Artificial Intelligence: Maybe These Numbers Are Artificial?
February 25, 2021
AI this. AI that. Suddenly it’s spring time for algorithmic magic. I read “Worldwide Revenues for AI Skyrocket, Set to Reach $550B by 2024.” That’s an interesting projection. What is “artificial intelligence?” No one has a precise definition. That makes it possible to assert that in 22 months, smart software will be more than half way to a trillion dollar market. That will make the MBA proteins kick into overdrive.
The write up cites the estimable mid tier consulting firm IDC and its Worldwide Semiannual Artificial Intelligence Tracker. I believe that this may be similar to the PC Magazine editorial team sitting around a lunch table generating lists of hot products and numbers about the uptake of windows 95. There is nothing wrong with projections. And estimates which aim toward a trillion dollar market are energizing in the Age of Rona.
The write up reports that IDC calculated with near infinite precision these outputs:
“the artificial intelligence (AI) market, including software, hardware, and services, are forecast to grow 16.4% year over year in 2021 to $327.5 billion… By 2024, the market is expected to break the $500 billion mark with a five-year compound annual growth rate (CAGR) of 17.5% and total revenues reaching $554.3 billion.”
Other findings (aside from the stretchy bendable fuzzy definition of “artificial intelligence” as including software, hardware, and services:
- “Software represented 88% of the total AI market revenues in 2020. However, it is the slowest growing category with a five-year CAGR of 17.3%.”
- “AI Applications took the largest share of revenue at 50% in 2020.”
- “The AI Services category grew slower than the overall AI market with 13% annual revenue growth in 2020.”
- “By 2024, AI Hardware is forecast to be a $30.5 billion market with AI Servers representing an 82% revenue share.”
Is AI a sandbox in which anyone can play? The data allegedly reveal:
In the Business Services for AI market, there were only four companies, Ernst & Young, PwC, Deloitte, and Booz Allen Hamilton, that generated revenues of more than $100 million in 1H 2020.
Okay, okay. Let’s step back:
- The definition of AI is nebulous which means that the assumptions are not exactly as solid as those of the new leaning Tower of Pisa in San Francisco
- The fuzzing of revenue streams, hardware, software, and the mushroom of services is confusing at least to me
- AI appears to be another of those one percenter sectors.
Net net: AI will use you whether you are ready or not or whether the systems work or not. We could ask IBM Watson but IBM is allegedly trying to sell its fantastic health care AI business. Googlers are busy revealing the flaws in some Googley assumptions about its AI capabilities. Nevertheless, we have big numbers.
VC, consultants, and MBAs, get ready to bill. By the way, these estimates seem similar to those issued by the estimable mid tier consulting firm for the cognitive search market. Not exactly a hole in one as I recall.
Stephen E Arnold, February 25, 2021
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