• September 10, 2012
  • By Leonard Klie Editor, Speech Technology and CRM magazines
  • FYI

Strong Gains Expected for Speech

Article Featured Image

The voice recognition software developers industry was static during the recession, but rising disposable incomes and technological advances have helped it rebound strongly, according to a new report from IBISWorld.

As the healthcare sector increasingly streamlines record-keeping and similar tasks, voice recognition software is gaining in popularity as a way to conveniently transfer those records. But, while strong growth is expected on the back of mobile Internet devices, open-source software could stifle traditionally strong profit margins, the report warns.

According to the report, revenue for the voice recognition software developers industry is expected to increase an average of 2.3 percent annually to $1.1 billion by 2017. This year alone, industry revenue is expected to grow 5 percent due to a 7.9 percent increase in private investment in computers and software.

However, the industry has not experienced growth across the board. "Industry revenue declined during the recession when corporate profits and per capita disposable income fell, causing private investment in computers and software to decline," says IBISWorld industry analyst Kevin Culbert.

The report ultimately concludes that increases in disposable incomes and corporate profits are expected to lead consumers and businesses to spend more on products that incorporate voice recognition technology. These products include portable devices like cell phones, mobile Internet-connected devices, and global positioning systems. The software vendors for these systems often license their technologies to the device manufacturers or service providers on a per subscriber or volume basis.

The report also makes note of an increase in the number of Internet-connected devices, which it says will show gains of 28.8 percent this year alone.

In addition to a rising number of mobile Internet connections, industry revenue will also benefit from healthcare providers adopting electronic health records (EHRs). The Health Information Technology for Economic and Clinical Health Act, enacted in February 2009, gives tax incentives for healthcare providers that adopt EHRs, and mandates that all healthcare providers switch over to EHRs by 2014. This, coupled with a growing number of physician visits, has caused healthcare providers to seek out more voice-enabled documentation solutions in the past five years.

Leading up to 2017, IBISWorld estimates industry revenue will continue on an upward trajectory. According to Culbert, industry operators will continue to benefit from increased investment in computers and software, rising demand in downstream markets, and the growing number of devices that incorporate voice recognition technology. But the industry is still expected to experience more competition from open-source software providers, the firm maintains.

The report also makes note of the industry consolidation that has taken place recently. In the past five years alone, the number of firms operating in this industry has declined by 4.6 percent per year to 34.

Additionally, IBISWorld cites growing market concentration within the industry, with the four largest players accounting for more than half of all industry revenue. The two largest, Nuance Communications and M*Modal, have rapidly expanded their share of the market during the past five years. Nuance has grown by an average of 18.2 percent per year as a result of its aggressive acquisition streak. The company has purchased eight other players to enhance its product offerings and reach new markets. Meanwhile, M*Modal, which was just acquired by One Equity Partners, the private investment arm of JP Morgan Chase, for approximately $1.1 billion, has increased its U.S. revenue at an average annual rate of 5.3 percent due to its own acquisition activities. As such, these players have outpaced industry growth and captured an increasing share of the market.

SpeechTek Covers
for qualified subscribers
Subscribe Now Current Issue Past Issues
Related Articles

OneTok Releases Voice-Enabled Mobile Apps

Gives developers a new voice recognition platform.

Nuance Healthcare Inks Deal with Providence Health & Services

Makes medical voice recognition available at hospitals and clinics.

iSpeech Launches Voice Recognition Platform for the Home

Technology controls smart TVs, electronics, and appliances by voice.

Horizon Private Cloud Partners with Voice Automated

Cloud-based service helps healthcare and legal businesses use voice recognition services from the cloud.

NY Area Airports Pilot Speech to Speed Travelers Along