AI software revenue to surge by a factor of 12 by 2025

April 29, 2020 -LONDON, UK: Global AI software revenue is projected to increase by 12-fold in the next seven years, skyrocketing from $10.1 billion in 2018 to $126.0 billion in 2025 according to Omdia.

“The global AI market is entering a new phase in 2020 where the narrative is shifting from asking whether AI is viable to declaring that AI is now a requirement for most enterprises that are trying to compete on a global level,” said Keith Kirkpatrick, principal analyst with Omdia. “AI is likely to trigger major transformations in industries where there is a clear case for incorporating AI, rather than in pie-in-the-sky use cases that may not generate a return on investment (ROI) for many years.”

Top use cases

Demand for artificial intelligence in the consumer, enterprise, government and defense sectors is growing. Currently, the number of business-to-business (B2B) software opportunities related to AI total 333 and cover 28 industry sectors, with 203 unique use cases. These use cases cover three major categories that are defined by the primary technology enablers of vision, language and analytics. Industry sectors where AI is likely to generate an immediate ROI include consumer (internet services), telecommunications, automotive, healthcare, advertising, business services and retail.

The consumer sector has been particularly successful in tapping the potential of AI due to the availability of an increasingly large amount of data as well as the development of powerful AI algorithms and processing hardware. This is expected to motivate other top AI verticals to leverage the growing use of Internet of things (IoT) data sources, specialized deep-learning (DL) algorithms and high-end processing hardware.

Due to the rising adoption of consumer digital assistants in smart speakers, mobile smartphone devices, automobiles as well as in other consumer devices and services, voice/speech recognition represents the highest revenue-generating use case. The sector is forecasted to rake in a global cumulative revenue of $38.8 billion from 2018 to 2025 and attain annual revenue of $8.8 billion in 2025, as reported by the Omdia Artificial Intelligence Market Forecasts report.

Other top use cases include customer service and marketing virtual digital assistants, network IT/operations and management, video surveillance, supply chain and inventory management, customer experience management/service delivery, personalized tutoring and adaptive learning, machine/vehicular object detection/identification/avoidance, medical image analysis and patient data processing.

Deep learning to drive AI market

Between 2018 and 2025, Omdia estimates that 57 percent of AI revenue will involve perception, with enhancements in vision and language. And moving forward, DL will be the key driving force of the AI market.

Unlike machine learning (ML), DL has improved perception capabilities that enable it to learn the features and rules of data without being told what those features are. This capability has allowed DL to extend to other types of very large datasets, such as those found in investment trading, cybersecurity and healthcare.

Furthermore, many use cases will employ DL or a combination of DL with other technologies like ML, computer vision, natural language processing or machine reasoning. As a result, DL-based human perception derived from vision and language is expected to take over machine learning-based analytics’ role in driving AI in the long run due to the wide range of use cases that will be enabled now and well into the future.

The largest technology category in terms of revenue, DL revenue is expected to grow from $5.1 billion in 2018 to $74.5 billion by 2025, representing 59 percent of the overall AI market in 2025.

About Omdia

Omdia is a global technology research powerhouse, established following the merger of the research division of Informa Tech (Ovum, Heavy Reading and Tractica) and the acquired IHS Markit technology research portfolio*.

We combine the expertise of over 400 analysts across the entire technology spectrum, analyzing 150 markets publishing 3,000 research solutions, reaching over 14,000 subscribers, and covering thousands of technology, media & telecommunications companies.

Our exhaustive intelligence and deep technology expertise allow us to uncover actionable insights that help our customers connect the dots in today’s constantly evolving technology environment and empower them to improve their businesses – today and tomorrow.

Omdia is a registered trademark of Informa PLC and/or its affiliates. All other company and product names may be trademarks of their respective owners. Informa PLC registered in England & Wales with number 8860726, registered office and head office 5 Howick Place, London, SW1P 1WG, UK. Copyright © 2020 Omdia . All rights reserved.

*The majority of IHS Markit technology research products and solutions were acquired by Informa in August 2019 and are now part of Omdia.