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  Date: 02/11/2016

Cognitive/AI sys to grow 55.1% CAGR from $8B in 2016 to $47B in 2020, IDC

IDC has forecasted the cognitive artificial intelligence (AI) system market to see a compound annual growth rate (CAGR) of 55.1% over the period of 2016-2020 that is from $8.0 billion in 2016 to more than $47 billion in 2020.

"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 other findings shared by IDC on this market includes :

This market has the ability to identify and react to the data flows using algorithms and rule-based logic enables cognitive/AI systems to automate a large range of functions across many industries. The use cases attracting investment in 2016 are automated customer service agents, quality management investigation and recommendation systems, diagnosis and treatment systems, and fraud analysis and investigation and also the use cases which 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.


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.
Author: Srinivasa Reddy N
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