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October 26, 2016 |

Worldwide Cognitive Systems and Artificial Intelligence Revenues Forecast to Surge Past $47 Billion in 2020, According to New IDC Spending Guide

FRAMINGHAM, Mass.–(BUSINESS WIRE)–Widespread adoption of cognitive systems and artificial intelligence (AI) across a broad range of industries will drive worldwide revenues from nearly $8.0 billion in 2016 to more than $47 billion in 2020. According to a new Worldwide Semiannual Cognitive/Artificial Intelligence Systems Spending Guide from International Data Corporation (IDC), the market for cognitive/AI solutions will experience a compound annual growth rate (CAGR) of 55.1% over the 2016-2020 forecast period.

FRAMINGHAM, Mass.–(BUSINESS WIRE)–Widespread adoption of cognitive systems and artificial intelligence (AI) across a broad range of industries will drive worldwide revenues from nearly $8.0 billion in 2016 to more than $47 billion in 2020. According to a new Worldwide Semiannual Cognitive/Artificial Intelligence Systems Spending Guide from International Data Corporation (IDC), the market for cognitive/AI solutions will experience a compound annual growth rate (CAGR) of 55.1% over the 2016-2020 forecast period.

“Software developers and end user organizations have already begun the process of embedding and deploying cognitive/artificial intelligence into almost every kind of enterprise application or process,” said David Schubmehl, research director, Cognitive Systems and Content Analytics at IDC. “Recent announcements by several large technology vendors and the booming venture capital market for AI startups illustrate the need for organizations to be planning and undertaking strategies that incorporate these wide-ranging technologies. Identifying, understanding, and acting on the use cases, technologies, and growth opportunities for cognitive/AI systems will be a differentiating factor for most enterprises and the digital disruption caused by these technologies will be significant.”

The ability to recognize and respond to data flows using algorithms and rule-based logic enables cognitive/AI systems to automate a broad range of functions across many industries. The use cases that are attracting the most investment in 2016 are automated customer service agents, quality management investigation and recommendation systems, diagnosis and treatment systems, and fraud analysis and investigation. The use cases that will experience the fastest revenue growth over the next five years are public safety and emergency response, pharmaceutical research and discovery, diagnosis and treatment systems, supply and logistics, quality management investigation and recommendation systems, and fleet management.

“Near-term opportunities for cognitive systems are in industries such as banking, securities and investments, and manufacturing,” said Jessica Goepfert, program director, Customer Insights and Analysis at IDC. “In these segments, we find a wealth of unstructured data, a desire to harness insights from this information, and an openness to innovative technologies. Furthermore, the value proposition of cognitive systems aligns well with industry executives’ chief priorities. For instance, cognitive technologies are being used in the banking industry to detect and combat fraud – consistently a top industry pain point. Meanwhile, in manufacturing, executives cite improving product quality as a top initiative. In this case, cognitive systems recognize and know how to respond to dynamic fluctuations in product specs by adapting the production to stay within quality targets.”

The industries that will invest the most in cognitive/AI systems in 2016 are banking and retail, followed by healthcare and discrete manufacturing. Combined, these four industries will generate more than half of all worldwide cognitive/AI revenues in 2016, with banking and retail each delivering nearly $1.5 billion. Healthcare and discrete manufacturing will deliver the greatest revenue growth over the 2016-2020 forecast period, with CAGRs of 69.3% and 61.4%, respectively. Education and process manufacturing will also experience significant growth over the forecast period.

Nearly half of all cognitive/AI revenue throughout the forecast will go to software, which includes both cognitive applications (i.e., text and rich media analytics, tagging, searching, machine learning, categorization, clustering, hypothesis generation, question answering, visualization, filtering, alerting, and navigation) and cognitive software platforms, which facilitate the development of intelligent, advisory, and cognitively enabled solutions. As both the largest and fastest-growing category, cognitive applications spending is forecast to reach $18.2 billion in 2020. Cognitive/AI-related services (business services and IT consulting) represent the second largest revenue category while hardware revenues (primarily from dedicated purchases of servers and storage) will grow nearly as fast as software with five-year CAGRs of more than 60%.

On a geographic basis, North America (the United States and Canada) is by far the largest region for cognitive/AI spending with 2016 revenues approaching $6.2 billion. Europe, the Middle East and Africa (EMEA) will remain the second largest region throughout the forecast, but cognitive/AI revenues from Asia/Pacific including Japan will nearly close the gap with EMEA by 2020.

The new Worldwide Semiannual Cognitive/Artificial Intelligence Systems Spending Guide sizes the market for technologies that analyze, organize, access, and provide advisory services based on a range of unstructured information. The spending guide quantifies the cognitive computing opportunity by providing data for more than 20 use cases across 19 industries in eight regions. Data is also available for the related hardware, software, and services categories. Unlike any other research in the industry, the detailed segmentation and timely, global data is designed to help suppliers targeting the market to identify market opportunities and execute an effective strategy.

About IDC Spending Guides
IDC’s Spending Guides provide a granular view of key technology markets from a regional, vertical industry, use case, buyer, and technology perspective. The spending guides are delivered via pivot table format or custom query tool, allowing the user to easily extract meaningful information about each market by viewing data trends and relationships.

About IDC
International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,100 analysts worldwide, IDC offers global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. IDC’s analysis and insight helps IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives. Founded in 1964, IDC is a wholly-owned subsidiary of International Data Group (IDG), the world’s leading media, data and marketing services company. To learn more about IDC, please visit www.idc.com. Follow IDC on Twitter at @IDC.

Contacts
IDC
Jessica Goepfert, 508-988-6944
jgoepfert@idc.com
or
Michael Shirer, 508-935-4200
press@idc.com


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