MSFT Microsoft Corporation

By Ted Greenwald 

Microsoft Corp. plans Monday to unveil its first product in a new line of software aimed at taking on International Business Machines Corp. and others in the growing market to apply artificial intelligence to everyday business needs.

The new product, a customer-service virtual assistant, is designed to let people describe problems in their own words and respond with suggestions drawn from user manuals, help documents and similar materials. Users can request a human agent, in which case the bot will try to assist the customer-care representative. Managers can view a dashboard overview of the results.

The bot is one of what Microsoft says will be a series of customizable programs running on the company's Azure cloud-computing platform. The programs, called Dynamics 365 AI solutions, will draw on basic AI capabilities such as natural-language processing as well as a trove of data and algorithms from Microsoft's Bing search engine, productivity apps and LinkedIn network.

The market for artificial-intelligence systems is expected to grow from $12.5 billion this year to $46 billion by 2020, according to International Data Corp. Microsoft, one of a handful of AI front-runners and a leader in business computing, is gunning for a piece of that market.

Microsoft already offers cloud-based AI services coders can stitch into their programs, competing against the likes of Alphabet Inc.'s Google, Amazon.com Inc. and IBM.

So, for example, companies that want a customer-service bot can either use these tools to build their own -- a feat that takes expertise and mountains of data -- or hire a company to build it for them, which can be expensive and time-consuming.

Microsoft positions its AI solutions as a lower-risk, lower-cost alternative.

"We're trying to come up with a model we believe is most efficient in terms of how quickly AI can get results," said Gurdeep Singh Pall, who heads Microsoft's AI-solutions team. The company declined to reveal pricing or timelines for integrating customer data.

In rolling out AI solutions that can be adapted to each customer's needs, Microsoft is squaring off more directly against IBM's Watson. Both companies are building application product lines based on their AI capabilities. But where IBM's programs target specific industries, Microsoft's address fundamental business needs that apply to any industry -- for instance, customer service. It is also going after Salesforce.com Inc., a leader in customer-service automation that also boasts AI features, though not a virtual assistant.

"There's huge interest from enterprises in deploying chatbots for customer service," said Van Baker, a researcher at Gartner Inc. "The intent usually is to reduce cost by reducing head count." He estimates 90% of enterprises are investigating chatbots generally, but only 4% have them up and running.

International Data Corp. expects spending on automated customer-service agents to grow to $6.1 billion in 2021 from $1.1 billion in 2016.

HP Inc., Macy's Inc. and Microsoft itself are among the bot's early adopters.

HP, looking to save on labor costs and improve customer satisfaction, started training the Microsoft bot in February and launched it in July, according to Jon Flaxman, the computer vendor's operating chief.

Today, the bot is on the front line of handling the 600 million support calls HP receives annually, he said, and has significantly boosted resolution rates.

Write to Ted Greenwald at Ted.Greenwald@wsj.com

(END) Dow Jones Newswires

September 25, 2017 09:14 ET (13:14 GMT)

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