AI laundry has arrived in consumer technology. Dozens of Internet-connected devices are now described as being powered by artificial intelligence. But amidst the AI networks and mattress pads, the gadget attracting the most attention is the Playmobil-like smartphone replacement.
The R1 is an AI-powered “pocket companion” that is priced at $199 and claims to have sold more than 40,000 units online. pre order last week. Creator Rabbit, which has raised $30 million from investors, describes it as a new generation of devices compared to the humble phone. It claims that its “big business model” has been trained on existing interfaces, such as apps, and that the voice-activated device can carry out tasks – booking a train ticket for example – on behalf of the user.
Smartphones have been slow to incorporate generative AI features. The scarcity of upgrade ideas contributed to a decline in unit sales last year. Shipments from the five largest companies fell by 3 percent in 2023, according to data from the International Data Corporation (IDC). At 1.17 billion, the total is at its lowest level in a decade. If AI tools can capture just 0.1% of global smartphone sales, the market could be worth half a billion dollars. But smartphone makers have no intention of letting that happen.
Startups spot an opportunity. AI is already the most popular area for venture capital investment. PitchBook tracked nearly $80 billion worth of venture capital deals in artificial intelligence and machine learning last year. While the total is down since 2021, it represents 23 per cent of deals – the largest of any sector.
San Francisco startup Humane, founded by former Apple employees, has raised more than $100 million for its AI-powered lapel pin. It has a price point similar to Apple, charging $699 plus a $24 monthly subscription that accesses the T-Mobile network. Investors include OpenAI. It appears that the pin can be used to make calls, listen to music, and answer queries. However, the startup laid off workers this month, suggesting that pre-order numbers may be weak.
The weakness of both products is their proximity to existing hardware. Voice activation already exists. It is already possible to make calls and listen to music.
Consultancy Precedence Research expects telecommunications to be the largest market for AI devices. Smartphone companies will not hand this market over to new entrants. They can eliminate demand for Humane and Rabbit products by integrating AI features into new phones before startups have time to ship their products.
Samsung on Wednesday announced AI-enabled features for the new phones, including live call translation. Apple is expected to announce the integration of the AI model soon. In AI hardware, adapting to legacy technology will outweigh the early hype.
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