The Cloud Will Drive Growth in Mobile Speech Recognition

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Cloud-based solutions will spur mobile speech recognition platform revenue growth through the next five years, taking it from $73 million today to just slightly less than $1 billion by 2017, representing a compound annual growth rate of 68 percent, according to a recent report from ABI Research.

The software-as-a-service delivery method is especially enabling for platform and mobile application developers. Many speech vendors are taking advantage of the cloud to open their technology and programming interfaces to any developer who wants them.

"[By] leveraging the cloud as a delivery mechanism, platform vendors can enable nearly any application developer that wishes to make its user interface experience more efficient," says Jeff Orr, senior practice director of ABI's Mobile Devices, Content, and Applications unit.

"Reaching a varied group of developers working on different [operating systems] and hardware platforms makes cloud-based solutions the optimum approach to enabling the masses," says ABI senior analyst Michael Morgan.

In its "Speech Recognition in Mobile Devices" report, ABI singles out Nuance Communications, AT&T, and iSpeech for their support of the developer community.

"Nuance has obviously got the advantage here," Morgan says.

ISpeech, he adds, "is coming along: They have some historically popular apps already under their belts."

AT&T was included on the list "because they have such a long history with speech recognition, and they can keep the business going to drive adoption. They're very new to the [mobile] game, so we're going to have to see how it goes," Morgan says.

The report notes that, historically, mobile speech recognition was delivered to consumers through relationships between device manufacturers and platform vendors or through virtual assistant applications developed by platform vendors. Smaller application development efforts lacked the resources and expertise to bring the benefit of speech recognition to their products, which has kept speech recognition trapped in functionally specific applications, it says.

"Now you don't necessarily have to have that upfront capital and the whole installation process," Morgan says. "Now you call, you sign up, and you have access to the technology right away. It's much more accessible to smaller and medium-sized businesses."

ABI also expects the number of application downloads to increase at a compound annual growth rate of 46 percent between 2012 and 2017. Because most of these downloaded apps are free, Morgan says developers will have to find a way to monetize their products, making sure there's a recurring revenue stream built into their models.

"When you use a cloud-based speech service, the general charging methodology is by transaction. This means that if you're an application developer, you need to consider your pricing model. You don't necessarily know how many transactions a user will do over the lifespan of the application, so having the one-time download fee may not be very coherent with a service that you have to pay for to support your application. Developers have to find other ways, be it subscription or per-use fee—something that's both easy and affordable for the end user."

Orr noted that consumers should expect to see the benefits of these efforts in mobile banking and retail applications first.

Cloud Applications Pay Off in ROI

Companies are devoting an increasing share of their IT budgets to cloud projects instead of traditional on-premises applications, resulting in an average of 1.7 times more ROI, Nucleus Research has found.

In addition to low upfront costs and faster time to deployment, cloud applications require on average 40 percent less investment in consulting than on-premises solutions, according to Nucleus. Other factors in the cloud ROI multiplier effect are ongoing application support and business analysis, reducing support personnel expenditures by 25 percent. With the flexibility of cloud-based applications, business users can adapt and expand their use over time, seamlessly enlarging the user footprint while taking advantage of incremental upgrades to drive greater productivity.

"Cloud has arrived as the first and most viable choice for applications. At this point, on-premises is really only a consideration for businesses that do not plan to grow, change, or upgrade their applications. In areas such as mobile access, integrated analytics, improved workflows, and more intuitive user interfaces, cloud applications have the flexibility that all businesses need to grow far beyond what on-premises applications can offer," said Rebecca Wettemann, vice president of Nucleus Research, in a statement.

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