Chatbot Market Growing at a CAGR 23.5% | Key Player IBM, Microsoft, Google, AWS, Nuance

IBM (US), Microsoft (US), Google (US), AWS (US), Nuance (US), Oracle (US), Creative Virtual (UK), Artificial Solutions (Spain), (US), Inbenta (US), [24]7.AI (US), Aivo (Argentina) ServiceNow (US), Conversica (US), Personetics (US), LiveChat (Poland), MindMeld (US), CogniCor (US), Gupshup (US), Contus (India), Chatfuel (US), KeyReply (Singapore).
Chatbot Market by Component, Type (Rule Based & AI Based), Application (Customer Service, Customer Engagement & Retention), Channel Integration, Business Function (ITSM, Finance), Vertical, and Region (2022 – 2026)

The global Chatbot market size to grow from USD 2.9 billion in 2020 to USD 10.5 billion by 2026, at a Compound Annual Growth Rate (CAGR) of 23.5% during the forecast period. The adoption of chatbot solutions is considerable and is projected to grow at a good pace in the coming years. One of the factors contributing to the growth of the chatbot market is the growing need for 24/7 customer support at a lower operational cost. Furthermore, the rise in demand for AI-based chatbots to deliver enhanced customer experience thus offering a competitive advantage to businesses.

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The COVID-19 pandemic has impacted trading activities across regions. It has had a moderate impact on all the elements of the technology sector. The hardware business is predicted to be the most impacted in the IT industry. Due to the slowdown of hardware supply and reduced manufacturing capacity, the IT infrastructure growth has slowed down. Businesses providing solutions and services are also expected to slow down for a short span of time. However, the adoption of collaborative applications, analytics, security solutions, and AI is set to increase in the remaining part of the year. Verticals such as manufacturing, retail, and energy and utilities have witnessed a moderate slowdown, whereas BFSI, government, and healthcare and life sciences verticals have witnessed a minimal impact. There was an immediate and widespread impact of COVID-19 on customer behavior across all industries. Consumer behavior has changed over the last few months across all countries and demographics. There has been an increase in expectations as priorities have shifted to health and safety first, which have realigned core human values and beliefs. As a result, almost all businesses have been thrust into reorganizing their approach to customers.

The solution segment is expected to account for larger market size during the forecast period

The global chatbot market is segmented on the basis of components into solutions and services.  Based on the solutions segment, the market is divided into platform and software. The solution segment is expected to hold larger market share as increasing use of chatbots in businesses is due to technology evolution that is making human-machine communication more interactive through AI-based solutions. Vendors have developed self-service NLG software and services to add value to chatbots, thereby helping them in understanding users’ intent and delivering information required by users. Chatbot vendors have added extra capabilities to generate narratives in different human languages, such as English, French, Mandarin, Japanese, and German, making it easy for users to understand.

Nowadays, chatbots carry multiple functions within a messaging conversation without the need for downloading an external application. AI has made significant developments in current chatbot capabilities. Techniques such as deep learning and ML leverage a large amount of data and efficient processing power, thus improving the quality of understanding and decision-making. The adoption of chatbot solutions is considerable and is projected to grow at a good pace in the coming years. One of the factors contributing to the growth of the chatbot market is the advent of technologies, such as analytics, AI, and cloud, which enable various industries to organize their operations. Ease of work execution and the need for saving time are some additional factors accelerating the use of chatbots as personal assistants in day-to-day life.

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Some of the key players operating in the chatbot market include IBM (US), Microsoft (US), Google (US), AWS (US), Nuance (US), Oracle (US), Creative Virtual (UK), Artificial Solutions (Spain), (US), Inbenta (US), [24]7.AI (US), Aivo (Argentina) ServiceNow (US), Conversica (US), Personetics (US), LiveChat (Poland), MindMeld (US), CogniCor (US), Gupshup (US), Contus (India), Chatfuel (US), KeyReply (Singapore), SmartBots (US), Yellow Messenger (India), Kevit (India), Yekaliva (India), and Pypestream (US). These chatbot vendors have adopted various organic and inorganic strategies to sustain their positions and increase their market shares in the global chatbot market.

Google, a publicly held company, was founded in 1998 and is headquartered in California, US. The company’s parent organization, Alphabet, was founded in 2015. Google’s product innovations witness an increase in the use of its services, and the company is one of the most recognized brands in the world. Its core products and platforms include Android, Chrome, Gmail, Google Drive, Google Maps, Google Play, Search, and YouTube, and each of them has over 1 billion active users every month. Google has built a platform in the cloud and invests in infrastructure, security, data management, analytics, and AI. The company’s global clientele base is spread across industry verticals, such as automotive, BFSI, retail and eCommerce, education, energy, engineering, entertainment, environment, food, beverage, government, healthcare, manufacturing, media, telecommunications and IT, transportation, and travel and hospitality. As more digital experiences are being built in the cloud, the company’s cloud products focus on helping enterprises of all sizes take advantage of the latest technologies and efficiently operate their businesses. Google also increasingly invests in platforms, such as Android mobile OS, Chrome browser, Chrome OS, and Daydream Virtual Reality (VR). It operates through 70 offices in more than 50 countries worldwide. In February 2020, the company completed the acquisition of Looker, a unified platform provider for business intelligence, data applications, and embedded analytics. In the chatbot market, Google offers Dialogflow that is aimed at enabling users with new ways to interact with products by building engaging voice and text-based conversational interfaces, such as voice apps and chatbots, powered by AI.

Microsoft was founded in 1975 and is headquartered in Washington, US. It is a prominent leader across regions and provides software products, along with diverse licensing suites. The company develops and supports software, services, devices, and solutions. Its product offerings include Operating Systems (OS), cross-device productivity applications, server applications, business solution applications, desktop and server management tools, software development tools, and video games. It also designs, manufactures, and sells devices, such as PCs, tablets, gaming and entertainment consoles, other intelligent devices, and related accessories. The company offers a range of services, which includes solution support, consulting services, and cloud-based solutions that provide customers with software, services, platforms, and content. It also offers online advertising and is a global leader in building analytics platforms. It provides production services for the AI-infused intelligent cloud. The company generates revenues by licensing and supporting a range of software products. Microsoft caters to a wide range of verticals, including finance and insurance, manufacturing and retail, media and entertainment, public sector, healthcare, and IT and telecommunications. It has a geographical presence in more than 190 countries across North America, APAC, Latin America, the MEA, and Europe. Microsoft offers Azure Bot Service in the chatbot market. Azure Bot Service enables rapid intelligent bot development powered by the Microsoft Bot Framework, which operates in a serverless environment on Azure.

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