According to IDC’s Worldwide AI and Generative AI Spending Guide, the European AI and genAI market is set to soar to a £36 billion in 2024, with a staggering compound annual growth rate of 33.7 per cent over the 2022-2027 forecast period.
The number crunchers at IDC said that Europe’s slice of the global AI pie is about one-fifth, and though GenAI only made up 9.6 per cent of Europe’s total AI market last year, it’s on a rapid rise.
IDC’s crystal ball predicts that genAI spending will outpace the rest of the AI market by more than threefold, meaning genAI will account for over a quarter of the total European AI market by 2027.
When it comes to tech segments, software is king in 2024, with a market value that’s more than the combined worth of hardware and services.
The demand for AI applications and platforms is fuelling the fastest growth in this area from 2022 to 2027.
Hardware’s share is expected to shrink in favour of software, except in the software and information services industry, where hardware remains the top dog due to specific AI infrastructure provisioning use cases.
AI adoption is already the norm, and companies are keen to jump on the GenAI bandwagon.
IDC research manager for customer insights and analysis Carla La Croce said: “Artificial Intelligence and generative AI applications should become fully integrated into the business, accompanied by responsible use.”
“Realising the full potential of AI and generative AI takes time. While the benefits for companies’ internal organisation and processes are clear, effectively harnessing these benefits requires long-term planning. Companies need a flexible and adaptable business plan to integrate AI and GenAI into a broader, forward-looking, and responsible strategy.”
The report said banking, retail, and software and information services are the big spenders in AI, making up nearly a third of the European AI market.
AI is revolutionising fraud analysis, threat intelligence, and customer support systems in finance.
Banks are increasingly using genAI to detect fraud and whip up accurate predictions and scenarios.
Retailers are turning to AI to boost customer experience with tools like augmented customer service agents and expert shopping advisors.
With customer expectations evolving and competition fierce, retailers are dabbling in genAI for marketing, sales, and customer engagement.
Lastly, the software and information services industry, which includes software vendors and data services companies, is splashing the cash on infrastructure to support AI system development or services for end customers.
While hardware currently takes the largest slice of this industry’s AI spending pie, software’s share is set to balloon in the long run as software providers push platform-as-a-service (PaaS) and software-as-a-service (SaaS) solutions.
