Chinese smartphone company Honor on October 15 announced a number of new AI features, including the ability to compare transactions from different e-commerce sellers.
CNBC | Evelyn Chen
BEIJING — Imagine if Amazon gave you a 20% discount on everything you buy using the iPhone Air.
That’s essentially what Chinese smartphone company Honor is trying to do to woo local buyers — by giving them on-device AI tools that can quickly compare deals on Chinese e-commerce sites such as JD.com and various sellers on Alibaba’s Taobao. In one example seen by CNBC, Honor AI-powered shopping search helped users save 20% by allowing the tool to find coupons they might otherwise have missed.
This feature and a number of other AI features are expected to be rolled out to Honor’s newly launched Magic8 smartphone and the company’s other devices in China on Wednesday. The timing is remarkable. China is entering its busiest shopping season of the year, a promotion period for Singles’ Day on November 11th, similar to Black Friday.
Fei Fang, president of products at Honor Device, told CNBC in an exclusive interview that with the AI upgrade, he expects Honor to emerge as one of the top three smartphone brands by market share in mainland China by the end of this year. This is according to a CNBC translation of his remarks in Mandarin.
She predicts that in the future, users will increasingly access features through AI portals rather than opening smartphone apps directly, and that customized services will be delivered automatically in the future.
“We believe this will happen and we are working along these lines,” she said, noting that Honor plans to release further AI capabilities in sports, health and friendships at its own ecosystem conference on October 23rd.
Honor’s AI capabilities are activated through the company’s “Yoyo” chatbot within the company’s Android-based operating system called MagicOS.
Honor said overseas markets now account for about half of its revenue, but the Shenzhen-based company first needs to compete with Apple if it wants to regain the top spot in China.
According to Counterpoint data, in the second quarter of this year, Huawei and Vivo shipped the most phones in China, each with 18% market share, while Oppo and Xiaomi vied for second place with 16% share each. Apple followed with 15% and Honor with 13%.
Apple is aiming to make a comeback in China this year. According to his social media accounts, CEO Tim Cook was in Shanghai this week, weeks after the new iPhone 17 hit stores, coinciding with news that the thin iPhone Air will finally start selling in China this month.
But even though Alibaba Group Chairman Joe Tsai announced earlier this year that it would collaborate with Apple on technology tools, the US smartphone giant has yet to release any AI capabilities in China. Neither side has yet released additional details.
AI chatbot
Honor, which spun off from Huawei in 2020, entered into a strategic partnership with Alibaba in September to jointly develop AI smartphone capabilities. Alibaba operates the Gaode maps app, the Fliggy travel booking platform, as well as the Taobao and Tmall e-commerce platforms in China.
Fang emphasized that shopping is just one of the many AI features Honor is releasing this week. Other tools include a guide that guides users to the best photo angle, the ability to suggest nearby restaurants just from a photo of a particular location, and the ability to hail a taxi using simple voice commands.
With vague prompts like “Book a ride home,” the technology learns from data on the device and your settings to automatically recognize your home address. Honor said personal information remains on the phone and is not transferred to the cloud. When it comes to payments, even when AI assists with online orders, users still have to manually approve them.
The new AI features for Chinese users come as ChatGPT begins allowing U.S. users to shop on Etsy and soon on Walmart through an AI chatbot interface. Other AI chatbots can also search the internet for specific products.
It remains to be seen whether AI will continue to be useful to consumers. But Honor said its strength is in using AI to complete multiple steps, such as calculating individual e-commerce memberships and personalized coupons, and show consumers the cheapest option with a prompt as simple as asking for the lowest price for a product.
Honor says most of its new AI features are based on its in-house developed graphical user interface (GUI) AI model that learns from the way humans interact with smartphone screens and multiple apps.
The company claimed that the AI’s learning capabilities enabled it to rapidly scale from 200 tasks in July to more than 3,000 tasks this fall.
In other cases, Honor said it has agreements with companies such as food delivery giant Meituan and video streaming platform Bilibili to use Model Context Protocol (MCP) technology pioneered by Anthropic to allow mobile phone AI to interact with Chinese app systems.
First, spend a lot of money
Honor also incorporates AI capabilities from other companies, such as Kuaishou’s Kling AI video generation model. Fang said Kring and other tools cost money for smartphone companies because they charge a fee for each use, and they are now offering that functionality for free to consumers.
“This is one of our current challenges,” Huang said. “We have invested a lot of money in AI, but we believe that before we commercialize it, we first need to create value for consumers.”
Honor announced in March that it would invest $10 billion in AI over the next five years. The company indicated it will make a significant portion of its initial investment this year.
The spending is part of Honor’s ambitious plan announced in March to become an AI device company and a platform that connects businesses and consumers. Like Apple, Honor also sells smartwatches, tablets, and laptops.
Outside of China, Honor partners with Google in AI and ranks fourth in European market share as of the second quarter, according to Counterpoint.
Honor has no immediate plans to roll out AI-powered shopping overseas, but the company showed off an AI agent for making restaurant reservations on OpenTable at Mobile World Congress in Barcelona in March.
