

Remarkably, the Generation Z demographic forms 27% of consumers actively seeking AI-powered smartphones. Their requirements align closely with the present capabilities of AI, such as identifying a desirable product within a TikTok video or summarising a set of handwritten college lecture notes. Notably, smartphone users interested in AI tend to spend more on their devices, with 70% of them willing to part with £800 or above, in contrast to 55% of consumers to whom AI holds no appeal.

AI seems to be positively influencing brand loyalty and average selling prices (ASPs). According to the Kantar data, 24% of Galaxy S24 series buyers in the European Five and the USA mention AI as the primary reason for their purchase. In a surprising reveal, the data shows that 93% of these buyers were previous Samsung device owners, compared to 87% of those who did not value AI as much. As smartphone sales growth remains sluggish, manufacturers are valuing the retention of their consumer base over acquiring new customers, and AI is helping them achieve this.

Moreover, AI is leading to higher ASPs, with 70% of consumers with an interest in AI spending over £800 on their smartphone, compared to 55% of those who do not find AI a compelling feature.

Jack Hamlin, Global Consumer Insights Director at Kantar's ComTech service, believes that after a long spell of stability in the hardware market, AI is emerging as the next distinguishing factor for smartphone manufacturers. He emphasized that embracing AI presents two growth opportunities: pushing volume and the value of smartphone sales and monetising unique capabilities through subscriptions. He cited Apple's services revenue which saw an 11% YoY increase in its Q1-24 results, highlighting the prospects that service revenue presents.

It's clear that AI is pushing new frontiers in the smartphone market and manufacturers are keen to ride the wave, the study illustrates. Kantar will keep monitoring the impact of AI on consumer behaviour and the market's response to AI innovations through its global longitudinal panels.

Kantar works to combine meaningful attitudinal and behavioural data with deep expertise and advanced analytics to uncover how people think and act. As a marketing data and analytics business, Kantar states it acts as an 'indispensable brand partner to the world's top companies'.