A new report projects a rosy future for the AI industry.
What’s new: A study from market research firm IDC estimates that global revenues for AI software, hardware, and services will reach $341.8 billion in 2021 — up from an estimated $156.5 billion last year — and will break $500 billion by 2024. The study reflects interviews, distribution statistics, financial reports, and other data from over 700 AI companies around the world.
What they found: The AI industry’s annual growth rate is expected to exceed 18.8 percent next year. The analysis breaks up that growth into three broad categories. Some of the most important findings:
- Software: Software sales make up 88 percent of the overall AI market. AI platforms (the largest of six software subcategories) account for half of the total. However, AI applications are expected to grow most quickly, marking a five-year annual rate of 33.2 percent.
- Hardware: AI-focused hardware — mainly servers and storage — accounts for just 5 percent of the industry’s sales. However, it is projected to grow by 29.6 percent in 2021 and 2022, faster than software and services. Server sales account for 82 percent of hardware sales which are dominated by Dell, HPE, Huawei, IBM, Inspur, and Lenovo.
- Services: AI services generated 14 percent of total sales and are expected to grow at a 21 percent compound annual rate through 2025. IT services bring in 80 percent of sales in this area.
Behind the news: IDC’s most recent predictions are in line with their previous report, published in February, and jibe with research from MIT Technology Review.
Why it matters: In the AI world — as in other high-tech sectors — it’s often difficult to discern real growth potential from gossip-fueled hype. Research reports that provide granular insights are a crucial tool for business leaders and investors who aim to capitalize on this industry, not to mention machine learning engineers who are plotting a career.
We’re thinking: We’ve seen market research reports that later proved right and many that later proved dead wrong. We hope this is one of the former!