The Rise of Chatbots! – Identifying Winners in the Next Wave of Human-Technology Interaction
Navidar | May 24, 2017
The chatbot industry, also known as artificial conversational entities and chat robots, is growing fast er than mobile apps did in their early release states¹. Venture investors poured more than $200M² into this emerging sector in 2016 and the titans of software are fully vested. For example, Cisco paid $125M on May 11, 2017 for privately-held MindMeld, a conversational AI platform that powers chatbots.
Companies employ many chatbot and messaging platform approaches. These methods vary in their focus (enterprise, consumer, messaging, and voice), breadth of applicability (horizontal or vertical-specific, such as food service), and technology employed. We at Navidar believe that each approach has its merits and describe them in this report. To help technology companies and brands establish and enhance their chatbot strategies, we also identified who we think the winners will be in each category.
For enterprise messaging, while privately-held Slack is in pole position with 180-plus chatbots, we expect that Google and Microsoft will control the most market share long-term due to synergies with their workforce productivity suites (G Suite and Office 365, respectively). On the consumer side, we think that Facebook will maintain its dominant lead—34,000 chatbots have already been created on Messenger. Turning to voice messaging, we expect the winners will be Google given its search supremacy and Amazon, which already has 6,000 “Skills” on Echo/Alexa, due to its ecommerce dominance.
As the preeminent technology investment bank in the middle corridor of the U.S., Navidar pays close attention to eye-catching statistics and trends like these. We are particularly excited about chatbots because of their potential to significantly enhance the billions of dollars enterprises have invested over the years in legacy software and more modern SaaS solutions while tying in messaging and voice technology. We are bullish about what can be accomplished and expect the momentum to continue. In this article, we examine the leading players in enterprise, consumer, messaging, voice, and chatbots. We also explore implications for mobile apps, enabling technologies, and use cases.
Tectonic Shift – Chatbots Taking Market Share from Mobile Apps
Messaging platforms for consumers (such as Facebook Messenger, Snapchat, and Kik) and enterprises (e.g., Slack, Microsoft Teams, and Cisco Sparks) are key to the mobile experience and we believe they represent the next wave of human-technology interaction. In fact, consumers now spend more time messaging than on social media³.
Chatbots enable companies to capitalize on these conversational interfaces by intelligently messaging customers, prospects, and employees in the channels where they spend a growing percentage of their plugged-in time. Demonstrating the wide adoption of messaging, four of the top five downloaded apps are messaging platforms.
We expect the proliferation of chatbots to gradually reduce the need for standalone mobile apps as consumers are spending more and more time on messaging platforms. They are already beginning to take consumer-interaction market share, much like mobile apps disrupted web offerings.
Tom Hadfield, CEO of Message.io told us that “conversational interfaces will change the way we interact with the world around us, much like the graphical user interface did in the 80’s, the web did in the 90’s and mobile apps did more recently. Our hypothesis is that this change is happening fastest inside the enterprise, creating what we call the conversational workplace.” A primary driving force, in our opinion, is that the mobile-app experience can be cumbersome as it entails downloading, searching, and engaging in multiple “touches”. It is easier for users to simply have text or voice conversations with their mobile devices than to use mobile apps.
Download Full Article Below