Tech Giants Contend for the Future: Will AI Gadgets Overtake Smartphones?

The race to dethrone smartphones as the leading gadgets has begun.

The race to dethrone smartphones as the leading gadgets has already begun. Some companies are developing alternative devices with artificial intelligence, reports The Economist.

Challenging the Duopoly

Over the past two decades, the iPhone with iOS and Google with Android have become monopolists in user interaction with the digital world. Additionally, the corporation behind the most popular search engine pays large sums to Cupertino for its integration into smartphones.

In return, Apple chose Google’s AI solutions to enhance Siri.

“After careful evaluation, we concluded that Google’s technology provides the most effective foundation for Apple Foundation Models. We are excited about the innovative opportunities it will open for our users,” the tech giants said in a joint statement.

Neither had an incentive to change the status quo, unlike their competitors.

On January 19, OpenAI’s Global Affairs Director Chris Lehane announced that the company is “on track” to unveil its debut device in the second half of 2026.

Two days later, information emerged that Apple is working on a wearable gadget intended to seize the initiative from OpenAI. Meta is developing AI-based smart glasses and redirecting resources from VR headsets to this area.

Amazon, the world’s largest online retailer, has integrated its AI Alexa+ into Echo speakers and will soon do the same with Echo glasses and headphones.

Rising Costs

The coming years will be challenging for smartphones. Yan Wang from the analytics company Counterpoint Research expects global shipments to decline by about 6% in 2026, with no recovery in sight. Meanwhile, a 2% growth was recorded in 2025.

One reason for the decline will be the sharp rise in memory chip prices. This is linked to the AI boom—billions of dollars invested in data centers have absorbed all supply.

According to Wang, the cost of 12 GB of RAM has increased by $70 over the past 15 months. Manufacturers of cheap phones will be forced to raise prices, negatively impacting sales volumes. Even Apple, whose smartphones sell at a premium, will feel pressure on its margins.

Factory Wars

The situation is exacerbated by the so-called “factory wars.” Smartphone manufacturers like Apple and Samsung have long been the largest semiconductor customers. But now their positions are being overtaken by Nvidia and other AI chip developers. They are more valuable and profitable for manufacturers.

As they lose their significance, phone makers will find it harder to secure the necessary chips.

Some have long been dissatisfied with the royalty system for smartphones. App developers pay Apple a commission of up to 30% on purchases within the ecosystem.

OpenAI, which earns most of its revenue from subscriptions, must pass on part of its income to Cupertino or Google.

Meta has been seeking ways to reduce its dependence on the smartphone duopoly since Apple introduced a feature in 2021 allowing users to opt out of tracking their activity. This complicated data collection and hit the advertising business.

Moreover, there is the prospect of consumers transitioning to devices better suited to the business models of Apple’s and Google’s competitors. With built-in lenses in Meta glasses, WhatsApp messages can be displayed. For the corporation, spending more time on its platforms means increased revenue from displaying commercial ads.

Amazon would also not shy away from placing its Echo speakers in every home and glasses on every face. This would allow for more information gathering for its growing advertising business and simplify shopping on its marketplace.

OpenAI would benefit if people abandoned smartphones and relied on a chatbot to interact with the digital world.

The Threat Remains Vague

For now, the threat to Apple and Google remains minimal. There are a total of 15 million smart glasses users worldwide. Cupertino sold 250 million iPhones last year alone. If the recent agreement with Alphabet makes Siri less annoying, it could encourage people to buy even more smartphones.

Meanwhile, developers of alternative gadgets face challenges. Google had to halt smart glasses sales because their built-in cameras violated people’s privacy.

There are also technical issues. Glasses need to be lightweight, leaving little room for batteries. Their overheating and limited lifespan were among the reasons why the product launched by the startup Humane in November 2023 failed.

Alex Katouzian from Qualcomm expects such “advanced” gadgets to become widespread, but only as an additional tool.

Mark Zuckerberg previously confirmed this view: people who switch to smart glasses will not abandon smartphones. They will simply look at them less.

The advent of phones with screens did not prevent consumers from buying computers, The Economist noted.

Apple and Google Evolve

The duopolists are not standing still either. Rumor has it that Apple is working on its own smart glasses. Google has launched Android XR—a platform for virtual reality headsets. The corporation has also released a new version of its smart speaker based on Gemini.

As reported, Apple plans to launch its own AI-based web search. It will be integrated into the Siri voice assistant.