June 13, 2024
Conversational AI Market
Ict

Conversational AI Market is Witnessing High Demand Driven by Increasing Adoption of Chatbots

Conversational AI refers to artificial intelligence technologies that can converse with humans using natural language. Chatbots are the most common example of conversational AI platforms. These AI-powered digital assistants can understand intents and requests expressed in natural human language and provide appropriate responses to help users complete various tasks.

The global conversational AI market is estimated to be valued at US$ 10.65 Bn in 2024 and is expected to exhibit a CAGR of 22% over the forecast period from 2024 to 2031.

Conversational AI helps companies streamline operations, automate processes and improve customer experience through personalized interactions. Chatbots are being used across industries like banking, ecommerce, healthcare and travel & hospitality to answer routine queries, engage customers and assist with basic transactions. The need for self-service customer support solutions and improved productivity is driving increased adoption of conversational AI technologies.

Key Takeaways

Key players operating in the Conversational Ai Market Demand are Google, Microsoft, Amazon Web Services, Inc., IBM, Oracle, Nuance Communications, Inc., FIS, SAP SE, Artificial Solutions, Kore.ai, Inc., Avaamo, Conversica, Inc. and Jio Haptik Technologies Ltd. Google, Microsoft and IBM currently dominate the market with their extensive Natural Language Processing technologies.

The growing demand for self-service customer support solutions and improved productivity using conversational AI is a major factor boosting market growth. Companies are investing heavily in chatbots and virtual assistants to enhance consumer experience, lower costs and automate routine tasks. Rapid digital transformation across industries is further expected to accelerate adoption of conversational AI platforms.

North America currently leads the global conversational AI market owing to strong presence of leading technology companies. However, Asia Pacific is expected to register highest growth during the forecast period supported by increasing adoption among SMEs and emergence of local AI startups in countries like India and China. Growing internet and smartphone penetration in developing markets will fuel expansion of conversational AI interfaces.

Market Key Trends

One of the key trends gaining traction in the conversational AI market is integration with deep learning and natural language processing capabilities. Advanced machine learning algorithms allow bots to understand user intent with high accuracy even while conversing in free-form natural language. Integration of NLP helps bots respond to requests, answer questions and exchange information like humans. This is improving user experience with conversational AI solutions.

Porter’s Analysis

Threat of new entrants: New entrants face high initial investment costs to develop complex technologies like natural language processing.

Bargaining power of buyers: Buyers have moderate bargaining power as there are many vendors providing conversational AI solutions.

Bargaining power of suppliers: Technology companies providing various AI solutions have moderate bargaining power over conversational AI vendors.

Threat of new substitutes: Chatbots and virtual assistants have gained popularity and improve the user experience over time.

Competitive rivalry: Major technology companies compete intensely to offer advanced conversational capabilities.

Geographical Regions

North America accounts for the largest share of the conversational AI market currently due to technological advancements and presence of key players in the US and Canada.

The conversational AI market in Asia Pacific is expected to grow at the highest CAGR during the forecast period. This is attributed to growing adoption of AI technologies across industries and rapid digital transformation in developing countries such as India and China.

*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it