Natural Language Understanding (NLU) Market Size, Share, Growth Analysis, By Offering (Solutions, Services), Type, Application (Machine Translation, Chatbots & Virtual Assistants, Sentiment Analysis, Data Capture) - Global Industry Forecast to 2029
[350 Pages Report] The global market for the natural language understanding (NLU) market is projected to grow from USD 19.2 billion in 2024 to USD 62.9 billion in 2029, at a CAGR of 26.8% during the forecast period. The NLU market is driven by several factors including, the increasing demand of consumers for personalized and intuitive interactions, enhanced productivity, shorter call durations in contact centers, a rising need for impactful brand messaging, and the rapid expansion of unstructured text data.
To know about the assumptions considered for the study, Request for Free Sample Report
To know about the assumptions considered for the study, download the pdf brochure
Market Dynamics
Driver: Rising demand for brand messaging drives adoption of robust NLU solutions
The rapid increase in consumer preference for messaging with brands, as highlighted by a recent LivePerson survey showing a rise from 65% to 85% in just one year, underscores a significant shift in communication expectations and presents a compelling driver for the NLU market. As the addressable audience for conversational interactions expands, brands are compelled to adopt robust automation strategies to meet these growing demands. A strong and accurate Natural Language Understanding (NLU) system becomes essential in this context, enabling businesses to create and scale the conversational experiences that consumers now crave. NLU facilitates the recognition of customer intents, allowing for quick and precise query resolution, which is crucial for maintaining high levels of customer satisfaction. Beyond just answering questions, NLU enhances sales, marketing, and customer care operations by providing deep insights into consumer behavior and preferences, thus enabling more personalized and effective engagement strategies.
Restraint: Lack of uniform standards to implement security solutions across the marine industry
Data sensitivity is a critical restraint in the NLU market, particularly as NLU systems are increasingly employed in areas like customer support and healthcare, where they handle highly sensitive and confidential information. When users interact with conversational AI systems, they often share personal data, including financial details, medical history, and other private information. Ensuring the security and privacy of this data is paramount to prevent misuse or unauthorized exposure. The potential risks associated with data breaches, unauthorized access, and data leaks can have severe consequences, including identity theft, financial loss, and breaches of confidentiality, which can significantly harm both individuals and organizations.
Opportunity: Emotion recognition-based NLU to unlock empathetic AI for personalized user experiences
The development of emotion-aware systems that can identify and respond to human emotions expressed in text and speech. Emotion recognition technologies aim to bridge the gap between human communication nuances and machine understanding, enabling AI systems to interpret not just the literal meaning of words but also the underlying emotions and sentiments conveyed. This advancement opens up a wide range of applications across various sectors. In mental health support, emotion-aware NLU systems can analyze patient interactions to detect emotional distress, provide empathetic responses, and even escalate concerns to healthcare professionals when necessary.
Challenge: Lexical ambiguity challenges NLU accuracy with multiple word meanings
Lexical ambiguity poses a significant challenge for NLU systems as it introduces complexities in language understanding. This challenge arises from the fact that many words in natural language have multiple meanings depending on context. For example, the word "bank" could refer to a financial institution where people deposit money or the sloping land beside a body of water. When encountered in text or speech, NLU systems must accurately discern the intended meaning based on the surrounding context to avoid misinterpretation. Failure to do so can result in erroneous conclusions and inaccurate outputs. This challenge becomes even more pronounced in languages with rich vocabularies and nuances, where words may have multiple meanings or subtle variations in different contexts.
Natural Language Understanding (NLU) Market Ecosystem
The natural language understanding (NLU) market ecosystem comprises of solution providers, service providers, end users and regulatory bodies.
By solutions, software tools & frameworks segment to account for the largest market size during the forecast period.
Software tools and frameworks are rapidly emerging as the fastest-growing solutions in the natural language understanding (NLU) market, propelled by their versatility and adaptability. These tools and frameworks provide developers with a wide range of functionalities, such as natural language processing (NLP) libraries, sentiment analysis tools, and speech recognition capabilities, enabling them to create custom NLU solutions tailored to specific needs and requirements. As businesses increasingly leverage NLU for various applications like chatbots, virtual assistants, and sentiment analysis, the demand for flexible and comprehensive software tools and frameworks continues to rise. The integration of these tools with other technologies like machine learning and data analytics further enhances their capabilities, driving innovation and fueling the growth of the NLU market.
By vertical, healthcare & life sciences segment is projected to grow at the highest CAGR during the forecast period.
The healthcare and life sciences sector is rapidly embracing natural language understanding (NLU) technologies, transforming how medical professionals and researchers process and utilize vast amounts of unstructured data. NLU enables the extraction of valuable insights from patient records, clinical trial data, and medical literature, leading to improved diagnostics, personalized treatment plans, and more efficient clinical workflows. By automating the analysis of complex medical texts, NLU helps reduce administrative burdens, allowing healthcare providers to focus more on patient care. NLU-powered applications, such as virtual health assistants and automated patient support systems, enhance patient engagement and streamline communication.
North America to account for the largest market size during the forecast period.
North America is a dynamic hub for advancements in the natural language understanding (NLU) market, marked by ongoing developments, technological advancements, and regulatory considerations. With leading tech companies like Google, Amazon, and Microsoft based in the region, there is a constant stream of innovation and research driving the evolution of NLU technologies. These companies invest heavily in AI research, pushing the boundaries of what NLU can achieve. North America's proactive regulatory environment supports the ethical and secure deployment of NLU technologies, further bolstering its leading position in the industry.
Key Market Players
The major natural language understanding (NLU) solutions and service providers include Microsoft (US), Google (US), IBM (US), AWS (US), Oracle (US), SAS Institute, Salesforce (US), OpenAI (US), Meta (US), SoundHound AI (US), IQVIA (US), LivePerson (US), Haptik (India), Kapiche (Australia), Rasa (US), MindMeld (US), Hugging Face (US), Conversica (US), Expert.ai (Italy), Verbio Technologies (Spain), Wolfram (US), Cortical.io (Austria), Omilia (Cyprus), Cognigy (Germany), Plasticity (US), Afforai (US), Tune AI (US), Vebrit.ai (US), Synthesys (UK), Picovoice (Canada), Symbl.ai (US), Tisane Labs (Singapore), Prosa.ai (Indonesia), Abacus.AI (US), Forethought (US). These companies have used both organic and inorganic growth strategies such as product launches, acquisitions, and partnerships to strengthen their position in the natural language understanding (NLU) market.
Get online access to the report on the World's First Market Intelligence Cloud
- Easy to Download Historical Data & Forecast Numbers
- Company Analysis Dashboard for high growth potential opportunities
- Research Analyst Access for customization & queries
- Competitor Analysis with Interactive dashboard
- Latest News, Updates & Trend analysis
Request Sample Scope of the Report
Get online access to the report on the World's First Market Intelligence Cloud
- Easy to Download Historical Data & Forecast Numbers
- Company Analysis Dashboard for high growth potential opportunities
- Research Analyst Access for customization & queries
- Competitor Analysis with Interactive dashboard
- Latest News, Updates & Trend analysis
|
Report Metrics |
Details |
|
Market size available for years |
2019–2029 |
|
Base year considered |
2023 |
|
Forecast period |
2024–2019 |
|
Forecast units |
USD Billion |
|
Segments Covered |
Offering (Solutions [Platform and Software tools & frameworks], Solutions by Deployment Mode [Cloud and On-premises] and Services [Professional Services {Training & Consulting, System Integration & Implementation, Support & Maintenance} and Managed Services]), Type (Rule-Based, Statistical, Hybrid), Application (Chatbots & Virtual Assistants, Customer Experience Management, Text Analysis, Sentiment analysis, IVR & message routing, Data capture, Machine translation and Other Applications) and Verticals (BFSI, Healthcare & Life Sciences, Retail & Ecommerce, IT&ITeS, Transportation & logistics, Government & Public sector, Media & Entertainment, Manufacturing, Telecommunication and Other verticals [Travel & Hospitality, Automotive, Energy & Utilities and Education]). |
|
Geographies covered |
North America, Europe, Asia Pacific, Middle East & Africa, Latin America |
|
Companies covered |
Key players are Microsoft (US), Google (US), IBM (US), AWS (US), Meta (US), SAS Institute, Oracle (US), Salesforce (US), OpenAI (US), SoundHound AI (US), IQVIA (US), LivePerson (US), Haptik (India), Kapiche (Australia), Rasa (US), MindMeld (US), Hugging Face (US), Conversica (US), Expert.ai (Italy), Verbio Technologies (Spain), Wolfram (US), Cortical.io (Austria), Omilia (Cyprus), Cognigy (Germany), Plasticity (US), Afforai (US), Tune AI (US), Vebrit.ai (US), Synthesys (UK), Picovoice (Canada), Symbl.ai (US), Tisane Labs (Singapore), Prosa.ai (Indonesia), Abacus.AI (US), Forethought (US). |
This research report categorizes the natural language understanding (NLU) market based on offering (solutions [platform and software tools & frameowrks], solutions by deployment mode, and services), type, application, vertical and region.
Offering:
-
Solutions
- Platform
- software tools & frameowrks
-
Services
-
Professional Services
- Training & Consulting
- System Integration & Implementation
- Support & Maintenance
- Managed Services
-
Professional Services
By Type:
- Rule-Based
- Statistical
- Hybrid
By Application:
- Chatbots & Virtual Assistants
- Customer Experience Management
- Text Analysis
- Sentiment analysis
- IVR & message routing
- Data capture
- Machine translation
- Other Applications
By Vertical:
- BFSI
- Healthcare & Life Sciences
- Retail & Ecommerce
- IT&ITeS
- Transportation & logistics
- Government & Public sector
- Media & Entertainment
- Manufacturing
- Telecommunication
- Other verticals (Travel & Hospitality, Automotive, Energy & Utilities and Education)
By Region:
- North America
- Europe
- Asia Pacific
- Middle East & Africa
- Latin America
Recent Developments:
- In May 2024, Reddit and OpenAI announced a partnership to enhance the user experience for both communities. OpenAI will utilize Reddit's Data API to integrate enhanced Reddit content into ChatGPT and new products, helping users discover and engage with Reddit communities.
- In May 2024, Oracle launched Oracle Cloud Infrastructure (OCI) Language 4.0 across all OCI regions, unveiling three new features aimed at delivering top-notch text analytics services to customers at an accessible price point. OCI Language serves as a cloud-based AI service specializing in extensive text analysis.
- In May 2024, IBM and Salesforce announced an expanded strategic partnership, combining IBM watsonx AI and Data Platform with the Salesforce Einstein 1 Platform to enhance customer choice and flexibility in AI and data deployment.
- In April 2024, Google Cloud and Mercedes-Benz deepened their strategic partnership, leveraging AI and generative AI technologies on Google Cloud's Vertex AI platform to enhance customer experiences. Mercedes successfully deployed Google Cloud's Dialogflow conversational AI in its U.S. call centers, assisting customers in over 30 languages with lease inquiries, payments, and upgrades, handling over a million calls.
- In March 2024, Microsoft announced significant changes to Azure AI Search to support customers building production-ready generative AI applications. Azure AI Search drastically increased storage capacity and vector index size at no additional cost, enabling customers to run retrieval augmented generation (RAG) at any scale without compromising cost or performance.
Frequently Asked Questions (FAQ):
What is natural language understanding (NLU)?
Natural language understanding (NLU) is a subset of natural language processing (NLP) within the field of artificial intelligence (AI) that focuses on machine reading comprehension. It involves enabling machines to understand and interpret human language in a way that is meaningful and useful.
Which region is expected to hold the highest share in the natural language understanding (NLU) market?
North America is expected to hold the largest market size in the natural language understanding (NLU) market driven by region's strong technological infrastructure, the presence of major tech companies like Google, Amazon, and Microsoft, and significant investments in research and development.
Which are key verticals adopting natural language understanding (NLU) solutions and services?
The key verticals adopting the NLU solutions & services are BFSI, Healthcare & Life Sciences, Retail & Ecommerce, IT&ITeS, Transportation & logistics, Government & Public sector, Media & Entertainment, Manufacturing, Telecommunication and Other verticals (Travel & Hospitality, Automotive, Energy & Utilities and Education)
Which are the key drivers supporting the market growth for natural language understanding (NLU)market?
The growth of the natural language understanding (NLU) market is propelled by various drivers such as growing consumer demand for personalized and intuitive interactions, increased productivity and reduced call durations in contact centers, a rising need for effective brand messaging, and the exponential growth of unstructured text data.
Who are the key vendors in the market for natural language understanding (NLU) market?
The key vendors in the global natural language understanding (NLU) market include Microsoft (US), Google (US), IBM (US), AWS (US), Oracle (US), Meta (US), SAS Institute, Salesforce (US), OpenAI (US), SoundHound AI (US), IQVIA (US), LivePerson (US), Haptik (India), Kapiche (Australia), Rasa (US), MindMeld (US), Hugging Face (US), Conversica (US), Expert.ai (Italy), Verbio Technologies (Spain), Wolfram (US), Cortical.io (Austria), Omilia (Cyprus), Cognigy (Germany), Plasticity (US), Afforai (US), Tune AI (US), Vebrit.ai (US), Synthesys (UK), Picovoice (Canada), Symbl.ai (US), Tisane Labs (Singapore), Prosa.ai (Indonesia), Abacus.AI (US), Forethought (US). .
To speak to our analyst for a discussion on the above findings, click Speak to Analyst
The research study for the natural language understanding (NLU) market involved extensive secondary sources, sources, directories, and several journals, including the Journal of the American Medical Informatics Association and The Association for Natural Language Processing Providers. Primary sources were mainly industry experts from the core and related industries, preferred NLU, third-party service providers, consulting service providers, end users, and other commercial enterprises. In-depth interviews were conducted with various primary respondents, including key industry participants and subject matter experts, to obtain and verify critical qualitative and quantitative information and assess the market’s prospects.
Secondary Research
The market size of companies offering NLU solutions and services was arrived at based on secondary data available through paid and unpaid sources. It was also arrived at by analysing the product portfolios of major companies and rating the companies based on their performance and quality.
In the secondary research process, various sources were referred to, for identifying and collecting information for this study. Secondary sources included annual reports, press releases, and investor presentations of companies; white papers, journals, and certified publications; and articles from recognized authors, directories, and databases. The data was also collected from other secondary sources, such as journals, government websites, blogs, and vendor websites. Additionally, NLU spending of various countries was extracted from the respective sources. Secondary research was mainly used to obtain key information related to the industry’s value chain and supply chain to identify key players based on solutions, services, market classification, and segmentation according to offerings of major players, industry trends related to solutions, solution by deployment mode, services, type, application, verticals and regions and key developments from both market- and technology-oriented perspectives.
Primary Research
In the primary research process, various primary sources from both supply and demand sides were interviewed to obtain qualitative and quantitative information on the market. The primary sources from the supply side included various industry experts, including Chief Experience Officers (CXOs); Vice Presidents (VPs); directors from business development, marketing, and NLU expertise; related key executives from NLU solution vendors, SIs, professional service providers, and industry associations; and key opinion leaders.
Primary interviews were conducted to gather insights, such as market statistics, revenue data collected from solutions and services, market breakups, market size estimations, market forecasts, and data triangulation. Primary research also helped in understanding various trends related to technologies, applications, deployments, and regions. Demand-side stakeholders, such as Chief Information Officers (CIOs), Chief Technology Officers (CTOs), Chief Strategy Officers (CSOs), and end-users using NLU solutions were interviewed to understand the buyer’s perspective on suppliers, products, service providers, and their current usage of NLU solutions and services, which would impact the overall NLU market.
The following is the breakup of primary profiles:
To know about the assumptions considered for the study, download the pdf brochure
Market Size Estimation
Multiple approaches were adopted for estimating and forecasting the natural language understanding (NLU)market. The first approach involves estimating the market size by summation of companies’ revenue generated through the sale of solutions and services.
Market Size Estimation Methodology-Top-down approach
In the top-down approach, an exhaustive list of all the vendors offering solutions and services in the natural language understanding (NLU) market was prepared. The revenue contribution of the market vendors was estimated through annual reports, press releases, funding, investor presentations, paid databases, and primary interviews. Each vendor's offerings were evaluated based on the breadth of solutions and services, types, application, and vertical. The aggregate of all the companies’ revenue was extrapolated to reach the overall market size. Each subsegment was studied and analyzed for its global market size and regional penetration. The markets were triangulated through both primary and secondary research. The primary procedure included extensive interviews for key insights from industry leaders, such as CIOs, CEOs, VPs, directors, and marketing executives. The market numbers were further triangulated with the existing MarketsandMarkets’ repository for validation
Market Size Estimation Methodology-Bottom-up approach
In the bottom-up approach, the adoption rate of NLU solutions and services among different verticals in key countries with respect to their regions contributing the most to the market share was identified. For cross-validation, the adoption of NLU solutions and services among industries, along with different use cases with respect to their regions, was identified and extrapolated. Weightage was given to use cases identified in different regions for the market size calculation.
Based on the market numbers, the regional split was determined by primary and secondary sources. The procedure included the analysis of the NLU market’s regional penetration. Based on secondary research, the regional spending on Information and Communications Technology (ICT), socio-economic analysis of each country, strategic vendor analysis of major NLU providers, and organic and inorganic business development activities of regional and global players were estimated. With the data triangulation procedure and data validation through primaries, the exact values of the overall natural language understanding (NLU) market size and segments’ size were determined and confirmed using the study.
Top-down and Bottom-up approaches
Data Triangulation
After arriving at the overall market size using the market size estimation processes as explained above, the market was split into several segments and subsegments. To complete the overall market engineering process and arrive at the exact statistics of each market segment and subsegment, data triangulation and market breakup procedures were employed, wherever applicable. The overall market size was then used in the top-down procedure to estimate the size of other individual markets via percentage splits of the market segmentation.
Market Definition
According to IBM, Natural language understanding (NLU) is a subset of NLP that focuses on analyzing the meaning behind sentences. NLU enables software to find similar meanings in different sentences or to process words that have different meanings.
As per Forethought, NLU is a part of artificial intelligence that allows computers to understand, interpret, and respond to human language. NLU helps computers comprehend the meaning of words, phrases, and the context in which they are used.
Stakeholders
- NLU Vendors
- NLU Solution Vendors
- Managed Service Providers
- Support & Maintenance Service Providers
- System Integrators (SIs)/Migration Service Providers
- Value-added Resellers (VARs) and Distributors
- Distributors and Value-added Resellers (VARs)
- System Integrators (SIs)
- Independent Software Vendors (ISV)
- Third-party Providers
- Technology Providers
Report Objectives
- To define, describe, and predict the natural language understanding (NLU) market, by offering (solutions [platform and software tools & frameowrks], solutions by deployment mode, and services), type, application, vertical and region.
- To describe and forecast the NLU market, in terms of value, by region—North America, Europe, Asia Pacific, Middle East & Africa and Latin America.
- To provide detailed information regarding major factors influencing the market growth (drivers, restraints, opportunities, and challenges)
- To strategically analyze micromarkets with respect to individual growth trends, prospects, and contribution to the overall NLU market.
- To profile key players and comprehensively analyze their market positions in terms of ranking and core competencies, along with detailing the competitive landscape for market leaders.
- To analyze competitive developments such as joint ventures, mergers and acquisitions, product developments, and ongoing research and development (R&D) in the NLU market
- To provide the illustrative segmentation, analysis, and projection of the main regional markets.
Available Customizations
With the given market data, MarketsandMarkets offers customizations as per the company’s specific needs. The following customization options are available for the report:
Product Analysis
- The product matrix provides a detailed comparison of the product portfolio of each company.
Geographic Analysis as per Feasibility
- Further breakup of the North American natural language understanding (NLU) Market
- Further breakup of the European natural language understanding (NLU) Market
- Further breakup of the Asia Pacific natural language understanding (NLU) Market
- Further breakup of the Middle East & Africa natural language understanding (NLU) Market
- Further breakup of the Latin American natural language understanding (NLU) Market
Company Information
- Detailed analysis and profiling of additional market players (up to five)
Growth opportunities and latent adjacency in Natural Language Understanding (NLU) Market