IDC: Annual Worldwide Spending on AI Systems to Reach $98 Billion by 2023
- By Richard Seeley
In a sign that artificial intelligence (AI) hardware and software is becoming a global business priority, an International Data Corporation (IDC) report released this week predicts AI spending will grow two-and-a-half times from $37.5 billion to $97.9 billion. That is a compound annual growth rate (CAGR) of 28.4 percent during the five-year 2018-2023 period of the report's forecast.
"The AI market continues to grow at a steady rate in 2019 and we expect this momentum to carry forward," said David Schubmehl, research director, Cognitive/Artificial Intelligence Systems at IDC in a press announcement Wednesday. "The use of artificial intelligence and machine learning (ML) is occurring in a wide range of solutions and applications from ERP and manufacturing software to content management, collaboration, and user productivity. Artificial intelligence and machine learning are top of mind for most organizations today, and IDC expects that AI will be the disrupting influence changing entire industries over the next decade."
On the leading edge of this disruption are the retail and banking industries. IDC reports that each of those industries will spend $5 billion this year on AI systems. Retail companies will be spending on applications to automate customer service and provide shopping advisor and product information expert systems for consumers. Banks are security oriented in their AI applications, as they develop automated threat protection, fraud detection and investigative apps, IDC reports. Other industries predicted to up AI spending include discrete and process manufacturers, healthcare, and professional services. In the fastest growing spending category are media companies and federal/central governments, where the report forecasts five-year CAGRs of 33.7 percent and 33.6 percent respectively.
The increased spending reflects AI moving from the proof-of-concept stage to practical applications.
"Artificial Intelligence has moved well beyond prototyping and into the phase of execution and implementation," said Marianne D'Aquila, research manager, IDC Customer Insights & Analysis in the press release for the new report. "Strategic decision makers across all industries are now grappling with the question of how to effectively proceed with their AI journey. Some have been more successful than others, as evidenced by banking, retail, manufacturing, healthcare, and professional services firms making up more than half of the AI spend. Despite the learning curve, IDC sees higher than average five-year annual compounded growth in government, media, telecommunications, and personal and consumer services."
While hardware for AI systems currently is the spending leader, software will overtake it by 2023, according to the IDC Worldwide Artificial Intelligence Systems Spending Guide. In 2019 hardware spending for AI infrastructure is outpacing software purchases, the report states. But by 2023, it predicts that spending for AI software and AI software platforms will see 36.7 percent CAGR.
Half of the AI spending will take place in the United States, where the retail and banking industries are the biggest spenders, IDC states. In second place is Western Europe with discrete manufacturing and banking leading the way. The third largest AI spender is China with 44.9 percent CAGR focused in retail, state/local government, and professional services. IDC predicts strong spending growth for Japan with 45.3 percent CAGR.