Chatbot Market to Reach $10.5 Billion by 2026
Research firm MarketsandMarkets projects the worldwide chatbot market to grow from $2.9 billion in 2020 to $10.5 billion by 2026, at a compound annual growth rate (CAGR) of 23.5 percent.
One of the factors contributing to the growth of the chatbot market is the increase in focus on customer engagement through various channels, according to the report, which also highlights initiatives toward the development of self-learning chatbots to deliver a more human-like conversational experience as a huge opportunity.
The report identifies IBM, Microsoft, Google, Amazon Web Services, Nuance Communications (recently acquired by Microsoft), Oracle, and Creative Virtual as key players in the market.
Though there was a slight manufacturing slowdown during the COVID-19 pandemic, the adoption of collaborative applications, analytics, security solutions, and artificial intelligence is set to increase in the remaining part of the year.
The report segments the market into solutions and services. The solutions segment includes both platforms and software and is expected to hold larger market share due to technology evolution that is making human-machine communication more interactive through AI-based solutions. Vendors have developed self-service software and services to add value to chatbots, thereby helping them in understanding user intent and delivering information.
The report further segments the maket into rules-based and AI-based solutions. Of those, the AI-based segment is expected to grow at a higher rate as chatbots rely more heavily on natural language processing and machine learning to generate their own answers to more complicated questions.
The report also segments the market by channel into websites, contact centers, social media, and mobile applications. Of those, mobile is projected to have the largest market share, due mostly to growing usage of smartphones across the globe. Chatbots can communicate with mobile users with the help of text messaging, applications, websites, and social media. They help organizations in the real-time monitoring of customer behaviors, trends, and interactions. They also track mobile services, such as geolocation, enabling rich, targeted communication based on locations and events.
Among business departments using chatbots, corporate finance is expected to grow at the highest CAGR, while sales and marketing are expected to account for the largest market size due to the ease in collecting data from customers to improve service/ product quality and conversion rates.
By application, the report segments the market into customer service, personal assistant, branding and advertisement, customer engagement and retention, data privacy and compliance, employee engagement and on-boarding, payment processing, sales and marketing, and others, including churn analysis, campaign management, news delivery, and data aggregation. Of those, customer service is expected to hold largest market share as companies refocus their efforts to deliver 24/7 support to customers.
Among verticals, healthcare and life sciences are expected to grow at the highest CAGR. Chatbots, the report concluded, could revolutionize healthcare, substantially boosting efficiency and improving the accuracy of symptom collection and ailment identification, preventive care, post-recovery care, and feedback procedures.