Chatbot Market, by Component Type (Solution, Services), Deployment (On-premise, Cloud), Usage (Website, Contact Centers, Social Media, Mobile Platform), End-User (Retail & E-commerce, BFSI, Healthcare, Travel & Tourism, Others), Regional Analysis (North America, Europe, Asia Pacific, LAMEA): Global Opportunity Analysis and Industry Forecast, 2020–2027

The global chatbot market forecast shall be $19,570 million by 2027, increasing from $2,568.3 million in 2019 at a healthy rate of 28.7%. Asia Pacific chatbot market is estimated to grow at a CAGR of 29.3% by registering a revenue of $5,049.1 million, throughout the analysis period. Massive expansion of information and communications technology infrastructure, combined with rising adoption of smartphone users particularly in India, China, and Australia are some of the factors driving the Asia-Pacific chatbot market during the forecast period.

Global Chatbot Market Analysis:

Chatbot is a computer application that is powered by artificial intelligence and it chats virtually to humans to solve queries or related problems in multiple languages. Furthermore, chatbots help in reducing the operational expense and increase overall efficiency.

Impact Analysis of COVID-19 on the Chatbot Market

The global chatbot market is expected to witness an upsurge in growth rate during the outbreak of COVID-19 pandemic, mainly because its deployment by various industrries such as banking & insurance, healthcare, and retail for responding to queries of customers and other tasks. Due to lockdown conditions in the majority of countries, remote work facility has been adopted by various organizations. The companies are highly dependent on chatbots to control the burden of customer queries due to less availability of employees.

However, certain companies operating in the chatbot market such as Google and IBM are coming forward with their strategic steps to help society, during the COVID-19 chaotic situation. For instance, in June 2020, The Andhra Pradesh National Health Mission announced that they have integrated with IBM Watson, a virtual agent, in order to help the people rapidly get answers to their queries regarding COVID-19. The innovative chatbot is developed to understand and respond to frequent questions about the pandemic in Telugu, Hindi, and English. Moreover, in April 2020, WHO (World Health Organization) announced that they have successfully launched Facebook messenger, their own version of WHO health alert platform to offer accurate and instant information about COVID-19. These key factors may generate investment opportunities for the chatbot industry, in the global marketplace.

Rising adoption of advanced chatbots by market leaders may flourish the global market for chatbot technologies

The chatbot industry is witnessing massive growth mainly because of the increase in the adoption of chatbots to handle queries and support customers. According to Salesforce.com, inc, an American cloud-based software company, more than 69% consumers prefer to use chatbots for speeding up communication.

Furthermore, strategic collaboration, product innovation, and business expansions of tech-giants are also expected to bolster the chatbot market, across the globe. For instance, in November, 2020, Microsoft entered into a collaboration with Novo Nordisk, a significant healthcare company specializing in diabetes care worldwide, in order to develop an AI Chinese-speaking chatbot for diabetic patients. Also, in April 2020, Amazon Web Services, Inc., commercialized AWS Chatbot for all customers. AWS Chatbot is an interactive agent that can receive crucial alerts, run commands to return diagnostic information, perform AWS Lambda functions, and develop AWS support cases. Such key developments may lead to an increase in the demand for chatbot services in the global market.

To know more about chatbot market drivers, get in touch with our analysts here.

Lack of awareness may restrain the growth of the global chatbot industry

Lack of awareness and other challenges such as complex management of chatbots may obstruct the market growth, which will ultimately hamper the global chatbot market, throughout the forecast period. Moreover, limited awareness about benefits of AI chatbots may limit the growth of adoption of chatbot in the global market.

The enormously growing adoption of self-learning chatbots to deliver more humanlike conversational experience may create huge opportunities for the global chatbot market in the future

In recent years, companies have been working on the development of self-learning chatbots. Hence, they are implementing various integrated technologies like cloud-based deployment, interference engine, natural language processor (NLP), and application programing interface (API). These self-learning chatbots can adapt easily with changing environment and conditions as they can learn from their previous conversations, actions, decisions and experience. Moreover, companies are collaborating with each other to serve integrated self-service technology to the customer. For instance, in February 2020, Creative Virtual announced partnership with Spitch AG to develop speech recognition as well as conversational AI together, particularly in the omnichannel solutions. The collaboration provides a multi-lingual voicebot to enhance sales and customer experience. Above-stated factors are expected to create positive opportunities for the global chatbot market, in the coming years.

To know more about Chatbot Market Opportunities, get in touch with our analysts here.

Chatbot Market, by Component Type:

Services segment for chatbot market expected generate a revenue of $8,825.8 million by 2027 at notable CAGR of 33.8%

Source: Research Dive Analysis

Service segment for chatbot market shall have the fastest growth and it is expected to generate a revenue of $8,825.8 million by 2027, growing from $843.6 million in 2019. The growth of this segment for the global chatbot market is mainly attributed to its features including powerful NLP, highly advanced multilingual capabilities, capability of real-time analysis, and cost-effectiveness. In addition to this, certain market leaders are emphasizing on the technological innovations to fulfil the needs of organizations. For instance, in March 2020, Maintel, the UK based cloud and managed services company, with a focus on communication has made an announcement that they have released the AI-powered Chatbot as service solutions in order to meet the increasing requirements of customers to digitally transform the experience.

Moreover, solution segment for chatbot market shall have a dominating share in the global market and is projected to register a revenue of $10,763.8 million, during the analysis timeframe owing to the technological advancements along with growing customer demand for self-services. These are some of the key factors are surging the demand for chatbots, in the global market, over the forecast period.

Chatbot Market, by Deployment:

The cloud deployment for chatbot market will have the fastest market growth due to exponentially rising popularity of intelligent bots such as Alexa among the customers

Source: Research Dive Analysis

The cloud sub-segment of the chatbot market will have the fastest growth and it is expected to surpass $11,298.0 million by 2027, with an increase from $1,144.5 million in 2019. Cloud-based chatbots handle multiple types of confidential business information including client contact details, employees’ social security numbers, invoices and accounting, supply chain management, and other business intelligence. Also, growing popularity of cloud-based natural-language intelligent bots, such as google assistant, Alexa, and Siri is also fueling the segment growth, over the forecast period.

 On the other hand, the on premise sub-segment for the chatbot market will be a rapidly-growing segment and is estimated to generate a revenue of $8,297.2 million, throughout the analysis timeframe. Absolute control, excellent data security, and high flexibility are some of the reasons, businesses across the globe go for the adoption of on-premise chatbots platform. In addition, these platforms help in reducing dependency on vendors by giving sufficient room for customization along monitoring data access and usage more closely.

Chatbot Market, by Usage:

Social media for chatbot market will have the fastest market growth, during the forecast period

Source: Research Dive Analysis

The social media sub-segment for the chatbot market shall have rapid growth and is expected to generate a revenue of $4,686.4 million by 2027, throughout the review period. Chatbots help in increasing efficiency of work on social media mainly because it generates a more personal engagement with customers. Furthermore, discovering customer’s exact wants, shortening of sales cycle, and expansion of sales pipeline are some of the key factors responsible for the increased adoption of chatbots in the social media services.

The website segment for the chatbot market will have significant growth and it is projected to register a revenue of $5,848.8 million by 2027, during the analysis period. Integration of chatbot platform into website helps users in multiple ways such as ordering food, scheduling flights, and others. Hence, the adoption of chatbots in the website segment has seen dramatic growth, in the forecast period.

Chatbot Market, by End-User:

The travel and tourism segment for chatbot market will have lucrative growth due to growing demand for great tourism experiences

Source: Research Dive Analysis

Travel & tourism end-user for the global chatbot market will have magnificent growth and is further predicted to register a revenue of $2,591.1 million by 2027, during the forecast period. Extensively increasing demand for more meaningful travel experiences among the travelers across the globe can be one of the major factors driving the global chatbots market, during the forecast period. Chatbots come with multiple key benefits such as it is easy to access, informs users potential to customer regarding destinations & events, delivers more valuable information to clients, and increases the engagement rate. Hence, leading travel companies Kayak, Expedia are experimenting with chatbots, powered by a combination of NLP, live operators and machine learning, to serve customer service, sales support, and other commerce-related functions.

Regional Insights:

North America region has a significant market and it will reach up to $5,581.4 million by the end of 2027 owing to the strong presence of key players and their heavy investments into research & innovations

Source: Research Dive Analysis

The North America chatbot market accounted for $776.1 million in 2019 and is expected to register a revenue of $5,581.4 million by 2027. The market growth in the region is mainly driven by the enormous growth in the deployment of chatbots in multiple business verticals. In addition to this, technological innovations such as IoT, APIs, and artificial intelligence are evolving at a fast speed. Advanced chatbots are integrated with these technologies to provide enhanced operations, thereby boosting market demand.

Asia-Pacific chatbot market share is projected to grow at a CAGR of 29.3% by registering a revenue of $5,049.1 million by 2027. The Asia-Pacific region for chatbot market shows significant growth, as the region holds more than 50% of the global population, and hence any key technological shifts, such as AI and IoT are likely propel the market growth in the region. Massive expansion of information and communications technology infrastructures in the emerging countries, like India and China are projected to drive the market, during the forecast period. For example, in April 2020, Yellow Messenger, world’s fastest growing virtual assistant company, has announced that they have raised $20 million from an investor to cater the surging market’s demand.

Competitive Scenario in the Global Chatbot Market:

The advanced product development coupled with mergers & acquisitions are the frequent strategies followed by the significant market players

Source: Research Dive Analysis

Some of the leading chatbot market players include Kevit, Conversica, Inc, Yellow Messenger, CONTUS., KeyReply, Aivo, [24]7. ai, International Business Machine Corporation, Amazon Web Services, Inc, and Google Inc. Chatbot market players are focusing on novel product development, business expansion, and merger & acquisition. These are the effective strategies followed by the startup as well as established organizations.

Porter’s Five Forces Analysis for Chatbot Market:

• Bargaining Power of Suppliers: The chatbot technology players are high in number, and established companies of the chatbots are much larger and globalized. Hence, there will be less threat from the supplier. Thus, the bargaining power of the supplier is Moderate
• Bargaining Power of Buyer: Buyers shall have great bargaining power, mainly because of large number of players operating in the chatbot market. The chatbot service provider offers multiple features at an affordable price. The buyers can freely select products and services that best fit their preferences. Thus, the bargaining power of the buyer is HIGH
• Threat of New Entrants: The companies entering into the chatbot market are opting technological advancements to attract the users. Also, these companies are implementing multiple effective strategies to survive in the market. Thus, the bargaining power of the new entrant is Moderate
• Threat of Substitutes: There is no alternative product or service for chatbot so far. Thus, the threat of substitute is Low
• Competitive Rivalry in the Market: The competitive rivalry in the chatbot industry leaders is rather intense, especially between the global players including Microsoft, IBM, and Amazon. These tech giants are launching their value-added products and services in the global market and strengthening the footprint, across the world.Competitive rivalry in the market is High