The race to dethrone smartphones from their top position has begun. Some companies are developing alternative AI-powered devices, according to The Economist.

Fighting the Duopoly

For the past two decades, the iPhone with iOS and Google with Android have dominated user interaction with the digital world. Additionally, the corporation behind the most popular search engine pays substantial sums to Apple for its integration into smartphones.

In return, Apple selected 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 possibilities it will unlock for our users,” the tech giants stated in a joint announcement.

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

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

Two days later, it was reported that Apple is working on a wearable gadget aimed at taking the initiative from OpenAI. Meta is developing AI-powered smart glasses and reallocating resources from VR headsets to this area.

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

Market capitalizations of Meta, Alphabet, Apple, and Amazon. Source: The Economist.

Price Increases

The next few years will be challenging for smartphones. Jan Van from Counterpoint Research expects global shipments to decline by about 6% in 2026, with no recovery in sight. However, a 2% increase was recorded in 2025.

One reason for the decline will be the sharp rise in memory chip prices, driven by the AI boom—billions of dollars invested in data centers have consumed all available supply.

According to Van, the price of 12GB of RAM has increased by $70 over the past 15 months. Manufacturers of budget phones will have to raise prices, negatively impacting sales volumes. Even Apple, whose smartphones are sold at a healthy markup, will feel margin pressure.

Factory Wars

The situation is exacerbated by the so-called “factory wars.” Smartphone manufacturers like Apple and Samsung have long been the largest buyers of semiconductors. However, their positions are now being overtaken by Nvidia and other AI chip developers, which are more valuable and profitable for producers.

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

Some have long been dissatisfied with the smartphone revenue-sharing system. App developers pay Apple a commission of up to 30% on purchases within the ecosystem.

OpenAI, which derives most of its revenue from subscriptions, must share part of its income with Cupertino or Google.

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

Moreover, there is a prospect of consumers shifting to devices that better suit the business models of Apple and Google’s competitors. With built-in lenses, Meta's glasses can display WhatsApp messages. For the company, spending more time on its platforms means increased revenue from commercial ads.

Amazon also aims to place its Echo speakers in every home and its glasses on every face. This will allow for more data collection for its growing advertising business and simplify purchases on its marketplace.

OpenAI stands to benefit if people abandon smartphones and rely on chatbots for interaction with the digital world.

The Threat is Vague

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

At the same time, developers of alternative gadgets face challenges. Google had to halt sales of its smart glasses due to privacy violations caused by the built-in cameras.

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

Alex Katuzian from Qualcomm expects that such “advanced” gadgets will become widespread, but only as supplementary tools.

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

The emergence of phones with screens did not stop consumers from buying computers, as noted by The Economist.

Apple and Google are Evolving

The duopolists are also not standing still. 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.

It is worth noting that Apple plans to launch its own AI-based web search, which will be integrated into the Siri voice assistant.