ANALYSIS-Speech recognition technology yet to find its voice

BANGALORE, Sept 28 - Speech recognition technology, mostly used by the medical transcriptions industry, is slowly making its way into mobile phones, music players and navigation devices.

The big question, however, is whether the technology -- which analysts believe is still taking "baby steps" -- is ready for the mass market.

Analysts say despite the growing popularity of smart phones and other gadgets, it might be some time before voice recognition is viewed as a must-have technology.

"Voice recognition has been a negative experience from a consumer's perspective," says Daniel Ives, an analyst at FBR Capital Markets. "We're still in early innings of the speech game."

Nuance Communications, whose voice technology powers Amazon's book reader Kindle 2 and Apple's latest iPhone 3GS, is the dominant player with a 65 percent to 70 percent share in a relatively underpenetrated market.

Nuance's flagship product Dragon lets one dictate notes, send emails and run Google searches.

Microsoft entered the enterprise space with the acquisition of voice-based applications provider TellMe in 2007. Other players include IBM, Google and MedQuist Inc

Microsoft's technology drives Ford's in-car navigation-cum-entertainment system Sync.

Although speech recognition has been around in sci-fi movies for decades, it's only in the last few years that voice applications have been built around devices like cell phones, book readers and automobiles.

Mobile users have moved swiftly from keyboards to touchscreens, but the adoption of a voice-based interface will take a few more years to play out, analyst say.

Accuracy is one of the key stumbling blocks the technology needs to overcome to be accepted more widely; quite often, devices fail to recognize the exact spoken command.

Another hurdle is filtering out noise when using the devices in crowded areas.

"There's going to be a substantial increase in the number of smart phones that have speech recognition embedded in them, but whether people use it is a different kettle of fish," Steve Cramoysan, analyst at market research firm Gartner, said.

"Speech in phones, music players, book readers and navigation devices is going to be the single best opportunity over the next five years for Nuance," Scott Sutherland, an analyst at Wedbush, said.

Apple's iPhone 3GS and the iPod Touch are equipped with voice control systems that responds to simple voice commands.

Nuance's mobile devices segment, which makes about 15 percent of the company's revenue, is expected to grow the fastest, reaching 20 percent to 25 percent in two to three years.

Over time, it could reach a third of the company's revenue, Ives said. "Mobile is one of their strongest growth areas because they've been laying groundwork for the last one year to get on all these next-gen handsets."

Nuance's scale works in its favor as it's a pure-play voice technology company. Microsoft has a small segment working on this technology and some of the larger companies have already quit the field.

"No technology is easy... that is why IBM is out of the market and partnering with Nuance, and Nokia is getting out of the market," Sutherland said.

HEALTHCARE BOOM

Penetration in the speech recognition technology's traditional U.S. healthcare transcription market is still low, representing a huge growth opportunity.

Medical transcription companies use voice technology to transcribe doctors' spoken reports.

Nuance is the market leader here, competing with firms such as MedQuist, Spheris Inc and Transcend Services Co

The U.S. government's plan to digitize healthcare records is expected to boost the rapidly expanding healthcare segment.

The healthcare segment, which contributes 40 percent of Nuance's revenue, is expected to continue to dominate the speech recognition market.

But it will be mobile devices with advanced speech applications that will drive the mass adoption of this technology.

It has been an uphill battle in terms of adoption by consumers, but they're starting to turn the corner, Ives said. "The next year or two will be the telling tale."