LONDON, Jan 26, 2026, 11:58 GMT
- The Economist reported that the Apple-Android smartphone duopoly is now under new strain from AI-first devices supported by OpenAI, Meta, and Amazon.
- Yang Wang from Counterpoint predicts a roughly 6% drop in global smartphone shipments this year, pointing to higher component prices and intensified competition for chip manufacturing.
- Analysts and writers note that while phone AI chips pack a punch, they’re still tough for outside developers to access, which keeps common “on-device” AI features limited.
OpenAI, Meta, and Amazon are eyeing the smartphone’s territory as generative AI forces Big Tech to reconsider the go-to device for searching, shopping, and chatting. According to The Economist, the Apple-Android stronghold faces challenges from fresh hardware experiments, ranging from smart glasses to gadgets that emit screen light. 1
The timing is crucial since smartphones have served as the primary gateway to the internet for twenty years. If AI assistants take over as the main interface, the company owning the device—and the data it channels—could steer revenue streams, from subscriptions to advertising.
Phone makers are gearing up for a tough year ahead. Yang Wang from Counterpoint Research predicts a roughly 6% drop in global smartphone shipments this year, with no bounce back expected in 2027, the report says.
The Economist highlighted a fresh wave of contenders aiming to bypass the traditional phone screen. In a recent chat with Laurene Powell Jobs, OpenAI’s Sam Altman suggested his upcoming device would offer a distinct experience, likening current smartphone use to “walking through Times Square.”
OpenAI announced on Jan. 19 that its device is expected to launch in the second half of the year, according to the report. Just two days after, news surfaced that Apple is developing a wearable pin designed to counter whatever Altman and ex-Apple designer Jony Ive are creating.
Meta is redirecting resources from virtual-reality headsets to accelerate its AI-powered smart glasses development, according to the report. Meanwhile, Amazon has launched Alexa+, an enhanced AI assistant, for Echo smart speakers and aims to extend it to Echo smart glasses and earbuds.
Component prices and chip availability are tightening the pinch. According to Wang, the price of the 12 gigabytes of DRAM typical in smartphones has jumped by $70 in the last 15 months, driven by increased data-centre investment that’s limiting supply, the report noted.
Wang also highlighted a “foundry war” — a battle over manufacturing capacity among chipmakers that produce semiconductors for third parties. According to the report, smartphone giants like Apple and Samsung are losing ground to AI chip designers such as Nvidia, whose chips bring higher profits to foundries.
Challengers have clear motives to push back. Developers can face Apple commissions as high as 30% on in-app purchases, the report noted, and OpenAI has to share a cut of consumer subscriptions sold on iPhones and Android devices. Meta, too, has explored ways to lessen its dependence on the phone ecosystem since Apple’s 2021 update allowing users to opt out of cross-app and website tracking, the report added.
New form factors often face tough challenges and physics won’t bend. The report points out that Google’s smart glasses, released in 2014, were shelved just a year later amid privacy concerns. Wearables continue to battle heat issues and limited battery life. Humane’s AI pin, which debuted in November 2023, failed to catch on, and the company shut down last year, the report added.
Even if smart glasses catch on, they might not outright replace phones. Instead, they could rely heavily on them. Qualcomm exec Alex Katouzian mentioned that “edge” devices might become more common but could require a companion “puck” or a phone nearby to tackle the heavy processing, the report noted. Meta CEO Mark Zuckerberg also suggested users will likely “stare at them less,” not toss them aside completely.
There’s a less obvious issue brewing inside modern smartphones: AI hardware that’s barely tapped. FindArticles points out that phone makers have packed devices with NPUs—neural processing units built to handle AI calculations on-device—but their real-world impact is limited. Fragmented software and inconsistent developer support across brands keep these chips from reaching their full potential. 2
Android Authority raised a similar point, noting that mobile AI still struggles without a reliable, cross-vendor platform for developers—after years of fragmented toolkits and dropped interfaces. It highlighted Google’s LiteRT, launched in 2024 as a revamp of TensorFlow Lite, aiming to streamline how apps access CPUs, GPUs, and supported NPUs across different devices. 3
Apple and Google aren’t just watching from the sidelines. According to the report, Apple intends to integrate Google’s Gemini AI models into an enhanced Siri rollout set for later this year. At the same time, Google is advancing Android XR for smart glasses and headsets. These developments could determine if smartphones fade into the background or evolve into quiet companions supporting the next generation of AI devices.
