Artificial Intelligence (AI)’s impact in conversations and commerce is one of this year’s hottest tech trend. Its emergence may be the end of the app era as we know it and the beginning of conversational commerce.

Artificial Intelligence (AI)’s impact in conversations and commerce is one of this year’s hottest tech trend. Its emergence may be the end of the app era as we know it and the beginning of conversational commerce.

How did we get here?

There’s been buzz about AI for decades. As a field of study, AI started at a 1956 conference at Dartmouth College. Professor John McCarthy called academicians to research the premise “that every aspect of learning or any other feature of intelligence can in principle be so precisely described that a machine can be made to simulate it.” But not until 1997 did we see a striking display where a machine was independently learning and taking action. That’s when IBM’s Deep Blue beat chess’ Grandmaster Gary Kasparov.

Since then, there’s been tremendous advances in cognitive computing; which I will examine in future posts. This year, it’s fascinating to see the prevalence of AI-enabled applications.

Voice recognition has become more sophisticated in recognizing audio and in completing commands. In turn, voice assistants – Apple’s Siri, Amazon Echo‘s Alexa, and Microsoft’s Cortana – have grown massively in adoption.

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Sending messages to loved ones, controlling the music in your home, and ordering things from Amazon are easier than ever. So easy that people are paying for that right. In about a year of full release, Amazon already sold 3 million Echo devices, retailing for $180.

People’s comfort levels with audio assistants are growing. The voice assistants are more useful and, perhaps thanks to marketers and pop culture, AI seems more natural and personable.

Enter the bot

Psychologically, this newfound comfort with AI’s more human side accelerated the acceptance of bots. Bots are internet enabled applications that run automated tasks for a human.  We’ve all interacted with bots in the past; from asking Siri to set an alarm to speaking with an automated attendant to book a flight. Thanks to advances in AI, these bots are now actively entering what’s been a more private environment, messaging.

At their F8 developer conference in April, Facebook ushered in the bot era by launching a platform for developers to build chat robots within Facebook Messenger.

Companies now can use bots to communicate with users automatically through Facebook. Initial applications will be around customer service or transactions as Mark Zuckerberg demonstrated by ordering flowers by chatting with a flower delivery company’s bot – no need to call 1-800 Flowers! In the future, bots within messaging applications will recommend media, provide personalized insights, and eventually act independently.

What does this mean?

The bot era will have massive implications for the technology industry.

  1.    Apps will start to disappear
  2.    Messaging apps will become more important than social media platforms
  3.    Commerce will become conversational

1) The end of the app era

Beerud Sheth, the CEO of enterprise messaging service Gupshup summarized this well in a Forbes article :

“Developers are going to shift from making apps to making bots. About once every decade in the history of the tech industry, we’ve had these paradigm shifts.” In the mid-90s the world switched to the desktop, and then in the mid 2000’s it moved to mobile apps. “Predictably on schedule, in the mid-teens, we’re moving to the bot era.”

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http://www.gupshop.io

This shift has potentially catastrophic implications for Apple’s AppStore and Google Play, which I’ll also cover in a future post. Collectively, they earn about $10 billion of revenue per year just from Android and iOS application downloads, subscription fees, and in-app purchases.

In the future, what was once an apps’ functionality will instead be seamlessly embedded into a messaging platform like Facebook Messenger or WhatsApp. Users won’t have to open an individual app to book a restaurant, hotel or flight reservation; a messaging bot will do it all from one location.

2) Messaging apps will become more important than social media platforms

Messaging apps are already used more often than social media platforms. Surprised? According to Business Insider, in terms of Monthly Active Users (MAU) last year the top 4 messaging apps (Whats App, Facebook Messenger WeChat, and Tencent’s QQ Mobile) surpassed the top 4 social media platforms (Facebook, Tencent’s QQ & Qzone, and Tumblr at 555M MAU)

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People spend more time in messaging apps than any other medium. Millennials are prolific senders of messages sending nearly 3,000 messages per month.

Messaging is intimate, immediate, and contextually aware. Messaging apps know their users’ identities, locations, behaviors, and have built-in payment mechanisms.

These stats expose a plethora of opportunities for consumers and businesses to realize utility. Bot-savvy businesses will use them to generate brand awareness, sales, leads, research, and more.

3) Commerce will become conversational

For me, an interesting battleground for the bot era though will be in how to turn a conversation into revenue (a prized battleground for marketers and customer success teams). Companies that do this in an authentic and casual manner will reap the rewards of this new paradigm shift; those that don’t will suffer. For a glimpse of how to chat-enabled commerce is being used today, look at the interface for shopping concierge bots like Spring (see below).

Spring_messenger1

And when customer service agents convert an unhappy customer into a satisfied customer that buys more, it’s easy to understand why conversational commerce is the new frontier of e-commerce.

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Source: Harvard Business Review

 

At Graphene, we look for paradigm shifts and seek investment opportunities as markets change. Advances in AI – along with people’s demand for immediacy – has made AI one of our most active fields of research.

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