IDC reports rapid growth from $8 billion in 2016 to $47 billion in 2020

According to a recent research report by IDC (www.idc.com), the global Cognitive/AI systems market is projected to grow rapidly, exhibiting an average annual growth rate of 55.1% over the five-year period from 2016 to 2020. Driven by widespread adoption across various industries, the market size is expected to reach $47 billion in 2020, up from $8 billion in 2016.

David Schubmehl, Research Director for Cognitive Systems and Content Analytics at IDC, explained that "software developers and end-user enterprises are already embedding or adopting cognitive and artificial intelligence into almost every type of enterprise application and process," and that companies must develop and implement strategies that encompass this broad range of technologies. He further emphasized, "Understanding cognitive and AI systems technologies, analyzing use cases, and acting on growth opportunities will become a key differentiating factor for companies, and digital transformation through these technologies will become critical."

<Regional Growth Rates by Region for 5 Years (2015–2020) (Source: IDC)>


Through technology that recognizes and responds to data flows using algorithms and rule-based logic, cognitive/artificial intelligence systems enable the automation of a wide range of functions across various industries. According to this report, key use cases in 2016 will be automated customer service agents, quality control investigation and recommendation systems, diagnostic and treatment systems, and fraud analysis and investigation. Additionally, the use cases expected to see the fastest revenue growth over the next five years are public safety and emergency response, pharmaceutical research and discovery, diagnostic and treatment systems, supply and action planning, and quality control investigation and recommendation systems.

Jessica Goepfert, Program Director leading Customer Insights and Analysis research at IDC, stated, “In the short term, there are opportunities for cognitive systems in industries such as banking, securities and investment, and manufacturing.” She noted that these industries are more open to innovative technologies because they are rich in unstructured data and require corresponding insights. She explained, “The value proposition of cognitive systems aligns with the primary priorities of corporate executives. For example, cognitive technology can be used to detect and prevent fraud in the banking industry. In contrast, in manufacturing, where executives’ primary goal was product quality improvement, cognitive systems recognize dynamic changes in product specifications and respond accordingly to ensure production does not deviate from quality targets.”

In 2016, the industries expected to invest the most in cognitive/artificial intelligence systems are banking and retail, followed by healthcare and assembly manufacturing. These industries are expected to account for more than half of global cognitive/artificial intelligence revenue in 2016, with banking and retail sectors projected to reach approximately $1.5 billion each. Healthcare and assembly manufacturing are expected to show the largest revenue growth during the 2016-2020 forecast period, with compound annual growth rates (CAGRs) of 69.3% and 61.4%, respectively. The education and process manufacturing sectors are also expected to show significant growth during the forecast period.

During the forecast period, approximately half of Cognitive/AI system revenue is expected to come from the software sector, which includes cognitive applications (*including text and rich media analysis, tagging, search, machine learning, classification, clustering, hypothesis generation, question answering, visualization, filtering, alerting, and exploration) and cognitive software platforms (*facilitating intelligence, advisory, and cognitive-enabled solutions). Cognitive applications are the largest and fastest-growing sector within cognitive systems, projected to reach $18.2 billion in 2020. Following this, Cognitive/AI-related services (business services and IT consulting) represent the second-largest category, while the hardware sector (purchases primarily focused on servers and storage) is expected to grow rapidly, rivaling software, with an average annual growth rate of over 60% over the five-year period.

Geographically, North America (the United States and Canada) is currently the region with the largest spending on cognitive systems, with sales reaching $6.2 billion in 2016. The Europe, Middle East, and Africa (EMEA) region is the second largest, but the cognitive and artificial intelligence market in Asia-Pacific, including Japan, is expected to significantly narrow the gap with EMEA by 2020.