THE CHATBOT ECONOMY

Services based on artificial intelligence are improving rapidly, and chatbots are one way AI engages with real people. While chatbots have been in commercial use for several years, we are perhaps one year into the widespread emergence of the Chatbot or Bot Economy, with bots widely used in instant messaging applications including WeChat, Facebook Messenger and many well-known brands utilizing chatbot applications. The bots usually appear as one of the user's contacts or as a participant in a group chat.

FIRST, A BRIEF EXPLANATION

Chatbots are text-based services which let users complete tasks such as checking news, organising meetings, ordering food or booking a flight by sending short messages. Bots are usually powered by artificial intelligence and exist in the cloud, instantly accessed by users. For developers, this typically means bots are easier to create and update.

Bots can customize smart messages, which structure content to enable efficient communication between the bot and humans to capture user response and to act further on them. With smart messages, chatbots enable replication of virtually any site or app onto a cloud messaging platform, with most any transaction or task mapped to the messaging framework. 

APP ECONOMY DECLINE

The app economy launched one of the fastest-growing software markets ever. Over 100 billion apps have been downloaded, generating $40 billion in revenues for developers and billions more in subscriptions and other fees.

As the number of mobile apps increases while the size of our mobile screens is limited by what we are willing to carry, we look to be reaching the limits of the mobile operating platform + apps paradigm. After 8 years, the app economy is clearly maturing. Enthusiasm for apps is waning, as users find downloading apps and navigating between them a hassle. Most mobile users only use a handful of apps every day and fully a quarter of all downloaded apps are abandoned after a single use.

Example: Eigencat’s Facebook Messenger based RoboAdvisor is a chatbot but behaves like an app. It collects user inputs and gives graphic output and links for further information.

BOT ECONOMY ASCENDANCE

Within a couple of years 3.6 billion people have at least one messaging app installed. That’s half of our global population. Many teenagers now spend more time on smartphones sending instant messages than perusing social networks. WhatsApp users average nearly 200 minutes each week using the service. 

Messaging bots offer benefits as well. Bots de-clutter our mobile experience by sending us a message when we need to know or respond to something, but stay invisible otherwise. Bots reside in the cloud and upgrade themselves with new functionality — without any user action. Bots can interact with one other and can be chained together to perform a series of actions in sequence. Bots can supervise other bots, leading to bot hierarchies.

And the user interface for chatbots is a message. You just send and receive messages from the bot. No need to learn, understand and navigate disparate interfaces or languages. Users will be able to interact with bots just as they interact with other humans. It’s the most natural way to communicate and transact. The behind the scenes and invisible until needed nature of chatbots may mean that many are embedded within other applications and the emergence of new bot brands is likely to be different than the app paradigm.

The relative simplicity of bots is likely to make them attractive to businesses which have shied away from developing their own apps and now offer a better way to engage both locally and directly with consumers. Where the cost and complexity of developing and maintaining an app made them less attractive to many small businesses, chatbots promise less complexity, easier accessibility and lower cost for small business. Consider that installation takes seconds and switching between bots does not involve tapping on another app icon. 

Two decades ago, the paradigm shift on our PCs from “desktop OS + client” applications to “browser + website” led to a massive shift in the tech industries. We are on the verge of a similar shift on the mobile device, with even bigger consequences — given the fact that no one can live without theirs.

However, if bots are easier to develop that likely means more competition. Consumers could, as with app offerings today, be overwhelmed by a seemingly limitless offering. And while Apple and Google dominated the app economy, powerful companies including Microsoft, Facebook and TenCent are among the forces behind the rapid ascendance of chat and other bots. 

Challenges aside, the bot economy looks to be another fast-growing, multi-billion-dollar software ecosystem. Just as websites replaced client applications, messaging bots will likely replace mobile apps. Bots are the new apps. The bot store is the new app store.

Thanks for reading. Do feel free to comment, like or share the article if any part of this post ignites a spark of interest in you too. If you want to discuss chatbot technology strategy or find expertise in Singapore, drop me a line. 

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