“The End of the Smartphone Era?”
Over the past two decades, the smartphone has become the primary gateway for users to enter the digital world, creating one of the most profitable monopolies in the history of capitalism. Apple, with the iPhone, and Google, with Android, have dominated not only the hardware market but also the software, data, and advertising ecosystems. However, the rapid acceleration of artificial intelligence and the emergence of new AI-based tools have cast doubt on this once-stable order.
Today’s challenge is less about competition over a new “gadget” and more about a struggle over the future form of human–technology interaction. Players such as OpenAI, Meta, and Amazon are attempting to bypass the traditional intermediary—the smartphone screen—and shift interaction toward more invisible, continuous, and AI-dependent tools, from smart glasses to always-on voice assistants. As The Economist puts it, the core competition is over who will control the “primary gateway” through which users access the digital world.
This pressure arrives at a time when the smartphone market itself is facing structural weaknesses. The expected decline in global shipments, rising memory costs, and intense competition with AI chips for semiconductor manufacturing capacity are squeezing manufacturers’ profit margins. Even Apple, famed for its high profitability, is not immune to these constraints. In such an environment, incentives to seek alternative paths to growth are increasing.
For challengers, the issue goes beyond hardware sales. Apple’s and Google’s business models are built on what might be called an “ecosystem tax”—the commissions they charge developers and service providers. Companies like OpenAI, which primarily rely on user subscriptions, or Meta, which depends on advertising, are eager to distance themselves from this costly structure. Shifting users to tools outside the direct control of Apple and Google could reduce this dependence and channel data and revenues directly toward new competitors.
For now, however, the threat remains limited. The scale of iPhone sales and Android’s penetration still dwarfs the nascent market for alternative devices. Moreover, technical barriers, privacy concerns, and constraints related to battery life and heat slow the development of smart glasses and wearable AI devices. Past failures suggest that fully replacing the smartphone will be neither simple nor swift.
More importantly, Apple and Google themselves are not standing still. Deeper integration of AI into voice assistants, the development of mixed-reality platforms, and strategic partnerships indicate that the incumbent monopolists intend to redefine the game in their own favor. The ultimate outcome of the AI era may not be the death of the smartphone, but rather a shift in the balance of power within this very monopoly—where control over data and AI models, more than hardware, will determine the final winner.
