How Smarter Phones Will Transform Tech,
Media, and Telecom
A new
generation of devices, powered by artificial intelligence, could be in
consumers’ hands within a few years.
Picture the scene.
Your smartphone knows your wedding anniversary is coming up, and
you have a chat with it about how you might celebrate the event. Based on its
deep understanding of you and your spouse, the device suggests a romantic
weekend in Paris. You agree. It knows from your photos and calendar that you
got engaged at a small bistro in the 9th arrondissement, and from your travel
history it knows you favor a boutique hotel near Parc Monceau and your
preferred airline is Air France. It creates an itinerary and presents it to you
for your approval.
After you’ve used your smartphone a few times to book trips, you
trust the artificial intelligence (AI) that powers it so much that you
authorize it to book everything — and to negotiate on your behalf — without
even checking with you. Which leaves you time to get on with more important
things, like deciding what to pack for your trip.
It may
sound futuristic. But the truly AI-enabled
smartphone could become reality within the
next three to five years. In our broad definition, AI is a collective term for
computer systems that can sense their environment, and, in response to their
objectives, think, learn, and act. And in our view, smart devices, including
the smartphone, will be the vehicle through which AI will have the greatest
effect on the technology, media, and telecommunications (TMT) industry.
A quantum leap in capability for phone-like devices can’t come
soon enough. Given advances in computing, the smartphone now feels increasingly
dumb to most users. To be sure, major manufacturers have added voice assistant
capabilities and refined them. But, in general, the technology is still very
brittle when it comes to understanding discourses or keeping track of an
individual user’s transaction history.
In the coming years, the ubiquitous smartphones of today will be
replaced by smarter phones. Increasingly voice-activated and conversational,
they will apply AI to anticipate human activity and support it autonomously.
The emergence of this new generation of devices will have profound and
pervasive impacts for all players in the TMT value chain. Here are some of the
main anticipated developments.
Users: intimacy and
productivity.
AI will exploit ever more
detailed data on individual behaviors and preferences to automate and assist
what smartphone users do today and find ways to do things that were previously
unimaginable. And our phones will do this with personality. People will
experience greater intimacy and humanity in their digital experiences.
But developing AI as a
human-friendly technology is going to be a big challenge. Using AI to help
people actually make decisions and take actions — which we refer to as augmented
intelligence — will create unprecedented alliances between humans and
machines, with each learning and benefiting from the other. Soon people will be
able to select famous movie characters or even friends as the voices of their
smartphones. Apps will understand our emotions by our speech or by seeing our
faces, and will respond appropriately.
Automation of tasks and greater intimacy and personalization will
make it quicker and easier for consumers to search for, find, and choose what
they want, saving them time. Productivity and work–leisure bandwidth will
increase, with people freed up to pursue activities they’re really interested
in.
Carriers: evolving the
smartphone.
Echoing the trend seen in
the satellite and cable industries, where nobody pays upfront to own the set-top
boxes or rooftop satellite dishes, customers will likely migrate from owning
devices, to leasing devices, to just paying for the service or experience
through a single price that includes the equipment cost.
So, rather than collecting revenue primarily from device sales or
usage, the carrier business model will also involve leveraging user data to
create a new revenue source. Carriers could become developers of a “digital
twin” for each smartphone user. This digital representation of the individual —
based on all their demographic, behavioral, and preference data — would
negotiate with vendor sites (e.g., travel or hotel) to get the most
cost-effective deals. Consumers might have a choice between doing all the
research and booking the cheapest flights themselves or using their digital
twin to negotiate the best deal while paying a small commission on the total
amount spent using the twin. As a result, the effective price of the device or
service will fall.
Crucially, the quality of the experience will not depend solely on
the quality of the connection or the ease of contacting customer service, as is
generally the case today. As users’ dependency on their devices grows in tandem
with devices’ functionality, the need for uninterrupted service, more bandwidth,
and wider coverage will also grow. Carriers will need to seek ways to become
smarter in managing those devices by, for example, applying real-time data
allocation adjustments. The question of whether carriers will be allowed to
bill customers in innovative ways, such as surge pricing for data, is likely to
be controversial.
Given the importance of personal data in realizing the benefits of
AI, concerns over security, privacy, and regulatory compliance could become
barriers to AI innovation. Other risks could include challenges related to
device compatibility and consumers’ willingness to pay for more powerful
devices and for connectivity over shorter cycles based on data or resource
consumption. Also, from a tax perspective, developed and developing nations
will likely have differing views about how to allocate taxing rights and how to
value data, intellectual property rights, and automated tools. A possible lack
of consensus between territories — and unilateral steps taken by territories to
tax transactions — could increase the cost of doing business between source
countries (where income is generated) and home countries (where these companies
are based).
Device manufacturers:
cognitive computing.
Device manufacturers will
focus on embedding cognitive computing — or intelligent automation — into their
products, and on gathering more data on users to better meet their needs and
attract third-party revenue, including advertising. Just as today’s users
rarely focus on who made their cable or satellite boxes, future consumers will
pay less attention to device brands. The resulting commoditization of handsets
will lead some players to exit, while others will consolidate. Differing speeds
at which established device manufacturers incorporate AI into their products
might also play a role in reshaping the handset industry.
For device manufacturers, success in an AI world will not be
merely about how slim they can make the device, how much functionality they
pack into it, or how attractive they make it. Instead, it will be about how
effectively the device acts as the portal into a user’s experience of the
digital ecosystem. It also will be about controlling users’ connected services
and devices in a proactive and augmented fashion, including through voice
recognition, while still looking sleek and fashionable.
Content producers and
distributors: creative intelligence.
In content creation, the
dividing line between producers and distributors will continue to blur. AI will
augment the production and discovery of various types of content, with
innovations such as personally tailored trailers and mixes of video content
from many sources. This trend could go further, with special interest groups
drafting a storyline or key themes, and having other companies or AI produce
videos to promote their cause.
In the content access space, 5G networks will enable ever greater
Web-based consumption on mobile devices, with a face-off between subscription
and pay-per-unit charging. And with industry convergence between content
creation and distribution potentially including devices as well, competitive
frictions could arise. Content providers also could become involved in payment
services, even to the point of becoming banks or working in close collaboration
with them. As advertising becomes increasingly personalized, ads’ productivity
and return on investment will grow.
Of course, there are questions surrounding consumers’ readiness to
adopt AI-enabled services and to provide the required level of detailed
personal data. There’s also risk of pushback from unions, creatives, and
studios. And in an era of concerns over fake news, the ease of generating
AI-produced video content could contribute to a continuing proliferation of
dubious videos, through which special interest groups might seek to propagate
their views. This risk is compounded by the fact that AI-produced videos will
make content even more compelling and closely targeted, potentially
exacerbating polarization across society into different echo chambers. AI also
will dramatically accelerate content production, and traditional methods of
monitoring or regulating it will struggle to keep pace.
App developers: ubiquitous
interaction.
As the intelligent device
handles a greater share of the decision making about which apps to choose for
which task, app developers will become less visible to users and more
B2B-oriented. Apps will move away from performing functions and toward
understanding behaviors and producing outcomes. To maximize efficiency and
effectiveness in a B2B environment, app developers will locate more of their
intelligence in the cloud and will generate value from speed and processing
power rather than from branding. This refocusing will position them to play a
larger role as back-end utilities supporting other companies’ consumer-facing
front ends.
In moving away from consumer branding and toward a B2B model, apps
will risk losing their differentiation with users. This shift will benefit
larger players by making scale a more important success factor. Apps will
need to become ubiquitous in the user interaction with both the external world
and digital world.
No Time to Lose
The rapid advance of AI means the redefinition of “smart” is
already under way, and that we soon will have devices capable of inferring
users’ needs and meeting them autonomously. This means the window of
opportunity to prepare for an AI world is short, and shrinking. A look at
disruptive entrants who have connected buyers and sellers in new ways in other
industries, such as ride-sharing platforms and the music-streaming service
Spotify, as well as TMT pioneers such as Netflix and Amazon, provides a clear
indication of how fast things will move.
TMT companies should consider what opportunities and challenges
the upcoming AI disruption will create for their business and how well prepared
they are to leverage those disruptions. Tomorrow’s TMT leaders will be the
companies that embrace AI today.
by Anand Rao, Raman
Chitkara, and Sandeep Ladda
https://www.strategy-business.com/article/How-Smarter-Phones-Will-Transform-Tech-Media-and-Telecom?gko=4f423&utm_source=itw&utm_medium=20180612&utm_campaign=resp
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