The Forrester report, The AI Software Market Will Grow To $37 Billion Globally By 2025, forecasts the AI software market to be worth US$37 billion by 2025.
US$37 billion is not a bad number, right? I guess only if you ignore the lustful gaze of investors eyeing earlier estimates of a US$200 billion opportunity.
The Forrester report, Predictions 2021: Artificial Intelligence, listed many deterrents to AI success: a lack of trust, poor data quality, data paucity, a lack of imagination, and a dearth of the right power tools to scale.
That said, Forrester expects that in 2021 these issues will be tackled head on, not because they want to or suddenly have the wherewithal to overcome these in this unprecedented year, but because they have to.
Why? Forrester believes that this is the only way to compete in an AI-driven future. Effectively hinting that AI will be a standard component of major software in the future.
Forrester has downscaled its forecast of the AI software market for the next five years, and outlined the reasons as below:
- Post-2023, AI software revenues will be less than 3% of the overall application market. AI in business apps will be the norm, prompting AI-centric and AI-infused applications to dip further within the overall application market.
- Sixty per cent of software buyers will expect AI functionality from existing vendors – embedding this into current and future products, as opposed to rolling out new standalone AI-specific applications.
- AI-infused applications will be unable to sustain premium-product status. Currently, 10% of vendors are offering AI-infused apps at differentiated prices. As vendors add more AI functions, the ability to charge a premium for AI will be lost in the competition.