How Smartphone OEMs Can Stay Competitive in Era of AI Agents

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Apr 2, 2025
  • AI agents are trending, with smartphone OEMs seeing them as the next user interface.
  • Multiple AI agents will coexist on future smartphones. Internet giants would likely develop their own agents alongside OEMs versions to serve their ecosystems.
  • Smartphone OEMs will collaborate more closely and drive traffic to longtail service providers and app developers.
  • Distributing AI agents presents a new monetization opportunity. OEMs should make initial investments to support an open AI agent ecosystem to compete against internet giants.

AI agents are reshaping the global tech landscape. These intelligent assistants don’t just answer questions; they take action. Though there are dozens of definitions for an AI agent, the consensus is clear that an AI agent should execute tasks based on simple user prompts.

Imagine telling your smartphone to find a place with a good vegan menu and it not only books a table but pre-orders your meal. AI agents will fundamentally change how we interact with devices, replacing todays graphic-based user interface (UI).

This is why the slogan “AI is the new UI” is gaining momentum. AI agents will become the primary layer between users and applications (or services), shaking up the operating system dominance of smartphone OEMs.

Rise of AI agents and shifting power struggle

In the future, multiple AI agents are expected to coexist on a single smartphone, serving as gateways to apps and services. Smartphone OEMs will push their own agents, but third-party developers will introduce alternatives, leading to a multi-agent ecosystem. Crucially, AI agents wont operate in isolation; they will communicate and coordinate on tasks in the background.

Source: Counterpoint Research

Big tech companies like Meta, Tencent and ByteDance are poised to leverage AI agents to reinforce their ecosystems. Metas agent might only message contacts via WhatsApp, while Tencents could book a ride exclusively through Didi, a company it backs. These closed-loop ecosystems would lock users into their own systems and realize their ambition of controlling a “super app” that covers all aspects of people’s lives. This would also shift control away from smartphone brands.

OEMs at risk: From industry leaders to hardware assemblers

This shift threatens to upend the mobile ecosystems value chain. Today, OEMs hold significant sway over app distribution, especially in China, where Google Mobile Services (GMS) are absent. But in an AI-driven world, if OEMs fail to take the lead, they risk becoming mere hardware assemblers, with little control over software, services, or revenue streams.

This is why smartphone brands are racing into AI. Their own AI agents will act as intermediaries, directing user requests to partners they choose – not just to dominant internet platforms. This opens opportunities to collaborate with rising-star startups that want independence from big tech but need traffic to grow. For OEMs, AI agents could become a powerful monetization tool. When an OEM’s AI agent receives command, it could call on or recommend a start-up’s services which could be comparable to those of internet companies.

Next opportunity: AI agent marketplaces

A new frontier is emerging – AI agent distribution. Users won’t just download apps; they will choose AI agents tailored to their needs. Some may prefer an AI assistant designed for emotional support, while others might opt for one that excels in logic and reasoning. This shift allows OEMs to reinvent app stores as agent marketplaces, controlling how AI-driven services are deployed.

To seize this opportunity, OEMs must invest now in an open AI ecosystem. They should back independent AI startups and ensure seamless integration of third-party agents into their devices. By doing so, they can counteract closed ecosystems built by internet giants and regain leverage in the mobile industry.

The battle for AI agent dominance is just beginning, and the stakes couldn’t be higher. The brands that invest now will define the future of mobile computing. Those that hesitate will be left assembling devices for someone else’s ecosystem.

Summary

Published

Apr 2, 2025

Author

Archie Zhang

Archie Zhang is a Beijing-based research analyst specializing in the smartphone market.
Formerly an award-winning Financial Times journalist covering China’s tech sector, Archie brings a unique blend of industry insight and storytelling expertise to market analysis.

Shiwen Ma

Shiwen is a research analyst specializing in the smartphone market, based in Shenzhen, China. Prior to joining Counterpoint Research, Shiwen served SDIC securities as a TMT euqity analyst.