Conversational AI Market Size
| Study Period | 2019 - 2029 |
| Market Size (2024) | USD 53.13 Billion |
| Market Size (2029) | USD 20.43 Billion |
| CAGR (2024 - 2029) | 21.06 % |
| Fastest Growing Market | Asia Pacific |
| Largest Market | North America |
Major Players
*Disclaimer: Major Players sorted in no particular order |
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Conversational AI Market Analysis
The Conversational Systems Market size is estimated at USD 53.13 billion in 2024, and is expected to reach USD 20.43 billion by 2029, growing at a CAGR of 21.06% during the forecast period (2024-2029).
Conversational AI systems are intelligent machine solutions that understand language and conduct verbal or written customer conversations. These systems are aimed at improving the customer experience by boosting interaction.
- The availability of large amounts of data and increasing data-related complexities in enterprises are expected to drive the market demand for conversational system solutions. Further, the requirement of artificial intelligence (AI)-)-enabled systems to mimic human brains is one of the crucial parameters responsible for the development of the industry.
- The usage of conversational systems is increasing because of deep neural networks, machine learning, and other advancements in AI technologies. Conversational systems like chatbots are used for various applications across several end-user verticals. One primary consumer-facing application is a conversational system that acts as a personal assistant. It helps consumers accomplish various tasks; for instance, Apple's Siri offers an intuitive interface for connected homes or cars.
- An organization can simplify and reimagine business processes through conversational software platforms and reduce and automate business workflows through context-aware intelligence systems. These platforms enable users and systems to have meaningful interactions and work in tandem to meet business objectives.
- Furthermore, integrating artificial intelligence (AI) capabilities with conversational systems provides significant opportunities for growth in the global conversational systems market. Various factors, such as a lack of understanding of developing technologies and these systems' dependency on deployment platforms, are projected to hinder market expansion. Additionally, a lack of accuracy in virtual assistants and chatbots is expected to limit the market growth.
- However, the pandemic has bolstered the rapid adoption of advanced technologies. Further, to ease the several processes, various startups have been launched, and new solutions are also coming up, thereby contributing to the market growth rate. For instance, in December 2023, Instabase introduced its conversational AI for cross-document reasoning feature, which allows users to ask natural language questions across multiple documents and quickly receive accurate answers in Converse without any coding or data science expertise.
Conversational AI Market Trends
Rising Usage of AI-based Solutions for Customer Services Drives the Market Growth
- Artificial intelligence (AI)-powered customer support services assist organizations in increasing loyalty, online customer experience, preventive assistance, brand reputation, and even revenue growth. Natural language processing (NLP) and dialog-exchanging tool advances will drive market growth.
- Various contact centers are emphasizing conversational systems because they enable contact centers to AI automate speech-enabled apps and messages for interactions between computers and humans. Additionally, these systems understand client intent in various languages and reply to their inquiries accordingly. Many people throughout the globe use AI-based solutions like messaging platforms and speech-based assistants to connect with businesses. As a result, AI speech-based and messaging platforms are quickly supplanting traditional mobile and web apps as the new interactive medium for interactions.
- The increase can be attributed to a surge in demand for AI-powered customer support services. In view of the fact that by providing users with a much-required facility to complete their usual tasks, automation services are expected to increase significantly over the forecast period.
- Businesses benefit from the proactive customer support services provided by AI that help improve various aspects, such as loyalty, online customer experience, service assistance, brand reputation, and even revenue generation. The market growth is anticipated to be stimulated by growing advances in natural language processing, which includes NLP and dialog exchanging tools. As a result, the uptake of NLP tools is forecast to increase, which will lead to a rise in opportunities in the market, owing to the increased use of web services and cloud-based applications.
Asia Pacific is Expected to be the Fastest Growing Market
- The primary driver for the growth of the Asia-Pacific geographic segment is the significant presence of technology providers and the increasing usage of advanced technology-enabled bot solutions across major industries. These players in the region are focusing on developing innovative solutions to stay in the competitive market landscape.
- The region is witnessing rapid industrialization, raising the need for chatbots in the market under consideration. The growing retail and e-commerce sector in emerging economies, including China, India, Indonesia, Vietnam, Malaysia, the Philippines, Taiwan, and Thailand, has accelerated the high demand for and widespread adoption of chatbots by retailers and e-commerce business owners.
- The Asian-Pacific conversational systems market during the COVID-19 pandemic experienced steady growth. Due to increased COVID-19-infected patients in the region and the lockdown announced by the government of significant economies in the area, the deployments of chatbots by various organizations to handle the patients' queries related to their medication and consultation with doctors online from a remote location increased.
- Owing to the increased technological need, the region is witnessing the emergence of medium and large enterprises to help provide a better customer experience. In February 2024, BharatGPT, India's first Conversational AI, was launched in collaboration with Google Cloud. This significant partnership aims to revolutionize customer interactions with AI chatbots and enhance software development, creative endeavours, domain expertise, and business productivity.
- In August 2024, Amazon announced the beta launch of "Rufus," a generative AI-powered shopping assistant, in India. Rufus, trained on Amazon’s product catalog and web-wide information, addresses customer inquiries, offers product comparisons, provides tailored recommendations, and facilitates product discovery—all within the familiar Amazon shopping experience.
Conversational AI Industry Overview
The conversational AI market is highly fragmented, with major players like IBM Corporation, Microsoft Corporation, Google LLC (Alphabet Inc.), Amazon Web Services, Inc., and Nuance Communications Inc. Players in the market are adopting strategies such as partnerships and acquisitions to enhance their offerings and gain sustainable competitive advantage.
Conversational AI Market Leaders
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IBM Corporation
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Microsoft Corporation
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Google LLC (Alphabet Inc.)
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Amazon Web Services, Inc.
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Nuance Communications Inc.
*Disclaimer: Major Players sorted in no particular order
Conversational AI Market News
- September 2024: Kanari AI, a leading entity in Arabic speech technology, has teamed up with Kata.ai, Indonesia's GenAI chatbot platform, to bolster conversational AI solutions in the Middle East and Southeast Asia.
- August 2024: CoRover.ai, known for its conversational AI innovations and the brain behind BharatGPT, and a member of the Coalition for Responsible Evolution of AI (CoRE-AI), has forged a strategic alliance with EthosAI.one, an AI auditing firm dedicated to the future of Responsible AI.
Conversational Systems Market Report - Table of Contents
1. INTRODUCTION
- 1.1 Study Assumptions and Market Definition
- 1.2 Scope of the Study
2. RESEARCH METHODOLOGY
3. EXECUTIVE SUMMARY
4. MARKET INSIGHTS
- 4.1 Market Overview
-
4.2 Industry Attractiveness - Porter's Five Forces Analysis
- 4.2.1 Threat of New Entrants
- 4.2.2 Bargaining Power of Buyers/Consumers
- 4.2.3 Bargaining Power of Suppliers
- 4.2.4 Threat of Substitute Products and Services
- 4.2.5 Intensity of Competitive Rivalry
- 4.3 Impact of Macroeconomic Trends on the Market
5. MARKET DYNAMICS
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5.1 Market Drivers
- 5.1.1 Rising Usage of AI-based Solutions for Customer Services
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5.2 Market Challenges
- 5.2.1 Accuracy Problems Related to Conversational Platforms
6. MARKET SEGMENTATION
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6.1 By Modality Type
- 6.1.1 Uni-Modal
- 6.1.2 Multi-Modal
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6.2 By Type
- 6.2.1 Voice Assisted
- 6.2.2 Text Assisted
- 6.2.3 Other Types
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6.3 By Deployment
- 6.3.1 On-Premise
- 6.3.2 Cloud
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6.4 By Enterprise Size
- 6.4.1 Small & Medium Enterprises
- 6.4.2 Large Enterprises
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6.5 By End-user Verticals
- 6.5.1 IT & Telecommunication
- 6.5.2 BFSI
- 6.5.3 Government
- 6.5.4 Retail
- 6.5.5 Energy & Power
- 6.5.6 Other End-User Verticals (Educational Institutions, Travel & Tourism, Transportation & Logistics)
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6.6 By Geography***
- 6.6.1 North America
- 6.6.2 Europe
- 6.6.3 Asia
- 6.6.4 Australia and New Zealand
- 6.6.5 Latin America
- 6.6.6 Middle East and Africa
7. COMPETITIVE LANDSCAPE
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7.1 Company Profiles
- 7.1.1 IBM Corporation
- 7.1.2 Microsoft Corporation
- 7.1.3 Google LLC (Alphabet Inc.)
- 7.1.4 Amazon Web Services Inc.
- 7.1.5 Nuance Communications Inc.
- 7.1.6 Oracle Corporation
- 7.1.7 Kore.ai
- 7.1.8 LivePerson
- 7.1.9 SAP SE
- 7.1.10 Baidu
- *List Not Exhaustive
8. INVESTMENT ANALYSIS
9. FUTURE OF THE MARKET
** Subject To AvailablityConversational AI Industry Segmentation
A conversational AI technology processes and converts simple bidirectional text and conversation into meaningful output. Traditional systems are sophisticated instruments equipped with sensors, IoT systems, and appliances. These systems use enhanced methods of communication, such as sight, sound, and tactile, to communicate across a digital device network.
The conversational AI market is segmented by modality type (uni-modal and multi-modal), by type (voice-assisted and text-assisted), by deployment (on-premise, cloud), by enterprise size (small & medium enterprises, large enterprises), by end-user verticals (IT & telecommunication, BFSI, government, retail, energy & power, and other end-users), and geography (North America, Middle East and Africa, Latin America, Asia Pacific, and Europe). The market sizes and forecasts are provided in terms of value in (USD) for all the above segments.
| By Modality Type | Uni-Modal |
| Multi-Modal | |
| By Type | Voice Assisted |
| Text Assisted | |
| Other Types | |
| By Deployment | On-Premise |
| Cloud | |
| By Enterprise Size | Small & Medium Enterprises |
| Large Enterprises | |
| By End-user Verticals | IT & Telecommunication |
| BFSI | |
| Government | |
| Retail | |
| Energy & Power | |
| Other End-User Verticals (Educational Institutions, Travel & Tourism, Transportation & Logistics) | |
| By Geography*** | North America |
| Europe | |
| Asia | |
| Australia and New Zealand | |
| Latin America | |
| Middle East and Africa |
Conversational Systems Market Research FAQs
How big is the Conversational Systems Market?
The Conversational Systems Market size is expected to reach USD 53.13 billion in 2024 and grow at a CAGR of 21.06% to reach USD 20.43 billion by 2029.
What is the current Conversational Systems Market size?
In 2024, the Conversational Systems Market size is expected to reach USD 53.13 billion.
Who are the key players in Conversational Systems Market?
IBM Corporation, Microsoft Corporation, Google LLC (Alphabet Inc.), Amazon Web Services, Inc. and Nuance Communications Inc. are the major companies operating in the Conversational Systems Market.
Which is the fastest growing region in Conversational Systems Market?
Asia Pacific is estimated to grow at the highest CAGR over the forecast period (2024-2029).
Which region has the biggest share in Conversational Systems Market?
In 2024, the North America accounts for the largest market share in Conversational Systems Market.
What years does this Conversational Systems Market cover, and what was the market size in 2023?
In 2023, the Conversational Systems Market size was estimated at USD 41.94 billion. The report covers the Conversational Systems Market historical market size for years: 2019, 2020, 2021, 2022 and 2023. The report also forecasts the Conversational Systems Market size for years: 2024, 2025, 2026, 2027, 2028 and 2029.
Conversational Systems Industry Report
Statistics for the 2024 Conversational Systems market share, size and revenue growth rate, created by Mordor Intelligence™ Industry Reports. Conversational Systems analysis includes a market forecast outlook 2029 and historical overview. Get a sample of this industry analysis as a free report PDF download.
