The technology is amazingly realistic, and Baby X's ability to name shapes that you hold in front of her and smile back when you laugh makes interacting with her incredibly engaging.
A digital system that can laugh, cry and learn all while expressing her responses to how she perceives you are feeling makes it easy to forget that she isn't actually living.
Details like the way she seems to breathe are based on her biological programming which mimics human breathing to make her speech and movement more realistic.
This is where Baby X is unique, she isn't just an avatar designed to look like a human, she is a computer system designed around biological models to simulate biological behaviour.
Her ability to respond with sad or happy emotions in response to different situations has resulted in a human to machine interaction that the world has never before seen.
Her animated face seems to express emotions based on her perceived feelings in such a realistic way, not only thanks to great graphics, but also because she is built around the same underlying anatomic structure that controls a human face.
For every facial muscle that moves and skin wrinkle that forms when you smile, the equivalent digitally programmed skin tissue and muscles are moving when Baby X smiles.
Her eyes are programmed to watch you through a webcam and facial tracking analysis, her ears use the computers microphone.
Combined this means that she doesn't just respond to what you say verbally, but also interprets what your face is saying.
Creating an avatar that has its own digital stream of consciousness is a huge leap for the field of artificial and emotional intelligence.
With its own digital brain you only need a few minutes of interaction with Baby X to forget that there is a computer involved and become emotionally connected to a child-like character who is warm and engaging.
However, virtual babies don't have much commercial value, so Baby X has had to grow up quickly.
This week the adult avatar Nadia was launched through Sagar's spinoff company Soul Machines.
With the help of chief business officer Greg Cross and 12 months of work with their ever growing Auckland based team, Nadia is now being used to help people in Australia with disabilities to access the National Disability Insurance Scheme (NDIS).
Combining IBM Watson's artificial intelligence technology with FaceMe, an Auckland developed video communication system, Nadia can now speak, write and answer questions online with people who may struggle to fill out electronic forms or read text online.
Nadia - whose voice is based on actress Cate Blanchett - can detect if a user is upset and respond using a more empathetic tone to help bring a calm tone to the conversation.
Nadia is just one of many new characters being created for the very real jump towards customer service being taken over by artificial and emotionally intelligent avatars.
