May 22, 2024
Conversational AI Market
Ict

The Global Conversational AI Market is Powering a New Wave of Innovation

The adoption of conversational AI is accelerating business innovation by enabling human-like interactions. By leveraging natural language processing, conversational interfaces can understand intent and context to meet customer and employee needs through messaging apps, voice assistants, and chatbots.

Conversational AI is artificial intelligence that powers virtual assistants, chatbots, and other dialog systems to communicate with humans through chat, voice and text to complete tasks such as information retrieval and question answering. Key applications of conversational AI technologies include website and mobile application chatbots, smart speakers and virtual assistants, messaging bots and CRM chatbots. These solutions help automate customer support, streamline operations, and provide personalized customer experiences.

The Global Conversational AI Market Demand is estimated to be valued at US$ 10.65 Billion in 2024 and is expected to exhibit a CAGR of 22% over the forecast period 2024 to 2031.

Key Takeaways

Key players operating in the Conversational AI 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.

Growing demand from industries like banking, healthcare and ecommerce are fueling the adoption of conversational AI solutions as they help enhance customer experience and reduce operational costs.

Global expansion by major technology companies and startups in developing nations is expected to boost the conversational AI market outside United States and China. Investments in conversational AI research and enhanced cloud offerings are facilitating global commercialization.

Market key trends

One of the key trends in the conversational AI market is the integration of advanced AI capabilities like deep learning, natural language processing and neural networks to improve understanding of language. This enables conversational systems to comprehend complex questions, multi-turn conversations and contextual responses like humans. Leading technology providers are focusing on enhancing language understanding through continued training on massive text datasets to make assistants more versatile.

Porter’s Analysis

Threat of new entrants: High barriers to entry including large deep learning requirements and capital investments needed to effectively compete in the market deters new companies.

Bargaining power of buyers: Due to the presence of big tech players, buyers have moderate bargaining power as they can negotiate pricing and customize solutions as per their needs from alternatives.

Bargaining power of suppliers: The availability of AI expertise and startups providing specific solutions gives suppliers moderate power to influence prices.

Threat of new substitutes: Low threat as conversational AI remains a unique solution for human-like interactions compared to traditional interfaces.

Competitive rivalry: Intense competition exists among tech giants to achieve dominance by providing more advanced, affordable and customized products.

Geographical Regions

North America remains the largest regional market for conversational AI, accounting for over 35% of the global value share in 2024 due to heavy investments by top companies in the region for research and development.

The Asia Pacific region is expected to experience the fastest CAGR during the forecast period led by countries like India, China and Japan. This can be attributed to growing internet penetration, establishment of local AI startups and focus of global firms to tap into opportunities arising from rapid digitalization of businesses in the region.

Geographical Regions

The United States holds the largest share of the conversational AI market currently due to the presence of major technology companies and startups conducting extensive R&D in the region. It is estimated to account for more than 30% of the global market value in 2024.

The Asia Pacific region is poised to grow at the fastest CAGR between 2024-2031. This can be attributed to factors like growing internet connectivity, rising investments in AI by Chinese technology firms and government initiatives to promote research & development of conversational systems in countries such as India, South Korea and Japan. An increasing number of startups in the region are also contributing to the rapid growth of the conversational AI sector.

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