The way Apple and Samsung are selling generation AI is totally different

The world’s two biggest smartphone makers, Samsung and Apple (AAPL), are going all-in on generative AI. Take a look at Samsung’s latest Galaxy Unpacked event in Paris, where the company debuted its latest foldable smartphones and showcased the benefits of its Galaxy AI platform.

Meanwhile, Apple spent most of its WWDC event in June focusing on how its Apple Intelligence generative AI software will power new features in its iPhones. But companies that, according to IDCwhich represented 36.6% of the global smartphone market in the second quarter of 2024, are taking decidedly different approaches to bringing generative AI to their users.

Samsung is looking to quickly build a large user base for its generative AI services, thus encouraging developers to create apps for its Galaxy AI platform. And as these apps prove more capable and useful, Samsung will attract more users.

Samsung’s Galaxy AI features are available in this year’s Galaxy S24, last year’s S23, and 2022’s Galaxy S22, not to mention three generations of its foldable phones. Overall, Samsung says it hopes to get Galaxy AI into about 200 million devices by the end of the year. Apple, however, says that only people who own its most powerful iPhones, the iPhone 15 Pro and iPhone 15 Pro Max, and later iterations of the ubiquitous smartphone, will get Apple Intelligence features.

Apple is betting on boosting iPhone sales in the short to medium term by getting users interested in generative AI apps to upgrade to the next generation of devices rather than keeping their current iPhones for years to come.

Despite the difference in approaches, both companies still need to prove to consumers that generative AI applications are worthwhile. And that will take time.

“By 2025, if not a little longer, most purchases would be purchases that would have happened anyway, as opposed to [people] ending because they need it [AI] features,” explained Ryan Reith, vice president of IDC’s Mobile Device Tracker program.

Samsung vs Apple

Samsung got the jump on Apple in the AI ​​race, launching its Galaxy AI platform, complete with a handful of AI apps from Google (GOOG, GOOGL), alongside its Galaxy S24 lineup in January. Since then, the company claims that 77% of S24 users have used its AI features at least once a week. So far, Samsung says that Google’s Circle to Search feature, which lets you take photos of objects and text and circle them to identify or translate them, is among users’ favorite AI options.

In addition to Google’s Circle to Search, Samsung offers AI-powered translation, transcription, text composition, and photo editing apps. Of these, I find the transcript the most useful. Photo editing, which lets you manipulate photos using generative AI, seems more like a party trick than a must-have feature that people will use regularly.

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Still, these options are a start. And getting them into the hands of users and developers will inevitably help Samsung create more interesting and, importantly, useful AI offerings in the future.

“I think Samsung is recognizing that it wants to get [Galaxy AI] available to as many people as possible,” explained TECHnalysis Research President and Chief Analyst Bob O’Donnell.

“They want to get developers excited about creating things for their platforms. And so, this is one way to do that, because all of a sudden you have a significantly larger installed base with Samsung bringing in a few generations back, whereas obviously with Apple, it’s going to be a significantly smaller installed base,” he added.

Samsung’s approach should encourage developers eager to reach a large user base to start creating apps for its platform. And if these developers create engaging apps, users will inevitably turn to Samsung devices to gain access to these apps. The approach won’t change smartphone units in the immediate future, but if customers enjoy using apps built for Samsung’s AI services, they’ll be much more likely to buy the company’s devices when they’re shopping for a new phone in the future. future.

Apple, however, isn’t interested in waiting for phone sales to increase over time. The company clearly wants users to buy its next-generation iPhone as soon as it hits the market, likely in September. It makes sense for Apple. The iPhone is its most important product, and after declining sales in 2023 and a mixed start to 2024, getting new devices into consumers’ hands sooner rather than later is a must.

Wall Street is hoping the company’s Apple Intelligence platform will help drive a new sales cycle next year. Tying the software to the latest and greatest iPhones gives Apple a better chance of achieving this.

But it also means it will have a smaller installed user base for its generative AI products than Samsung. And that could hurt AI developers building on Apple’s software, at least in the short term.

Do consumers really want generative AI?

All this generative talk about AI, however, will be worthless if consumers don’t actually understand it. While Samsung’s initial usage numbers are impressive, they only count users accessing its AI software once a week. Considering we answer our phones dozens of times a day, that’s still not exactly an endorsement.

Interestingly, my family and friends are still quite confused about what adding generative AI to their smartphones means for them. Although Samsung and Apple have made flashy announcements, the average consumer, at least as far as my circle is concerned, still doesn’t understand the entire concept.

For now, we’ll have to see how Apple showcases its Apple Intelligence during the anticipated iPhone event in September, and how Samsung and Google continue to develop their own messaging and offerings in the coming months.

Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.

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