This is the architectural decision that everything else follows from, and it has four inputs: connectivity, latency, privacy and cost.
Connectivity first. If the app is used where signal is unreliable — warehouses, basements, rural sites, aircraft, underground — then anything on the critical path must work offline, full stop. We have rebuilt several apps whose core AI feature was cloud-only and therefore useless to the field teams they were built for.
Latency second. Anything in a real-time loop — camera overlays, live captioning, interactive voice — cannot tolerate a network round trip. Below roughly 100 milliseconds an interaction feels like part of the interface; above 300 it feels like waiting for something else. Only on-device inference reaches the first number reliably.
Privacy third. Data that never leaves the device is data you do not have to secure in transit, store compliantly, or declare in a data-safety form. For health, financial and biometric features this frequently converts a difficult enterprise or app-store privacy review into a straightforward one, and it is worth architecting for on that basis alone.
Cost last, but it compounds. A feature invoked twenty times per session by a hundred thousand users is a serious cloud bill; the same model quantised onto the device costs nothing per call. We have moved features on-device purely on unit economics after launch, and it is cheaper to plan for it than to retrofit.
In practice most apps end up hybrid: a small quantised model handles the frequent, fast, private path, and a frontier cloud model handles the heavy reasoning, with graceful degradation when offline rather than a blocked screen.