by Conversational AI Market – artificial intelligence (AI) refers to technologies that can simulate human conversations. Widely known as chatbots or virtual assistants, conversational AI uses technologies like natural language processing, machine learning, and deep learning to understand a user’s intent and respond appropriately through non-predefined pathways. Conversational AI solutions have a broad range of applications including customer support, personal assistants, smart speakers, messaging bots, and more. The growing adoption of intelligent voice assistants by major companies like Amazon Alexa and Google Assistant is driving the demand for conversational AI capabilities among businesses as well.
The Conversational AI Market is estimated to be valued at USD 10.65 Bn in 2024 and is expected to reach USD 44.38 Bn by 2031, growing at a compound annual growth rate (CAGR) of 22.6% from 2024 to 2031.
Key Takeaways
Key players operating in the Conversational AI market 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.
The growing demand for chatbots and virtual assistants across sectors is one of the major factors fueling the Conversational AI Market Size. Chatbots are delivering value across industries like e-commerce, healthcare, banking, and more by handling various queries and tasks for customers.
Major tech companies are continuously investing in expanding their conversational AI capabilities globally. For example, companies like Google and Amazon have expanded their intelligent voice assistants like Google Assistant and Alexa to various regional languages to reach a broader customer base worldwide.
Market key trends
One of the key trends in the conversational AI market is the rising focus on personalized assistance. Earlier chatbots used to provide generic responses to user queries but now with advanced AI technologies, bots are able to understand users better through continuous conversations. They can remember past interactions, recognize individual users and provide customized assistance based on user needs, preferences and context. This has significantly improved the user experience with conversational agents. The focus on personalization is expected to drive the demand and adoption of conversational AI platforms in the coming years.
Porter’s Analysis
Threat of new entrants: New entrants face high start-up costs in developing conversational AI technologies. Established players have significant resources and existing customer base.
Bargaining power of buyers: Buyers have moderate bargaining power as there are many providers offering similar conversational AI platforms. However, switching costs are low.
Bargaining power of suppliers: Software and technology providers that provide virtual assistants, chatbots, facial recognition etc. have low bargaining power as there are many supplier options for companies.
Threat of new substitutes: Potential substitutions like traditional websites and apps provide some threat. However, the personalized experience of conversational AI is unique.
Competitive rivalry: Intense rivalry exists among leading providers given the lucrative growth opportunities. Companies compete on features, quality, customer experience and pricing.
The geographical region where the conversational AI market is concentrated in terms of value is North America. This is due to wide technological adoption and presence of major technology companies. The USA holds majority market share currently.
The fastest growing region for the conversational AI market is Asia Pacific. The rapid digital transformation and technology innovation in countries like India, China is driving massive growth. Proliferation of mobile devices and internet connectivity is expanding the conversational interface applications in retail, BFSI, healthcare and other sectors.
*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it
Vaagisha Singh
Vaagisha brings over three years of expertise as a content editor in the market research domain. Originally a creative writer, she discovered her passion for editing, combining her flair for writing with a meticulous eye for detail. Her ability to craft and refine compelling content makes her an invaluable asset in delivering polished and engaging write-ups.LinkedIn
