According to the study by Next Move Strategy Consulting, the Conversational Artificial Intelligence (AI) Market size is predicted to reach USD 47.69 billion with a CAGR of 22.9% by 2030.
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Conversational AI refers to computer programs that use AI to enable interactions between humans and computers. They imitate human interactions by recognizing audio and text inputs and interpreting their meanings across several languages using big data, natural language processing, and machine learning. Additionally, conversational AI demands the integration of art and science to produce a digital application that integrates relevance, context, and personalization within a human-computer interaction.
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Natural language processing (NLP) and machine learning are combined in conversational AI. NLP is made to work in a continuous loop with machine learning techniques to improve AI algorithms. Machine learning algorithms then increase their response quality over time as they learn. Furthermore, customers and companies have grown accustomed to the results of quick, improved, and round-the-clock customer assistance. Advanced technologies are helping businesses enhance customer satisfaction, reduce expenses, and increase profits. With new AI developments, product managers have access to the tools needed to create an effective Intelligent Virtual Assistant (IVA).
Market Dynamics and Trends
The rapidly rising demand for AI-powered customer support, omni-channel deployment, and reduced chatbot development costs in call centers, websites, emails, and applications drive the growth of the conversational AI market. Moreover, the rapid uprooting of current mobile and web applications by speech-based and AI-powered messaging apps is predicted to lead to the emergence of a new form of communication. This, in turn, boosts the conversational AI market growth.
In addition, the introduction of regional language support into conversational AI systems is significantly gaining popularity worldwide. For instance, Google added the support for seven additional languages for activities on Google Assistant. With this update, Google now offers support for 16 different languages. Furthermore, the growth of the market is driven by the emergence of advanced conversational AI capabilities, which are employed to provide services such as addressing frequently asked questions (FAQs) in an efficient and user-friendly manner.
However, the lack of awareness about conversational AI solutions coupled with high initial installation costs and constant update requirements are expected to restrain the market growth during the forecast period. On the contrary, the increasing penetration of natural language processing (NLP) and technological advancements in conversational AI such as gesture and recognition features are expected to create ample growth opportunities for the market in the coming years. For instance, in August 2021, Conversational AI platform provider Yellow.ai announced the funding of USD 78.1 million to expand its AI-based chatbot platform with NLP across the globe.
Geographical Analysis
The conversational AI market is dominated by North America, and this dominance is anticipated to continue during the forecast period. This is attributed to factors such as the rapid adoption of conversational AI-based chatbots as customer service agents by companies in the healthcare sector. In North America, the healthcare industry is expanding to incorporate robotics, AI, and augmented and virtual reality. This would support the provision of knowledgeable services and technologies for evidence-based healthcare with a focus on preventive and collaborative care.
On the other hand, Asia-Pacific conversational AI market is growing significantly with many companies and startups developing and deploying conversational AI solutions across various industries including e-commerce, BFSI, healthcare, and others. The growing developments and innovations in this field that can be further optimized on cloud services drive the growth of the conversational AI market in this region. For instance, in February 2021, Kore.ai, a U.S.-based conversational AI software company, launched its Japanese virtual assistant platform that is cloud-compatible. It enables customers in Japan to access the platform through Amazon Web Services (AWS).
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Key Market Segments
By Type
- Intelligent Virtual Assistants (IVA)
- Chatbots
By Component
- Platform
- Services
- Support and Maintenance
- Training and Consulting
- System Integration
By Deployment
- Cloud
- On-premises
By Technology
- Machine Learning
- Deep Learning
- Natural Language Processing (NLP)
- Automated Speech Recognition
By Organization Size
- Large Enterprises
- Small and Medium-Sized Enterprises (SMEs)
By Mode of Integration
- Web-based
- App-based
- Telephonic
By Business Function
- Sales and Marketing
- Finance
- Human Resource
- Operations
- IT Service Management
By Application
- Customer Support
- Personal Assistant
- Branding and Advertisement
- Customer Engagement and Retention
- Onboarding and Employee Engagement
- Data Privacy and Compliance
- Others
By End User
- BFSI
- Retail & E-commerce
- Healthcare & Life Science
- Travel & Hospitability
- IT & Telecom
- Automotive
- Media & Entertainment
- Others
By Geography
- North America
- U.S.
- Canada
- Mexico
- Europe
- UK
- Italy
- Germany
- Spain
- Netherlands
- Rest of Europe
- Asia-Pacific
- China
- Japan
- India
- Australia
- South Korea
- Taiwan
- Vietnam
- Rest of Asia Pacific
- RoW
- Latin America
- Middle East
- Africa
Competitive Landscape
Various players operating in the conversational AI market include Amazon Web Services (AWS), Google LLC, Microsoft Corporation, IBM Corporation, SAP SE, Baidu, Inc., Alibaba Group Holdings, Ltd., Salesforce, Inc., Artificial Solutions, Oracle Corporation, Fidelity National Information Services, Inc., Kore.ai, Inc., OpenAI, Nuance Communications, Conversica, Inc., and others. These market players are adopting various strategies such as product launches across various regions to maintain their dominance in the market.
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