Compared to its competitors, vivo's AI strategy is relatively restrained and pragmatic, making it more likely to be implemented; on the other hand, this also implies that the scope of imagination and market enthusiasm that this kind of innovation can leverage is limited.

Every September and October is the peak season for major mobile phone manufacturers to release their flagship models. This year, the focus of the outside world is on whether AI can bring functional innovation to mobile phones or even a wave of phone purchases. Previously, Apple's release of the iPhone 16 did not stimulate the expected enthusiasm in the market, and Chinese mobile phone manufacturers have also started to submit their answers one after another.

On October 10th, vivo, currently the largest-selling mobile phone manufacturer in China, held a developer conference in Shenzhen and announced a new AI strategy. Centered around the core of "deep integration of large model technology with mobile phone operating systems," vivo released its self-developed Blue Heart large model matrix, the original system 5 (OriginOS 5), Blue River operating system 2 (BlueOS 2), and progress in the ecosystem.

Vivo Vice President Zhou Zhou at the press conference. Compared to other manufacturers, vivo's AI strategy is quite restrained and focused. Image source: vivo

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Vivo hopes to transform the mobile phone operating system with AI technology. This is a common move that all mobile phone manufacturers are currently making, but vivo focuses on how to use AI to optimize the experience of systems and software, and has proposed the goal for the current stage: to create a personal intelligent assistant.

Zhou Zhou, Vice President of vivo, Vice President of OS Products, and Dean of vivo AI Global Research Institute, said that vivo hopes to do a good job in basic experience, enhance the original functions of the product, and does not aim to do something very large and complex at this stage.

In the second half of last year, AI became a new direction for competition among mobile phone manufacturers. Zhou mentioned that last year, vivo's thinking was still on what benefits large models could bring directly, but now it thinks more about how to reconstruct the system with mobile phones. The purpose of reconstructing the system is to combine the capabilities of AI large models and the characteristics of mobile phones to provide a personal intelligent exclusive assistant.

Compared to competitors, on the one hand, this positioning appears restrained and more likely to be implemented; on the other hand, it also means that, for now, the scope of imagination and market enthusiasm that this kind of innovation can leverage is limited.

According to the information currently released by vivo, for consumers, the most intuitive change in the newly upgraded OriginOS 5 is the improvement of the interactive experience. In the latest system design, users can complete multiple complex tasks with a simple voice command, and the system also supports recognition of various dialects and international languages. When it is not convenient to speak, commands can also be input through long pressing and other methods.Vivo's newly launched feature, "Xiao V Circle Search," can identify user intent through circle search content and make recommendations accordingly. Image source: Vivo

In addition, Vivo has also introduced the "PhoneGPT" multimodal assistant, which can actively complete tasks based on user intent. With just one command, it can accomplish tasks such as booking restaurants and buying coffee.

There are currently two main approaches to implementing AI capabilities in smartphone manufacturers: one is like Apple's collaboration with OpenAI, where smartphone manufacturers partner with third parties to obtain AI capabilities; the other is self-development. Vivo has chosen the latter. Therefore, a key issue affecting Vivo's future AI development is whether the input-output ratio of this approach is sufficiently large.

It is understood that Vivo's AI team currently has more than 1,000 people, with an annual investment exceeding 20 billion yuan. Zhou said that at present, the AI functions of smartphone manufacturers are indeed similar, but as time goes on, the differences accumulated through self-development will gradually emerge.

In other words, although it seems not complicated to turn a smartphone into a personal intelligent assistant, user experiences vary greatly. Based on the idea of self-developed underlying technology, what Vivo wants to do is not just to stay at the application level of capability, but a systematic project and mechanism.

Against the backdrop of the current downturn in consumer electronics and the longer replacement cycle of users' devices, AI smartphones and folding screen smartphones together constitute the only two growth directions in the mobile phone industry. In these two directions, the emergence of a flagship product that becomes a hit is crucial for Vivo to gain a share in China's high-end smartphone market.

For a long time, Vivo's basic market has been in the mid-to-low-end smartphone market below 4,000 yuan. In the three years of Huawei's absence, Vivo also entered the high-end market with folding screens, but this advantage was quickly eroded after Huawei's return. According to third-party consulting firm IDC data, in the second quarter of 2024, Huawei has returned to the top of the Chinese folding screen market share, with Vivo's folding screen domestic market share at 23.1%, far behind Huawei's 41.7% market share.

In terms of AI smartphones, IDC data shows that in 2024, the global shipments of the new generation of AI smartphones will reach 170 million units, accounting for about 15% of the overall smartphone shipments. The share of the new generation of AI smartphones will rise rapidly after 2024, and it is expected that the market share will exceed 50% by 2027.

The essence of the AI smartphones currently spoken of in the industry is to superimpose AI functions on the original smartphones, which is a short-term transitional form. He believes that in the long run, AI will become the new operating system of smartphones, and the real AI smartphones should be AI-native. When there is a major breakthrough in software development, hardware may need to be redesigned to match the new capabilities of the software. Therefore, the operating system and ecosystem are more significant for the future competition of smartphone manufacturers. This is also the key factor why manufacturers such as Apple, Huawei, and Vivo are currently focusing on the underlying system.

So far, Vivo has been the top-selling smartphone brand in China for three consecutive years, but its sales advantage is gradually declining. IDC data shows that as of the second quarter of 2024, Vivo became the top-selling brand in China's smartphone market with a market share of 18.5%. However, Huawei's market share in the second quarter of 2024 has reached 18.1%, and it once again became the top-selling brand in the smartphone market with a market share of 17.5% for the first half of the year.At present, the immediate task facing vivo is how to consolidate its advantage in the mid-to-low-end mobile phone market while striving for certain growth in the high-end market during the new ranking competition phase in China's mobile phone market after Huawei's return.

After Huawei's return, the fact that vivo has to give up the high-end market share it once seized with folding screens has already shown its embarrassment in the high-end market. In his view, compared with competitors such as Huawei and Apple, vivo is still limited by ecological and technological gaps, and it is difficult to become an innovative leader in AI competition in the short term. Therefore, from this perspective, vivo's choice in AI strategy to make minor innovations, be a follower, and focus more on optimizing user experience and consolidating its own base is both a pragmatic move and a good card that can be played under the current situation.