Damo: “Doubao” AI phones are difficult to build an ecosystem, reaffirming the “added” ratings of Tencent Holdings (00700), Alibaba-W (09988), and Meitu (01357)

The Zhitong Finance App learned that Morgan Stanley released a research report saying that as far as ByteDance's “Doubao” plans to launch an AI assistant for smartphones, although the ideal “Doubao” ecosystem seems very rich, there are challenges in implementation. The bank believes that application shares are still the first choice for AI investment, and reaffirms the “plus” ratings of Tencent Holdings (00700), Alibaba-W (09988), and Meitu (01357).

Yesterday, ByteDance released a video showing the new “Douban” smartphone AI assistant. The assistant has been integrated into the ZTE (00763) sample phone as a system. The “Doubao” smartphone AI assistant can read user screens, access smartphone apps, and complete complex tasks. This raised some concerns that C-side applications might lose traffic entry. However, the bank believes there are challenges in promoting “Doubao” assistants. Large-scale smartphone OEMs and super applications prefer to develop their own AI assistants (AI assistants) rather than rely on ByteDance. The bank believes that Chinese super apps are more dominant. Damo said it continues to be optimistic about AI investment opportunities for Chinese applications, including Tencent (best AI application agent), Alibaba (best AI infrastructure), and Meitu (AI multi-modal beneficiary).

The “Doubao” smartphone AI assistant is a Doubao AI assistant that is deeply embedded in the smartphone system, and released a video presentation. In the display, the AI assistant demonstrated the following abilities, including (1) interactive functions: users can activate the “bean bag” assistant through voice, headphones, or the AI side button on the phone. Double-click the AI side button to start a voice or video call with the AI assistant. The assistant can read screen content in overlay format. (2) Multi-modal generation: Users can request an assistant to complete simple photo editing tasks, such as removing the background. (3) Mobile agent: The assistant can access the installed application to complete tasks such as price comparison, order placement, restaurant reservation, remote vehicle control and conference scheduling. (4) Memory function: With user authorization, the “Doubao” assistant will read and store screen information in the local environment to personalize tasks. (5) Professional mode: In this mode, the assistant has stronger reasoning skills and can complete complex tasks across applications, such as planning itineraries and booking tickets based on social media preferences.

Damo believes that there are promotion challenges mentioned above. The bank sees a major obstacle to OEM cooperation. The implementation of the “Doubao” assistant requires in-depth technical cooperation and commercial negotiations with different smartphone OEMs, as it involves making system-level modifications, redefining the value proposition of smartphones, and weakening the bargaining power of OEMs in the supply chain. As for major smartphone OEMs (such as Apple (AAPL.US), Huawei, and Xiaomi Group-W (01810)), which have strong technical capabilities, they are more likely to have their own AI assistants rather than cooperate with ByteDance. The bank believes that the OEM options that ByteDance can cooperate with are very limited. In the Chinese market, it is very difficult to establish a “bean bag” ecosystem.

From an investment perspective, Damo believes that apps are still the first choice for AI investment. Although the market is concerned that “Doubao” assistants may become traffic entrants and weaken C-side apps, the bank is still optimistic about Chinese apps. The reason is that Chinese super apps (such as WeChat, Taobao, and Meituan-W (03690)) have highly concentrated traffic and are more dominant. They prefer their own AI assistants to ensure traffic.