AI Acceleration in Asia, Third-Party GenAI Disrupting Customer Service, and Ethernet Switch Demand Down Shifts
Asia/Pacific AI Investments to Reach $110 Billion by 2028, IDC Reports
The Asia/Pacific region (including China & Japan) is experiencing a remarkable acceleration in adopting AI and Generative AI technologies, including software, services, and hardware designed for AI-driven systems. According to 国际数据公司 's latest Worldwide AI and Generative AI Spending Guide, AI and Generative AI (GenAI) investments in the region are projected to reach $110 billion by 2028, growing at a compound annual growth rate (CAGR) of 24.0% from 2023 to 2028. This surge highlights the region’s critical influence in shaping the future of AI innovation and driving technological progress on a global scale.
“As organizations transition from experimenting with generative AI to more large-scale enterprise implementations, there is an increased emphasis on comprehensive AI governance. This approach not only considers technological frameworks like AI platforms and models but also addresses regulatory, organizational, and cultural dimensions to protect internal and external stakeholders' interests. AI governance is therefore much larger than data governance and must be an integral part of an enterprise’s AI strategy.” Deepika Giri Head of Research, Big Data & AI, IDC APJ.
With a market share of 23.8 percent in 2024, the software and information services industry is one of the leading industries in AI adoption. A significant portion of AI investment in professional services is allocated to AI infrastructure provisioning, where service providers manage the IT infrastructure for AI systems, and end users access the necessary resources for computing and storage for AI system development or provision of AI services.
Gartner Predicts Unofficial Third-Party Tools Powered by GenAI Will Resolve 40% of Customer Service Issues by 2027
By 2027, 40% of all customer service issues will be fully resolved by unofficial third-party tools powered by GenAI, according to Gartner .
Consumers are increasingly adopting unofficial third-party GenAI tools such as ChatGPT, Google AI Overviews, and Apple Intelligence to resolve customer service issues. The deep integration of GenAI into these widely available consumer tools is driving a shift in consumer behavior, as customers prefer these platforms for their convenience and availability. As a result, customer service teams may expect a decline in official first-party service volume.
“There is a transformation in customer behavior and a reset in their expectations with GenAI continuing to reshape the customer service landscape,” said Daniel O'Sullivan , Senior Director Analyst in the Gartner Customer Service and Support practice. “As customers increasingly self-solve issues through GenAI-enabled tools, there will be diminished demand for official first-party service. When customers do have to engage with first-party service, their expectations will be higher.”
“Service and support leaders must evolve their customer experience and channel strategies to reflect these profound shifts and meet customer needs in this AI-driven world,” said O’Sullivan.
IDC's Worldwide Quarterly Ethernet Switch Tracker Shows Moderate Declines in 3Q24
The worldwide Ethernet switch market recorded $10.8 billion in revenue in the third quarter of 2024 (3Q24), a 7.9% year-over-year (YoY) decline. Despite the annual drop, the market grew 6.6% from the second to the third quarters of 2024. The total worldwide enterprise and service provider (SP) router market declined 17.4% y/y to $3.1B in 3Q24. These findings are detailed in the latest editions of the 国际数据公司 Quarterly Ethernet Switch Tracker and IDC Quarterly Router Tracker.
"Ethernet switching is a critically important technology for enterprises, service providers and cloud giants, as connectively demands continue to rise in the cloud and AI era," says Brandon Butler Research Manager, Enterprise Networks, IDC. "While datacenter growth is fueled by high-bandwidth and low-latency AI workloads, the requirements are driving enterprises and service providers to deploy ever-faster Ethernet switch speeds. In the non-datacenter segment, Ethernet switch vendors are embedding AI capabilities into software management platforms to improve operations and performance, aligning with the market’s transition to more balanced supply-demand dynamics."
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Ethernet Switch Market Highlights
The Ethernet switch market showed varying trends across the datacenter and non-datacenter segments. Revenues in the datacenter (DC) portion of the market rose 18.0% YoY and rose 6.2% sequentially from 2Q24 to 3Q24. Total market revenues for 200/400 GbE switches rose 126.3% YoY in 3Q24 and rose 23.8% from the second to the third quarter of 2024, indicating strong interest in the highest-speed Ethernet switches. ODM (original device manufacturer) Direct sales continue to be a growing part of the datacenter segment, rising 56.5% YoY, and comprising 19.4% of the datacenter portion of the Ethernet switch revenues.
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