by Scott Denne
As machine learning permeates the tech stack, spoken and written queries are displacing type and click, leaving companies – from enterprise software developers to consumer electronics manufacturers – to bolt natural-language interfaces onto their products. That has led to a sharp rise in acquisitions of firms developing conversational artificial intelligence (AI), a trend that’s likely to extend through this year.
Today, two such deals were announced, highlighting the range of applications for such technology. In one, Cisco’s Webex nabbed Voicea for the target’s ability to turn recorded meetings into notes and summaries. In the other, Vonage picked up Over.ai to bolster its call-center products with advanced interactive voice response. The scarcity of natural-language-processing expertise, mixed with the broad applicability of the tech, has fueled a surge of M&A.
According to 451 Research‘s M&A KnowledgeBase, 23 vendors developing chatbots or other conversational AI capabilities were acquired last year, up from 15 in 2017. So far in 2019, there have been about three such transactions per month. Based on our estimates, most of the disclosed deal values have printed below $30m, with several below $10m. Still, for conversational AI specialists, exiting sooner could be more profitable than waiting.
Although there’s widespread demand for conversational capabilities, few companies are likely to ink multiple purchases and the buyer universe will begin to dry up. And there may be a limited opportunity to build a large independent company in this market as most businesses look to their existing software providers for machine learning capabilities. In 451 Research‘s Voice of the Enterprise: AI & Machine Learning report, a plurality of organizations (38%) told us they’ll leverage machine learning by acquiring software with the technology already baked in.
