Omdia's principal smartphone analyst, Sanyam Chaurasia, has published a piece noting that AI technology is spreading rapidly across Indian smartphones, with ChatGPT already surpassing 227 million monthly active smartphone users in the country. AI is gradually shaping purchasing decisions, and differentiation will shift from single features toward integrated, personalized experiences. Privacy, trust, and control are becoming the key pillars of agentic AI development, and vendors must balance autonomy with user control to achieve differentiated upgrades. The rapid spread of AI technology across India and its surging popularity are laying the groundwork for the next phase of smartphone differentiation. As baseline AI capabilities become standardized, competitive advantage will increasingly shift toward integrated, personalized, and agentic experiences 鈥?but greater AI autonomy will also raise consumer expectations around trust, transparency, and control.
AI is taking on a bigger role in India's smartphone premiumization journey
India's smartphone market is steadily climbing the value chain, with average selling prices rising from US$171 in the first half of 2020 to US$316 in the first half of 2026, a compound annual growth rate of 11%. Better financing support, broader channel coverage, and intensifying product competition have made higher price tiers more accessible, driving the market's ongoing premiumization. But as this transition matures and more consumers already own increasingly capable devices, sustaining the premiumization trend will require vendors to create more compelling reasons for consumers to aspire, upgrade, and pay a higher premium for their next smartphone. AI can become an important new lever in this equation 鈥?expanding innovation from single hardware features into experiences that become more useful, more personalized, and more differentiated throughout the entire usage cycle. For consumers, this shift has already begun. Today's AI mainly makes familiar tasks like search, photography, communication, and productivity easier; over time, as more contextual and agentic experiences emerge, it can evolve from "help me do it" to "do it for me." For vendors, the opportunity lies in translating these AI experiences into stronger differentiation and more compelling value propositions, especially in the premium segment. Omdia's Smartphone User Innovation Readiness study shows that Indian consumers are already building these AI usage habits. The core question now is how the industry can convert this engagement into higher smartphone value, stronger differentiation, and new reasons to upgrade.
AI has entered purchase decisions but has not yet replaced traditional factors
Indian consumers still mainly rely on familiar fundamentals such as price, camera, battery, performance, and durability when buying smartphones. However, as the marginal benefits of hardware improvements diminish, homogenization pressure is affecting hardware design, and differentiation is shifting toward the overall experience a smartphone can deliver. AI capabilities and features in smartphones have not replaced these traditional purchase criteria. But they have become a key factor with a rising position in the decision hierarchy. For smartphone vendors, the focus should be on using AI to improve existing user experiences and creating stronger layers of differentiation through the interaction interface. This foundation is already taking shape. India has rapidly become a major market for AI adoption, which provides an important signal: consumers are ready to use new AI tools and will eventually adapt to more agentic experiences. As of September 2026, ChatGPT's monthly active smartphone users in India had exceeded 227 million, equivalent to about 32% of the country's smartphone installed base, while Gemini had surpassed 153 million, or about 21%. A user base of this scale shows that vendors do not need to build consumer awareness of AI from scratch 鈥?the opportunity increasingly lies in converting this familiarity into differentiated AI experiences on smartphones. However, user interaction is still largely dominated by standalone apps and remains relatively independent of the smartphone brand consumers own. How this interaction model evolves as chatbot interfaces and large language model capabilities become more deeply integrated into smartphone operating systems will be the key issue going forward.
Figure 1: AI is already deeply embedded in Indian consumers' smartphone usage behavior. Today, consumers mainly experience AI through familiar activities such as creating and editing content, information discovery, search, writing, and translation, reflecting a combination of standalone AI apps and built-in smartphone features. In Omdia's research, the maturity of CREATE, DISCOVER, and ASSIST is far higher than that of ACT, indicating that today's smartphone AI is still largely at the "help me do it" stage of experience. The next phase may change where this value lands. Moving toward agentic experiences will require AI to better understand user context, interact across apps and services, and reliably perform actions on the user's behalf. This will bring devices, operating systems, and the broader ecosystem more deeply into the AI experience. As a result, as AI becomes more agentic, smartphones can evolve from primarily being access points for AI services into active participants in how those services are orchestrated and delivered, creating more room for AI to differentiate smartphone brands and their ecosystems.
AI differentiation will increasingly shift from features to experiences
As AI becomes more familiar to Indian consumers, its role in the smartphone value proposition will evolve from utility toward value creation. Omdia's User Innovation Readiness study shows early signs of this shift. 43% of consumers expect their smartphone's AI capabilities to improve through software updates, while nearly four in ten say useful AI could make them willing to pay more for a smartphone. What is needed, therefore, is not just adding AI to the spec sheet, but making smartphone AI gradually more useful throughout the entire usage cycle. The challenge is that individual AI features may become increasingly difficult to differentiate. Search, translation, summarization, image editing, and content creation have already become widespread across brands and price tiers. As these capabilities proliferate, baseline AI utility will increasingly become an expectation rather than a differentiator. The opportunity in the premium market will therefore shift toward more integrated experiences 鈥?combining personalization, user context, and intelligence across apps, services, and connected devices.
Figure 2: The opportunity for AI in India's smartphone market lies in value, not just features. The longer-term opportunity lies in embedding AI more deeply into the smartphone ecosystem. An AI experience that understands the consumer, learns preferences through continuous use, and works seamlessly across devices and apps will be harder to replicate through a single feature or standalone AI app. Differentiation therefore shifts from having AI to how well the smartphone understands the user and how effectively it acts for them. If vendors can combine this capability with deeper personalization and ecosystem integration, AI has the potential to strengthen brand differentiation, give consumers stronger reasons to stay within a particular smartphone ecosystem, and ultimately upgrade within that ecosystem.
AI agents raise the execution bar for smartphone vendors
The shift from assistive AI to action-oriented AI will require consumers to grant more permissions 鈥?from sharing personal context and granting cross-app access to allowing AI to perform tasks on the user's behalf. Omdia's research shows that the current challenge is not convincing Indian consumers that AI is useful 鈥?only 4% cite lack of utility as a limitation of AI. Instead, half of consumers mention privacy and security concerns, and 40% worry they will become overly dependent on AI. The challenge has therefore shifted from "convincing consumers to use AI" to "winning their trust so they are willing to grant AI more permissions."
Figure 3: As AI shifts from assistance to execution, trust and control become the next barrier to usage. For smartphone vendors, this requires greater investment in privacy, transparency, reliability, and user control. Agentic experiences will require clear permissions, predictable outcomes, and visibility into what AI can access and execute, without hindering everyday use. The next phase of smartphone AI will therefore be defined not only by the capabilities of agents, but also by how far consumers are willing to confidently delegate to AI. Vendors that can expand AI autonomy while preserving consumer control will be better positioned to turn agentic AI from a technical capability into everyday consumer value.
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