AI-Centric Software Market Revenue Will Drop despite the Swift Demand and Growth

Technology vendors globally are merging AI into the existing software products today. As a result, the market will see a rapid growth- reaching $37 billion by 2025, reveals Forrester.

A vast majority of technology companies infuse artificial intelligence in their current solutions, and hence, the market is booming. As per the latest Forrester study, the AI-based software market will reach $37 billion by 2025 –excluding the hardware and consulting services.

Mainly, the growth of AI applications will be constrained by vendors – primarily due to the embedded AI functionality, with greater frequency. Despite this, the total artificial intelligence software market will plunge below the recent investor estimation of $150 to $200 billion.

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While the world sees an increasing demand for AI as technology, platforms, and applications – its ubiquity will ultimately make this technology conventional for software development. Some of the principal conclusions from the Forrester study are –

1. Post-2023, the AI software revenues will be no more than 3% of the total application market. AI in business solutions is going to be the standard as we advance, prompting AI-based and AI-infused apps to dip further in the worldwide application market.
2. Almost 60% of software buyers would expect AI functionalities from their existing vendors – as an alternative to custom-creating their applications. Clearly, this number is likely to grow more with time.
3. The AI-infused solutions will not be able to put up with premium-product status. Currently, only 10% of software vendors are delivering AI-infused solutions at distinguished prices.

It is no secret that as more tech vendors adding such AI functions, the ability to charge a premium for advanced applications and technology would be lost in the market competition. Moreover, the AI maker platforms that are used for designing highly customized solutions have the most substantial growth potential.

This is also effective for AI facilitator platforms – which are used for applications including computer vision, natural language virtual assistants, and more. Some more AI market sectors that are likely to mature are the AI-infused applications that create differentiated products through added AI functionality and AI-centric apps for specialized medical tasks.

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In this context, Andrew Bartels, VP and Principal Analyst at Forrester, explained in the company blog post – “We believe investors are defining the AI market too hyperbolically. They are mistakenly including categories that are loosely influenced by or distantly adjacent to AI software.”

Lately, more business leaders are increasingly depending on AI and advanced tech as the principle of their digital transformation plan. As a result, they are most likely to expect their vendors to include AI functionality at no additional business cost.

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