by Scott Denne
The number of conversational artificial intelligence (AI) deals surged last year and looks bound for a boost in 2019. Buyers are drawn to the emerging opportunity to add voice and text capabilities into both their products and customer service channels as multiple 451 Research surveys show an increasing amount of value placed on such offerings.
By our reckoning, the number of acquisitions driven by the target’s conversational AI or chatbot technology increased by four times over in 2018. According to 451 Research’s M&A KnowledgeBase, last year saw 28 such deals, up from seven a year earlier and just two in 2016. We tracked two such transactions this week alone – Qlik’s reach for Crunch Data to enable conversational queries in its business intelligence software and Yodlee’s purchase of Abe AI to enable banks to interface with Amazon’s Alexa and other conversational ecosystems.
According to 451 Research’s VoCUL: Corporate Software survey, 17% of software buyers said that chatbots and virtual assistants were among the technologies that could improve customer experiences, up from 15% in the same survey six months earlier. Correspondingly, software and service providers are increasing their investments in those technologies. In our Voice of the Service Provider survey, 48% said they are increasing their budgets for AI/machine learning (ML), with much of that going toward virtual assistants and other customer service functions.
All of that will continue to flow into dealmaking. In 451 Research’s recent Tech Banking Outlook Survey, respondents predicted that the broader category of AI and ML would be the top driver of M&A in 2019. Yet, despite the exploding volume of conversational AI deals, most are modest-sized acquisitions and likely to stay small as conversational AI most often becomes a product feature, rather than a stand-alone offering.