Are Bots the New Apps? - Fung Business Intelligence Bots the New Apps by... · bots for the Messenger platform, consisting of send/receive application program interfaces, discovery

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DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.

• Steady progress in natural language processingand artificial intelligence (AI) has led to theadventofbots, automated softwareagents thatcan carry on conversations, answer questionsandperformtasks.

• Many industry experts believe that the powerandflexibilityofbotscouldsurpassthatofapps,which have become the tool of choice forperformingtasksonsmartphones.

• Theglobalmarket for chatbotshit$88.3millionlastyearandisexpectedtogrowata36%CAGRthrough 2023, when it will reachmore than $1billion, according to Credence Researchforecasts.

• Computer scientists are working on making thenextsteptoconnectbotswithAIappliancesthatcandecodehumanspeech.Oncethattechnologyhas been proven, the conversational computersthatwereoncethestuffofsciencefictionmoviesarelikelytobecomeubiquitous.

Are Bots the New

Apps?

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EXECUTIVESUMMARY

Since the advent of the cell phone, we have seen several concurrenttechnologicaltrends.Oneisthesteadyadvancementofsemiconductorandmicroelectronicstechnology.Developmentsinthesefieldshaveenabledusto carry in our pocket a device with more computing power than amainframecomputerhad justa coupleofdecadesago,andourhandhelddevices empower us to run all kinds ofmultimedia programs thatwe callapps. The second trend is the parallel advancement of research andtechnologyinnaturallanguageprocessingandAI,whichincreasinglyenablecomputerstounderstandhumanspeech.Athirdtrendisthedevelopmentof apps. Initially, smartphone users could run programs frombuilt-inwebbrowsersor fromnativeapps.Appsgraduallywonoutbecause theywererelatively easier to use. However, there is a new game in town—bots—which, ironically, echo the text-basedprogramsof amuchearlierera, the1960s.

Bots are automated softwareagents thatusenatural languageprocessingandAItocontrolprogramsthatcananswerquestionsorcompletetasks.Atpresent,theyoperateviaatext-basedinterface:theusertypesaquestionintoanappormessagingprogramand,voilà, thequestion isansweredoran action is performed. But given the functionality and power that appsalready offer via their combination of graphical user interface andtouchscreen,whywouldanyonepreferabot?

Theanswer resides in theeffort required tocode,debugand testanapp.An app’s functionality is fixed (until the next version is created), andthereforelimited.Thislimitationmeansthatappsarenotabletoservetheminorityofuserspresentinthe“longtails”ofthebell-shapedcurve.Bots,which reside on a server, can be modified and customized much moreeasily.Moreover,manyofusaresufferingfrom“appfatigue,”andaretiredof constantlyhaving todownload, register,organizeandupdatea slewofappsonourphones.Nearlyeveryretailerandorganizationhasitsownapp,which makes app upkeep challenging. Clearly, bots cannot replace appscompletely,buttherewillbeaplaceforbothonusers’smartphones.

Source:PcMag

There are several commercially available AI-based personal assistantdevices, such Amazon’s Echo, and the number of functions they canperformisrapidlyincreasing.Theseassistantsarenotbots,however.They

Manyofusaresufferingfrom“appfatigue,”andaretiredofconstantlyhavingtodownload,register,organizeandupdateaslewofappsonourphones.

BotsareautomatedsoftwareagentsthatusenaturallanguageprocessingandAItocontrolprogramsthatcananswerquestionsorcompletetasks.

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simply perform preprogrammed tasks. They are not able to carry on aninteractive conversation with the user…yet. The next step is to connectthese devices, which can decode human language, with bots, in order tocreate tools that were previously the stuff of sci-fi movies: interactive,speakingcomputersthatcanintelligentlyconversewithhumans.

WHATISABOT?

A bot (short for “chatbot”) is an automated software agent that uses acombination of natural languageprocessing andAI to control software toanswer questions or complete tasks. The “bot” root comes from “robot”(derived from the verbmeaning “towork” inmanySlavic languages), andthenameimpliesthatbotsareabletoactautonomously.

NATURALLANGUAGEVS.TEXT-BASEDBOTS

Interestingly, with bots, AI and natural language processing technology istaking a few steps backward in order to take a big step forward. Botdevelopers areusing a text-based interface that echoes computer scienceexperiments of the 1960s, and leapfrogging the current generation ofcomputerizedassistants thatareable tounderstandand respond tovoicecommands. The next step—to connect the two systems—will enable thecreation of computers that can converse with us and perform intelligentactionsonourbehalf.

AI-BASEDPERSONALASSISTANTS

Apple’s Siri is probably the best-known AI-based personal assistant, butthereareseveralotheronesavailable,asshowninthetablebelow.

Figure1.KeyFeaturesofMajorAIPersonalAssistants

Platform LaunchDate KeyFeatures

AppleSiri Oct.2011 Integratedintomultipledevices,includingtheiPad,iPhone,iPodTouch,AppleWatchandAppleTV

AmazonEcho(withAlexa)

Jun.2015 Caninteractandcontroldevicesandservicessuchashomeautomation;canordercarsfromUber;canorderAmazonproducts

GoogleNow Jul.2012 Reliesonpredictivetechnologytoanticipatetheuser’sinformationneeds

MicrosoftCortana

Apr.2014 Employsprogressiveintelligence;thesystemaskspermissionbeforeaccessingauser’sinformationonadeviceinsteadofautomaticallyrecordinginformation

FacebookM Aug.2015 UseshumanintelligencetotrainandimproveAI

HoundbySoundHound

Underdevelopment

Comprehendsnaturallanguage;iscapableofhandlingsophisticatedcommands

Mobvoi Aug.2014 ChineseAIpersonalassistantthatisavailableoniOS,Androidanditsownsmartwatch

Viv May2016 Learningplatformthatcanhandlecomplexinquiries;opentoavarietyofdevicesandservices

Source:Companywebsites/FinancialTimes

Interestingly,withbots,AIandnaturallanguageprocessingtechnologyistakingafewstepsbackwardinordertotakeabigstepforward.Botdevelopersareusingatext-basedinterfacethatechoescomputerscienceexperimentsofthe1960s.

Abot(shortfor“chatbot”)isanautomatedsoftwareagentthatusesacombinationofnaturallanguageprocessingandAItocontrolsoftwaretoanswerquestionsorcompletetasks.

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Source:FuturisTech

Viv is the newest entrant into the space. The assistant’s manufactureroffered an impressivedemoof the system inMay2016 and is planning arolling launch toward the end of this year. Amazon’s Echo is currentlydrawing an enormous amount ofmedia attention. Its repertoire of 1,500activities (which the company calls “skills”) is growing, anduserswho arealsoAmazonPrimememberscanplacePrimeordersverballythroughEcho.

ELIZA:ONEOFTHEFIRSTBOTS

ELIZA (namedafter theElizaDoolittle character inGeorgeBernardShaw’splayPygmalion)wasanatural languageprocessingprogramwrittenattheMassachusettsInstituteofTechnologyduring1964–1966.TheprogramrantheDOCTOR script,which simulatedapsychotherapist. ELIZAwould ask apatient what was ailing him or her, “listen” to the answer, and thencontinuewithasequenceoffollow-upquestions.However,thecapabilitiesof the program were exhausted fairly easily, leading to nonsensicalconversations.(ClickhereforanonlinedemoofELIZA.)

Figure2.SampleELIZAConversation

Source:Mobygames.com

ELIZAwasanaturallanguageprocessingprogramwrittenattheMassachusettsInstituteofTechnologyduring1964–1966.TheprogramrantheDOCTORscript,whichsimulatedapsychotherapist.

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MARKETSIZE

The potential market for bots is as large as the global installed base forsmartphones, which the GSM Association estimates will total nearly 2.6billionthisyear.Anotherwaytogaugethepotentialmarket is in termsofthenumberofusersof socialmedia applications,whichare shown in thegraphbelow.

Figure3.LeadingSocialNetworksWorldwide,asofApril2016,NumberofActiveUsers(Mil.)

*Numberofuniquevisitingmembers,nottotalmembersSource:Facebook/Google/LinkedIn/WeAreSocial/WhatsApp/Twitter/Tumblr

Thepopularityofchatapps is illustrated in the figurebelow,whichshowsthat US Android users spend between eight and 48 minutes per day onvariousmessagingapps.

Source:KakaoTalk

1,5901,000

900853

697640

555400

320300300

249222215200

122100100100100100

FacebookWhatsApp

FacebookMessengerQQ

WeChatQzoneTumblr

InstagramTwiqer

BaiduTiebaSkypeViber

SinaWeiboLINE

SnapchatyyVK

PinterestBBM

LinkedIn*Telegram

USAndroidusersspendbetweeneightand48minutesperdayonvariousmessagingapps.

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Figure4.USAndroidUsers:AverageTimeSpentonMessagingAppsperDay,1Q16(Minutes)

Source:SimilarWeb

CredenceResearchestimates that the globalmarket for chatbots reached$88.3millionlastyear.Thefirmexpectsthemarkettogrowata36%CAGR,tomorethan$1billion,through2023,asshowninthefigurebelow.

Figure5.GlobalChatbotMarket(USDMil.)

Source:CredenceResearch

FACEBOOK

At Facebook’s April 2016 F8 developer conference, CEOMark Zuckerbergcommented,“Noonewantstohavetoinstallanewappforeverybusinessorservicethattheywanttointeractwith.Wethinkthatyoushouldjustbeabletomessageabusinessinthesamewaythatyoumessageafriend.”Atthe conference, Facebook announced the launch of a beta version of its

8.12

9.36

16.10

18.43

20.38

20.47

28.40

29.50

32.48

48.37

GoogleHangouts

FacebookMessenger

Skype

Snapchat

Viber

LINE

WhatsApp

WeChat

Kik

KakaoTalk

$0

$200

$400

$600

$800

$1,000

$1,200

14 15 16E 17E 18E 19E 20E 21E 22E 23E

CredenceResearchestimatesthattheglobalmarketforchatbotsreached$88.3millionlastyear.Thefirmexpectsthemarkettogrowata36%CAGR,tomorethan$1billion,through2023

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bots for the Messenger platform, consisting of send/receive applicationprogram interfaces, discovery tools using a natural language processingengine provided byWit.ai. At the time of the platform’s launch, 35 botswereavailable,includingthefollowing:

Figure6.SelectedFacebookBotsAvailableatLaunchofItsBotsPlatform• 1-800-Flowers

• BankofAmerica

• Burger King / TimHortons

• BusinessInsider

• CNN

• eBay

• Expedia

• Fandango

• HP

• PhilzCoffee

• Salesforce

• Shopify

• Staples

• StubHub

• UNICEF

• TheWallStreetJournal

• Zalando

Source:Engadget.com

The most recent arrival on the Facebook Messenger platform is BuzzBot(developed by BuzzFeed), which is currently collecting and filtering newsabouttheUSnationalpoliticalconventions.

MICROSOFT/SKYPE

Microsoft has had mixed success in launching bots. In March 2016, itlaunched an AI-powered chatbot called Tay, a product of the MicrosoftTechnology and Research and Bing teams. The bot was intended to craftlightheartedresponsestoconversationalqueriesposedby18–24-year-olds,butwaspulledadayafter launch, shortlyafter itwasdiscovered that thebotcouldbe“taught”tomakeracistandsexistcomments.

Morerecently,Microsoftaddedchatbots toSkype, the Internet telephonyplatformitacquiredinMay2011for$8.5billion.InMarch2016,Microsoftintroduced Skype Bots, which it said were a newway to bring expertise,products, services and entertainment into daily messaging on Skype. Thecompanyplanstomakethebotsavailableforaudioandvideocallinginthefuture. The types and capabilities of Skype Bots are outlined in the tablebelow.

Figure7.SkypeBots’CapabilitiesandCreators

Bot Capabilities Creator

MitsukuArtificiallyintelligentBFF(bestfriendforever)designedtoentertain Pandorabots

CaptionBot Attemptstounderstandanddescribeimages Microsoft

MurphyBrings“whatif”scenariostolifeandcreatesimagesthatillustratethequestions Microsoft

“Hello,Stranger!”Game

Textgameinwhichtheuserhelpsthemaincharacterescapetheoceandepthsinrealtime BotWanted

“Hello,Stranger!2”Game

Textgameinwhichtheuserreceivestextmessagesfromanunknowngirl,Alice,tohelpheronherjourney BotWanted

Ava Automatedvirtualassistantforbusinesses Zoom.ai

BingMusic–Preview

Searchestheweb,includingpopularsitessuchasYouTube,LyricFindandVevo,forasongtitleandartist Microsoft

MarkZuckerbergcommented,“Noonewantstohavetoinstallanewappforeverybusinessorservicethattheywanttointeractwith.Wethinkthatyoushouldjustbeabletomessageabusinessinthesamewaythatyoumessageafriend.”

InMarch2016,MicrosoftintroducedSkypeBots,whichitsaidwereanewwaytobringexpertise,products,servicesandentertainmentintodailymessagingonSkype.

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Bot Capabilities CreatorBingNews–Preview

SearchesthewebforthelatestnewsusingBing Microsoft

BingImage–Preview

Searchesthewebformemes,GIFs,stickersandotherimages Microsoft

Summarize Summarizesalinkintothemainpointsofthearticle MicrosoftGettyImages–Preview

Searchesoneoftheworld’slargestdatabasesofstockphotography Microsoft

Source:Companywebsites

BOTLIST:ANAPPSTOREFORBOTS

App stores arose as the number of smartphone apps exploded, and, in asimilarfashion,Botlist.cohasemergedasadirectoryforbots,calling itself“an app store for bots.” The site lists around 400 bots for the followingplatformsandcategories:

Figure8.BotlistPlatformsandCategoriesPlatforms Categories

Android

Email

FacebookMessenger

iPhone

Kik

Slack

SMS

Telegram

Web

Skype

• Analytics

• BuildABot

• Communication

• CustomerSupport

• Design

• DeveloperTools

• Entertainment

• FileManagement

• Food

• Health

• HR

• Marketing

• News

• OfficeManagement

• Payments

• Personal

• Productivity

• Security

• Social&Fun

• Sports

• TaskManagement

• Travel

• Utilities

Source:Botlist.co

OTHERBOTMAKERS

Other bots include the Haptik personal assistant app, which can acquireinformation and perform services for the user, and Helpshift, a customersupport platform formobile andwebusers that helps companies supportandengagetheircustomers.

Users of WeChat (the fifth-largest social network worldwide as of April2016) havebeenusing bots to shop andpay bills since the company firstbegan offering them in 2013. WeChat bot accounts are called “publicaccounts,”andareavailableintwotypes:

• Subscription accounts,which are used by content providers to sendmessagestosubscribers.

• Serviceaccounts,whichareusedbycustomerservicedepartmentstointeractwithcustomers.

Appstoresaroseasthenumberofsmartphoneappsexploded,and,inasimilarfashion,Botlist.cohasemergedasadirectoryforbots,callingitself“anappstoreforbots.”

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“BOTSARETHENEWAPPS”

Manybelieve that theageof apps is coming to a close and thatbotswillsupersede them. While apps are unlikely to disappear completely,Medium.comsuggeststhatbotsprovideanumberofadvantagesoverapps:

• Botsareeasier to install,hosted in thecloud,andcanbedistributedandupdatedquicklyandeasily.

• Appsareexpensivetocreateandmaintain,andonlyservetheneedsofthemajorityofusers.

• Consumersareoverwhelmedwiththeneedtodownloadandinstalladifferentappforeverything.

• Messaging is ubiquitous, and bots satisfy the human need forinteractivecommunication.

ThisJuly,thefirst internationalbotathon—ahackathonforchatbots—tookplace in San Francisco, organized by VentureBeat. A 15-year-old namedLiamMcKinleycreatedthewinningbot,whichhelpsstudentsusingGoogleClassroommonitortheirgrades,homeworkandcommunication.

Source:Linkedin.com

OTHERTYPESOFBOTS

There are several other types of bots, some which are used to thedetriment of society and some for our benefit. These include ticket bots,webcrawlers andother software agents. Ticket bots areused topurchasepopularconcertticketswhentheygoonsaleonwebsitesforresalelateratahigherprice (i.e., tobescalped).Theyareconsideredascourge,as theyresult in higher ticket prices and reduced ticket availability for ordinaryconsumers. Governments often try to eliminate these bots, but thebotmakers seem to always be one step ahead of law enforcement andverificationservicessuchasCaptcha.

Manybelievethattheageofappsiscomingtoacloseandthatbotswillsupersedethem.

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Source:CodeProject

Webcrawlers arebots that can systematically travel through the Internetforthepurposeofcatalogingit.PopularsearchenginessuchasGoogleandYahoousewebcrawlerstoupdatetheircatalogs.Therearealsomanywebtools that use bots to “scrape” common information; thesemight gatherinformation from a set of similar web pages, for example, saving usershoursoftimethatwouldbeusedfortediousdataentry.

CONCLUSION

Steady progress in computer science has brought advances in naturallanguage processing andAI, leading to the advent of bots.Many industryexpertsbelievethatbotswillsurpassappsintermsofpowerandflexibility,eventually becoming the tool of choice for performing tasks onsmartphones. Before that happens, though, developers must reliablyconnectbotswithAIappliancesthatcandecodehumanspeech.Oncethathappens, the conversational computers that were once the stuff of sci-fimovieswilllikelybecomeubiquitous.

WebcrawlersarebotsthatcansystematicallytravelthroughtheInternetforthepurposeofcatalogingit.

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DeborahWeinswig,CPAManagingDirectorFungGlobalRetail&TechnologyNewYork:917.655.6790HongKong:852.6119.1779China:[email protected],CFASeniorAnalystHONGKONG:10thFloor,LiFungTower888CheungShaWanRoad,KowloonHongKongTel:85223002470LONDON:242-246MaryleboneRoadLondon,NW16JQUnitedKingdomTel:44(0)2076168988NEWYORK:1359Broadway,9thFloorNewYork,NY10018Tel:6468397017

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Are Bots the New Apps? - Fung Business Intelligence Bots the New Apps by... · bots for the Messenger platform, consisting of send/receive application program interfaces, discovery