Worldwide revenues for the artificial intelligence (AI) market, including software, hardware, and services, are expected to grow 19.6% year over year to $432.8 billion in 2022, according to new research by IDC. In 2023, the market is estimated to surpass $500 billion.
“AI has emerged as the next major wave of innovation. AI solutions are currently focused on business process problems and range from human augmentation to process improvement to planning and forecasting, empowering superior decisioning and outcomes. Advancements in language, voice and vision technologies, and multi-modal AI solutions are revolutionizing human efficiencies,” said Ritu Jyoti, group vice president, Worldwide Artificial Intelligence (AI) and Automation Research at IDC. “Overall, AI plus human ingenuity is the differentiator for enterprises to scale and thrive in the era of compressed digital transformation.”
Among the three AI technology categories, AI Software’s proportion of investment will fall somewhat in 2022, while spending on AI Hardware and Services climbs more swiftly. This pattern is expected to persist into 2023. Overall, the AI Services category is expected to increase at a 22 percent compound annual growth rate (CAGR) over the next five years, while AI Hardware is expected to develop at a 20.5 percent CAGR.
AI Software
In the first half of 2021, AI Applications accounted for 47 percent of investment in the AI Software category, with AI System Infrastructure Software accounting for about 35 percent. AI Platforms are predicted to increase at the fastest rate, with a five-year CAGR of 34.6 percent. With a five-year CAGR of 14.1 percent, AI System Infrastructure Software will be the slowest growing market.
AI ERM is expected to expand the quickest within the AI Applications market over the next several years, compared to AI CRM and the rest of AI Applications. AI Lifecycle Software is expected to develop at the quickest rate of all the named software markets in this IDC study, with a five-year CAGR of 38.9%.
AI Services
In the first half of 2021, AI IT Services grew by 20.4 percent year over year, with global spending reaching $18.4 billion. This rate of growth is expected to rise to 22% in 2022 and stay there until the conclusion of the projected period. With a five-year CAGR of 21.9 percent, AI Business Services aren’t far behind in terms of growth. Overall AI Services investment is expected to reach $52.6 billion by 2025, according to IDC.
“AI remains a key driver of IT investment, which in turn boosts spending on related services to ensure sustainable adoption at scale,” said Jennifer Hamel, research manager, Analytics and Intelligent Automation Services. “Client demand for expertise in developing production-grade AI solutions drives IT services expansion, while the need to establish the right organization, governance, business process, and talent strategies spurs spending on business services.”
AI Hardware: AI Storage, AI Server
In comparison to Software and Services, the AI Hardware category increased the highest in market share in the first half of 2021, gaining 0.5 percent. With a year-over-year growth rate of 24.9 percent, it is expected to attain a market share of 5% in 2022. During the first half of 2021, AI Storage grew at a faster rate than AI Server. In 2022, however, the pattern will be reversed, with AI Server predicted to rise 26.1 percent vs 19.7 percent for AI Storage. AI Server dominates the category in terms of spending share, accounting for more than 80% of the total.
“Of all the spending in the various AI market segments, AI Hardware is by far the smallest,” said Peter Rutten, research vice president, Performance Intensive Computing at IDC. “What this should tell organizations is that nickel-and-diming purpose-built hardware for AI is absolutely counterproductive, especially given the fast-growing compute demand from increasing AI model sizes and complexities.”
