Conversational AI Market Outlook – 2030
The global conversational AI market size was valued at $5.78 billion in 2020 and is projected to reach $32.62 billion by 2030, registering a CAGR of 20.0% from 2021 to 2030.
Conversational artificial intelligence is a set of techniques designed to empower computer applications to process, understand, and respond to user voice and text commands in a natural way. Moreover, conversation AI is an enhanced form of artificial intelligence that allows users to interact with devices, websites, and applications through touch, text, and gesture information.
Conversational AI is intended to be used in combination with intelligent virtual agents or chatbots to interact with a complex system in a faster and more reliable way. Further, applied conversational artificial intelligence requires the combination of art and science to create a digital application that incorporates relevance, context, and personalization within an interaction between humans and computers.
Conversational artificial intelligence unites machine learning technology with natural language processing (NLP). NLP is designed to flow into a constant loop with machine learning processes to continuously enhance AI algorithms. Subsequently, machine algorithms advance their response quality over time with improvement in learning.
The conversational AI market share is expected to witness notable growth during the forecast period, owing to a rise in demand for AI-powered customer support services. Furthermore, the rise in demand for AI-based Gartner chatbot solutions has driven the growth of the market. Moreover, the surge in deployment of omnichannel methods is expected to propel the conversational AI market growth during the forecast period. However, a lack of awareness about conversational artificial intelligence solutions restrains the market growth. On the contrary, the rise in customer engagement through social media platforms is expected to provide lucrative opportunities for the growth of the conversational AI market during the forecast period.
Key Takeaways
- The global market study covers 20 countries. The research includes a segment analysis of each country in terms of value for the projected period.
- More than 1,500 product literature, industry releases, annual reports, and other such documents of major market industry participants along with authentic industry journals, trade associations' releases, and government websites have been reviewed for generating high-value industry insights.
- The study integrated high-quality data, professional opinions and analysis, and critical independent perspectives. The research approach is intended to provide a balanced view of global markets and to assist stakeholders in making educated decisions to achieve their most ambitious conversational AI market growth objectives.
Segment Overview
The global conversational AI market is segmented into component, deployment, type, technology, and end user.
Based on components, the market is bifurcated into platforms and services (support & maintenance, training & consulting, and system integration). The platform segment dominated the market, in terms of revenue, in 2020, and is expected to follow the same trend during the forecast period.
By Component
Platform segment influence the market in 2020, and expected to follow the same in future
By deployment, it is divided into cloud and on-premises. The cloud segment was the highest revenue contributor in 2020 and is anticipated to garner significant market share during the forecast period.
By Deployment
Cloud segment will dominate the market throughout the forecast period
By type, the market is categorized into IVA and chatbots. The chatbot segment acquired the largest share in 2020 and is expected to grow at a high CAGR from 2021 to 2030.
By Type
Intelligent Virtual Assistant segment will lead the market by the end of 2030 with a highest CAGR of 22.4%
Based on technology, the market is classified into machine learning, deep learning, NLP, and automated speech recognition. The NLP segment dominated the market, in terms of revenue, in 2020, and is expected to follow the same trend during the forecast period.
By Technology
Natural Language Processing segment will maintain the lead during the forecast period
By end user, the market is fragmented into BFSI, retail & e-commerce, healthcare & life science, travel & hospitality, telecom, media & entertainment, and others. Retail & E-commerce segment was the dominant segment, in terms of revenue, in 2020, and is anticipated to witness significant growth during the forecast period.
By End User
Retail and Ecommerce segment will dominate the market during 2021 - 2030
Regional/Country Market Outlook
North America: The North American conversational AI market leads globally, driven by high technology adoption rates and a strong emphasis on customer experience. Major players, especially in the U.S., are investing heavily in AI-driven solutions to enhance customer service and streamline operations. The presence of established tech companies and startups fosters innovation, contributing to market growth.
Asia-Pacific: The Asia-Pacific region is rapidly emerging as a significant market for conversational AI, fueled by increasing smartphone penetration and a growing emphasis on digital transformation. Countries like China and India are witnessing substantial investments in AI technologies, particularly in customer service and e-commerce sectors, leading to heightened competition and innovation.
Europe: In Europe, the conversational AI market is evolving with a focus on regulatory compliance and data privacy. The region’s diverse linguistic landscape drives the development of multilingual AI solutions. Companies are leveraging conversational AI to improve customer engagement and operational efficiency, particularly in the retail and finance sectors.
LAMEA: The LAMEA region is gradually adopting conversational AI, spurred by the growing demand for automation and improved customer interaction. Moreover, the surge in investment in digital technologies, particularly in Brazil and the Middle East is one of the prime factors propelling the growth of the conversational AI Market in the LAMEA region. However, challenges such as infrastructure limitations and varying regulatory environments may impact market growth.
By Region
LAMEA region would exhibit the highest CAGR of 22.9% during the forcast period
Key Market Dynamics
The conversational AI market is experiencing rapid growth, driven by increasing demand for enhanced customer experiences and automation in various industries. Key factors include the rising adoption of chatbots and virtual assistants, which improve efficiency and reduce operational costs. Technological advancements in natural language processing and machine learning further propel market expansion. Moreover, the surge in investment in conversational interfaces streamlines customer support across prime industries, boosts engagement, and gains valuable insights from user interactions. As companies prioritize personalized communication and 24/7 service availability, the market is projected to see significant advancements and competitive innovations during the forecast period.
Top Impacting Factors
Significant factors that impact the growth of the global conversational AI industry include a surge in demand for AI-based chatbot solutions and an increase in demand for artificial intelligence-powered customer support services. However, the absence of knowledge about conversational artificial intelligence-powered solutions acts as a prime barrier to early adoption, which hampers the growth of the market. On the contrary, the rise in deployment of omnichannel methods coupled with growth in client engagement through social media platforms is expected to offer potential growth opportunities for the conversational AI market during the forecast period.
Competitive Analysis
Competitive analysis and profiles of the major conversational AI market players, such as Amazon Web Services Inc., Artificial Solutions Holding ASH AB, Baidu Inc., Haptik, IBM Corporation, Microsoft Corporation, Oracle Corporation, Google LLC, SAP ERP, and Conversica, Inc. are provided in this report. These key players have adopted various strategies, such as product portfolio expansion, mergers & acquisitions, agreements, geographical expansion, and collaborations, to increase their market penetration and strengthen their foothold in the industry.
Report Coverage & Deliverables
This report delivers in-depth insights into the conversational AI market overview into component, deployment, type, technology, end-user, regions, and major players' key strategies. It offers detailed market forecasts and emerging trends.
Component Insights
The conversational AI market is bifurcated into two main components: platforms and services. In 2020, the platform segment dominated the market in terms of revenue and is expected to maintain this trend throughout the forecast period. The services segment includes support & maintenance, training & consulting, and system integration, which play a crucial role in enhancing the overall effectiveness of conversational AI solutions.
Deployment Insights
The market is divided by deployment into cloud and on-premises solutions. In 2020, the cloud segment emerged as the highest revenue contributor, driven by the growing preference for scalable and flexible solutions. It is anticipated that the cloud segment will continue to garner significant market share during the forecast period, as organizations increasingly adopt cloud-based technologies for their operational needs.
Type Insights
In terms of type, the conversational AI market is categorized into Intelligent Virtual Assistants (IVA) and chatbots. The chatbot segment acquired the largest share of the market in 2020 and is expected to grow at a high compound annual growth rate (CAGR) from 2021 to 2030. This growth is fueled by the increasing demand for automated customer support and engagement solutions across various industries.
Technology Insights
Based on technology, the market is classified into machine learning, deep learning, natural language processing (NLP), and automated speech recognition. The NLP segment led the market in terms of revenue in 2020 and is projected to continue its dominance during the forecast period. The ongoing advancements in NLP technology are enhancing the capabilities of conversational AI, making it more effective in understanding and processing human language.
End User Insights
The conversational AI market is fragmented by end-user into several categories, including BFSI (Banking, Financial Services, and Insurance), retail & e-commerce, healthcare & life sciences, travel & hospitality, telecom, media & entertainment, and others. The retail & e-commerce segment was the dominant revenue contributor in 2020 and is expected to witness significant growth during the forecast period, driven by the increasing demand for personalized customer interactions and streamlined service.
Regional Insights
Regionally, the conversational AI market trends are analyzed across North America (U.S. and Canada), Europe (UK, Germany, France, Italy, and the rest of Europe), Asia-Pacific (China, India, Japan, South Korea, Taiwan, and the rest of the Asia-Pacific), and LAMEA (Latin America, the Middle East, and Africa). North America, particularly the U.S., remains a significant participant in the global conversational AI industry, with major organizations and government institutions heavily investing in technology to enhance operational efficiency and customer engagement.
Key Strategies and Developments
- On October 12, 2023- Rasa, a leading conversational AI technology provider, announced the launch of its new Generative AI-native enterprise conversational platform. This platform aims to democratize generative AI by making it accessible to enterprises in a transparent, reliable, and trustworthy manner. The platform reduces the complexity of building AI assistants and combines pro-code and low-code development for maximum productivity. At the core of the Rasa Platform is CALM (Conversational AI with Language Models), a hallucination-free generative AI-native approach that improves assistant fluency and minimizes building complexity. The platform includes Rasa Pro, an open-core conversational AI framework, and Rasa Studio, which facilitates next-level conversation understanding, dialogue management, and enterprise search.
- On August 7, 2024- Conversational AI has transformed how businesses interact with their customers, and GPT-4 is at the forefront of this revolution. GPT-4, the latest model in the Generative Pretrained Transformers series, uses machine learning to understand and generate human-like text. This model enhances conversational experiences by providing instant, accurate, and personalized responses, improving customer satisfaction and operational efficiency. Businesses can leverage GPT-4 to automate customer service, reducing the workload on customer service teams and providing customers with instant responses. The evolution of GPT models has opened up new possibilities in the field of Conversational AI, paving the way for more natural and engaging interactions between humans and machines.
- In March 2024- AI is changing the way companies approach product launches by enabling more targeted and efficient launch strategies. Businesses are leveraging AI-generated content to enhance engagement and creativity in marketing efforts. This approach leads to improved sales and customer satisfaction. The future of AI in product launches looks promising, with the potential to transform the landscape of new product development and marketing campaigns. As AI continues to advance, businesses will have even more opportunities to create innovative and personalized product launches that resonate with their target audience.
Key Benefits For Stakeholders
- This study comprises an analytical depiction of the conversational AI market size along with the current trends and future estimations to depict the imminent investment pockets.
- The overall conversational AI market analysis is determined to understand the profitable trends to gain a stronger foothold.
- The report presents information related to key drivers, restraints, and opportunities with a detailed impact analysis.
- The current conversational AI market forecast is quantitatively analyzed from 2021 to 2030 to benchmark the financial competency.
- Porter’s five forces analysis illustrates the potency of the buyers and suppliers in the smart display.
- The report includes the market share of key vendors and conversational AI market trends.
Conversational AI Market Key Segments
By Component
- Platform
- Services
- Support and Maintenance
- Training and Consulting
- System Integration
By Deployment
- Cloud
- On-Premises
By Type
- IVA
- Chatbots
By Technology
- Machine Learning
- Deep Learning
- NLP
- Automated Speech Recognition
By End User
- BFSI
- Retail & E-commerce
- Healthcare & Life Science
- Travel & Hospitality
- Telecom
- Media & Entertainment
- Others
Key Market Players
- Amazon Web Services, Inc.
- Artificial Solutions Holding ASH AB
- Baidu, Inc.
- Conversica Inc.
- Haptik
- IBM Corporation
- Microsoft Corporation
- Oracle Corporation
- Google LLC
- SAP ERP
Conversational AI Market Report Highlights
| Aspects | Details |
 By Component |
|
 By Deployment |
|
 By Type |
|
 By Technology |
|
 By End User |
|
 By Region |
|
 Key Market Players | Haptik (Reliance Industries Ltd.), Google LLC, Baidu, Inc, International Business Machines Corporation (IBM), Microsoft Corporation, Conversica Inc., Artificial Solution Holding ASH AB (Artificial Solution International AB), Amazon Web Services, Inc., Oracle Corporation, SAP SE |
Analyst Review
Conversational AI technology is a set of software specifically used to design automated messaging and speech-enabled applications that enable users or humans to interact with computer applications. Further, conversational AI technology can communicate like humans by recognizing text & speech and responding by mimicking human conversation. In addition, rise in demand for self-service applications is expected to offer profitable opportunities for the conversational AI market Moreover, the deployment of AI-powered conversational solutions in automobiles, marketing, e-learning, retail & the e-commerce sector is one of the prime factors driving the growth of the conversational AI market in the coming years.
The global conversational AI market is highly competitive, owing to the strong presence of existing vendors. Conversational AI vendors, who have access to extensive technical and financial resources, are anticipated to gain a competitive edge over their rivals, as they have the capacity to cater to the market requirements. The competitive environment in this market is expected to further intensify with increase in technological innovations, product extensions, and different strategies adopted by key vendors.
Surge in demand for e-commerce platform globally is driving the need to enhance conversational AI solutions such as chatbots and voice assistants. Moreover, prime economics, such as the U.S., China, Germany and Japan, plan to develop and deploy next-generation conversational AI solutions across various sectors. For instance, in March 2021, U.S. President Joe Biden has announced a massive plan to modernize the U.S. infrastructure with an estimated budget of over $2.25 trillion, which is anticipated to provide lucrative opportunities for the market growth.
Among the analyzed regions, North America exhibits the highest adoption rate of conversational AI and has been experiencing massive expansion of the market. On the other hand, Asia-Pacific is expected to grow at a faster pace, predicting lucrative growth due to emerging countries, such as China, Japan, and India, investing in these technologies. Regions, such as the Middle East and Africa, are also expected to offer new opportunities in the conversational AI market in future.
Globally, various key players and government agencies are investing in conversational AI to make them compatible with various industrial platforms. For instance, in April 2020, the French government launched AlloCovid, an artificial intelligence voice assistant service, across the country to help COVID-19 patients suffering from potential coronavirus symptoms. In addition, in August 2019, the BBC released the first beta of the next-generation Beeb voice assistant, an English language Alexa to interact and control display radio and TV services. All these developments across conversational AI showcase lucrative growth opportunities for the market growth.
The key players profiled in the report include Amazon Web Services, Inc., Artificial Solutions Holding ASH AB, Baidu, Inc., Haptik, IBM Corporation, Microsoft Corporation, Oracle Corporation, Google LLC, SAP ERP, and Nuance Communications, Inc.
The Conversational AI Market is estimated to grow at a CAGR of 20.0% from 2021 to 2030.
The Conversational AI Market is projected to reach $32.62 billion by 2030.
To get the latest version of sample report
Surge in demand for AI-based chatbot solutions, and increase in demand for AI-powered customer support services etc. boost the Conversational AI market growth.
The key players profiled in the report include Amazon Web Services Inc., Artificial Solutions Holding ASH AB, Baidu Inc., and many more.
On the basis of top growing big corporations, we select top 10 players.
The Conversational AI Market is segmented on the basis of component, deployment, type, technology, and end user.
The key growth strategies of Conversational AI market players include product portfolio expansion, mergers & acquisitions, agreements, geographical expansion, and collaborations.
Machine Learning segment would grow at a highest CAGR of 25.6% during the forecast period.
North America region will dominate the market by the end of 2030.
Loading Table Of Content...
