Key takeaways

  • New smartphones are pretty, but not very intelligent. AI and 5G are about to change that.
  • Voice and intelligent automation will reduce the need for apps and increase the utility of the phone as a proactive agent that meets our life needs before we even ask.
  • This change will affect all parts of the TMT supply chain and they need to prepare now.

It may seem unfair to talk about smartphones being dumb, particularly for those of us who remember early mobile phones that barely had the computing power to handle an address book. Yet these days, with new smartphones releases, whether slimmer, larger, with or without bevel or notch, the evolution is mostly cosmetic.

However, a report by PwC, The smarter phone: How AI-enabled devices will reshape the Technology, Media and Telecoms industry, argues that “over the next three to five years, the combination of AI and 5G will power the emergence of a new generation of devices that will redefine the word ‘smart’.”

As technology changes, what that means for a phone’s intelligence is that the importance of individual apps will diminish, and phones will begin to act autonomously in order to proactively meet our needs. The industries around mobile phones will also face dramatic changes.

Smart is
relative

“There’s an app for that,” is a phrase known to most early smartphone adopters. Trademarked by Apple once it became ingrained into the lexicon, it nicely sums up the way humans see smartphones – ie, they aren’t for calling people. Surveys show that phone calls don’t even make the top ten uses these days.¹

In reality, a big chunk of the time people spend on phones is in using apps. Currently, users select individual apps to trigger specific tasks via a graphical display, and because a user has to actively find and interact with an app and get it to do something, often many of the apps go unused.

Dissatisfaction with apps – they are a bother to install, often cumbersome to use and rarely provide more than a simple solution to a finite task – seems to be increasing, and follows the falling rate at which customers upgrade their hardware.²

The new
horizon

Rather than a tool to merely assist human intelligence, the mobile phone could be combined with the best of AI and 5G technologies to anticipate the wider needs of humans and then meet them through intelligent automation.

Initially, this is being seen in the use of intermediate apps that enable one or more apps to talk to each other. The next stage will be the further aggregation of apps that will then work together, and eventually, progress to a world where apps themselves will work in the background to, as the report suggests, “anticipate and infer what a user wants, then act on their behalf autonomously”.

For instance, your fitness app could know when exercise is scheduled in your calendar, and then upload the data of the session to your doctor’s health app and company fitness rewards program, without needing you to do a thing.

In such a world, the importance of the graphical user interface will decrease. We are already beginning to see that with their augmentation via voice assistance using conversational AI. Eventually, the need for any interface at all may disappear. The future will bring “autonomous decision-making, with AI anticipating and meeting users’ needs without users having to express them or even be aware of them”, the authors say.

We may be entering an age where your phone knows when your anniversary is coming up, asks you how you want to celebrate, books your travel, accommodation and dining based on your past history and simply leaves you to pack your suitcases. And it could be here as soon as 2020.

What will
this mean?

Understandably, these developments will herald “sweeping changes for users, carriers, device manufacturers, content providers and app developers,” and could “blur the boundaries between these formerly distinct participants in the supply chain”, the report says.

For users, AI will change the nature of their interaction with machines, and each will learn from the other. The increase in productivity this will lead to will be a boon, with no need to spend time choosing various apps to complete tasks.

For carriers, business models will need to be reimagined, with the importance of device sales and usage decreasing and users preferring the convenience of rental models, in the same vein of the current set top boxes.

“Carriers will move to supplement their current focus on average revenue per user with average time per user – the average time the user spends interacting with the device and using the carrier’s services,” the report says.

Phone manufacturers will need to move from a focus on design to one of function as mobile capability continues to accelerate daily tasks away from the desktop environment. A focus on cognitive computing and intelligent automation in their products will be key, as will gathering data to anticipate and meet user needs. User reference “will be about how effectively the device acts as the ‘portal’ into a user’s experience of all elements of the digital ecosystem around them.”

Content producers and distributors will gain further access to users as 5G enables higher web-based consumption over mobile. The discovery of content, personalised advertising and content will all be augmented by AI. Amidst a face off between subscription and pay per use models “content producers and distributors need to work out how to both understand and shape consumer needs and preferences.”

Finally, app developers will move towards functionality and B2B relationships as the apps themselves become less visible to the end user.

Prepare for
change

It’s clear that companies must prepare for the new reality of smartphones, and that if they don’t, they will struggle to catch up. As the report’s authors succinctly point out, “whatever your role in the TMT ecosystem, your window of opportunity to prepare for an AI world is short, and shrinking.”

To survive in an unclear future, they suggest three steps.

First, develop multiple endgame scenarios and identify the challenges and opportunities in each. Next, develop business models for each scenario considering partnerships and alliances that may need to be made. Finally, build the capabilities that will be needed to achieve the most likely scenario (but keep monitoring the others as things unfold).

It’s certainly not a small transformation for the industry, but it is one that different parts of the supply chain can survive with forethought and planning.

Next time you pick up your phone, think about how long it will be before you don’t even need to.

 


Download the report The smarter phone: How AI-enabled devices will reshape the Technology, Media and Telecoms industry, for all the insights into how new devices will affect the user and supply chain.

 

Contributor

Matthew Benwell

Matt is a telco and technology consulting partner at PwC Australia.

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