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Why Facebook is going all in on chatbots

The arrival of bots to Facebook's Messenger app has the potential to transform how people communicate with brands, but analysts said the fight for consumers' attention in this emerging space is just beginning.

"There will be a lot of excitement about the potential for these bots," said Macquarie analyst Ben Schachter. "We are somewhat more cautious."

As the marketplace for apps rapidly matures — most people spend 84 percent of their time in just five apps each month, according for Forrester — companies will increasingly try to get user's attention via those most-popular apps. Thus, the rise of chatbots.

Facebook has a big advantage here, because brands and companies naturally want to be where users are, and the social network's Messenger app currently has 900 million monthly active users and its WhatsApp has more than a billion monthly active users. The company said Tuesday that it processes 60 billion messages a day across Messenger and WhatsApp, three times more than SMS.

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The real question is how well the bot technology will work and whether it will be good enough to become a utility for businesses and see mass adoption by users, Schachter said. Either way, it will be at least a couple of years before it begins to drive revenue.

"We simply want to see execution before we get too excited about the opportunity," said Schachter.

Chatbots built on Messenger hold the promise of streamlining interactions between customers and businesses, but there are still limitations in the existing technology. In the short term, at least, customer service representatives will still have jobs.

"Bots will have a big part to play in automating the sales process, but there will still be tougher questions that can only be handled by a human," said Royston Tay, general manager of messaging at Zendesk. "At least for the next couple of years."

As the technology improves, bots will handle more of the work, said Assist co-founder Robert Stephens. Assist helps companies and brands, including 1-800 Flowers.com, which was featured at F8, get onto messaging platforms using its chatbot.

"It was interesting how they tied it to a bunch of bad customer experiences and how they could potentially scale that problem to be easy," said Dennis Choi, a software engineer at Amazon.

The Facebook Messenger platform could be useful for certain tasks but others — such as checking the weather — might still be better performed by clicking on a weather app, he said. A lot will depend on how well the bots can be trained to become "smart," he said.

To help developers build smarter bots, Facebook is making its Wit.ai Bot Engine available to developers. This will help them build more complex bots, interpret natural language, and continuously learn and improve over time.

"The fact that you have this really interesting artificial intelligence system in place to be able to leverage on top of Messenger — now we're talking about an even more interesting platform," said Aniruddh Bajirao, a developer at Match.com.

"This is fabulously useful to this new world of bots," said Ben Brown, CEO of Howdy, which makes bots and bot-making tools. Several factors are enabling bots to take off now, he said.

Visualization of computing hardware means developers can run multiple servers in the cloud, on platforms like Amazon Web Services, without having to buy them. Artificial intelligence tools have matured thanks to enormous investments from the likes of Facebook, Alphabet's Google, Amazon and Microsoft, enabling developers to build apps using open source tools. The web and app stores have become too crowded, frustrating developers and users now wanting greater simplicity.

Some companies are already jumping on board.

Match plans to start adding bots to Messenger fairly quickly, said Bajirao. "We like to spend more time where our users spend most time."

Facebook is also platform-agnostic, meaning developers can create bots that will work for users on any mobile device. It owns more "mobile moments" — time spent and data spent on mobile devices — than anyone else, said Forrester analyst Julie Ask. Google also has certain strengths in mobile, but has not been able to create a messaging service that comes close to Facebook's, said Ask.

"Facebook has the audience that is unparalleled, so they can take their time a bit," she said.

That said, competition will intensify.

Amazon has succeeded in attracting developers to build more than 500 "skills" on its Alexa platform, the technology behind the Amazon Echo, since opening up the platform to developers in August. Workplace messaging app Slack is also investing in bots and AI. For example, it recently launched Botkit with Howdy to simplify the process of building bots and give developers a framework to build on.

At the Microsoft Build Developer Conference, CEO Satya Nadella launched Microsoft Bot Framework, a platform for developers to create bots that interact with humans from text to Skype, Slack, Office 365 mail and other services. Industry insiders will be watching closely to see what Google unveils at its Google I/O developer conference on May 18 and whether Apple will leverage iMessage to launch a bot store of its own.

Facebook is looking to recreate the success chatbots have had in Asia, like Tencent's WeChat, said IDC industry analyst Karsten Weide. CEO Mark Zuckerberg may also be looking to capture a younger audience more accustomed to spending time in messaging apps, he said.

Weide is skeptical about enthusiasm among Western users for such a service. Twitter has been around been around for a long time, but has been unable to make a messaging platform work for advertising, let alone for e-commerce, he said.

The younger generation may be more open to it, and perhaps that is Facebook's real target audience, he said.

"There may be a whole new set of users who only use messaging apps," said Weide. "For them, it would be natural to use it for e-commerce."

Facebook is on a path to create distance between brands and their customers, and eventually to dominate customers' "mobile moments" and better serve them, said Ask.

"And they will, because Facebook understands customers better than the brands," she said.

Correction: The Google I/O developer conference is May 18. An earlier version misstated the date.