Virtual assistants ready to rocket, as AI tipped to transform the market

As the virtual assistant (VA) market braces itself for the transition to generative AI, a new report from Futuresource Consulting reveals VA-enabled product shipments are on track to grow by 16% this year. And while generative AI is a welcome disruption, with the potential to inject new energy into the market, there are difficulties to overcome.

A new VA battleground

“VA development has stalled somewhat in recent years,” says Simon Forrest, Principal Technology Analyst, Futuresource Consulting. “This is not due to a lack of innovation, but instead the challenges in changing user engagement, which has become locked into simple, non-monetizable command-and-control functions. Now, vendors are beginning to retire their traditional intent-based platforms, and they are looking towards new solutions.

“The new battleground is conversational, personalised and perceptive VAs, assigning intonation and emotion to verbal responses, and conveying mood and other non-verbal information to users. All this is made possible by advancements in large language models (LLMs).

“But there’s a problem. The costs involved in training AI, and providing the server infrastructure, appears to be disproportionate to the revenue opportunity these assistants may eventually deliver. As a result, we’re seeing a parallel activity, where small language models are providing an opportunity to deliver more cost-effective solutions.”

Methods of monetisation are key

All leading VA platform vendors are now following broadly the same innovation pathway, with LLMs providing the catalyst to design more intelligent voice interfaces.  Platform owners are also seeking new methods of monetisation, using subscription tiers that unlock access to the largest and most capable models, alongside free variants, which may be suitable for simple interactions.

“Voice has always held the promise of a natural, frictionless interface,” says Forrest, “one which allows humans to interact seamlessly with apps and services. Although this dream has never truly materialised, generative AI is helping to solve this, by presenting countless ways for users to express intent and phrase queries. Yet voice is just one element of the LLM-based VA experience. Multi-modality enables assistants to operate with text, imagery and video alongside voice. This is creating a rich tapestry of responses, appropriate to each individual task and situation.

Google continues to advance its Gemini, Apple has announced a new AI version of Siri, Amazon is working on an AI variant of Alexa, and Baidu announced DuerOS X in April this year. Then there’s also Samsung, Huawei, Yandex, OpenAI and Meta, all making noise in the space.”

The outlook remains positive

From shipments of 2.4 billion built-in units in 2024, Futuresource expects a CAGR of 7% out to 2028, culminating in 2.9 billion shipments in that year, and an installed base of 9.3 billion built-in VA-enabled devices.  In terms of VA platforms, Futuresource expects Google Assistant/Gemini to hold 38% of global share by the end of 2024, while Apple strengthens its foothold in the market, with 20%, as the AI-variant of Siri is introduced later in the year.  Microsoft’s introduction of Copilot into PCs means it will now take third position, achieving a single digit share.

Futuresource Consulting’s Virtual Assistant H1 market tracker assesses the current state of the market, including key trends and technological advancements, and provides an outlook on the shape of the sector over the next five years. The information in this report is based on interviews, research and analysis conducted throughout June and July 2024. For more information or to make a purchase, please contact Ben at ben.thrussell@futuresource-hq.com.

About the author

Simon Forrest

As Principal Technology Analyst for Futuresource Consulting, Simon is responsible for identifying and reporting on transformational technologies that have propensity to influence and disrupt market dynamics. A graduate in Computer Science from the University of York, his expertise extends across broadcast television and audio, digital radio, smart home, broadband, Wi-Fi and cellular communication technologies.

He has represented companies across standards groups, including the Audio Engineering Society, DLNA, WorldDAB digital radio, the Digital TV Group (DTG) and Home Gateway Initiative.

Prior to joining Futuresource, Simon held the position of Director of Segment Marketing at Imagination Technologies, promoting development in wireless home audio semiconductors, and Chief Technologist within Pace plc (now Commscope) responsible for technological advancement within the Pay TV industry.