STRATEGIC ALLIANCE: Will Microsoft's Stake in Lernout & Hauspie Drive Growth in Speech?

Microsoft and Lernout & Hauspie Speech Products have announced a broad strategic alliance designed to accelerate development of the next generation of voice-enabled computing on the Microsoft Windows platform. Under the alliance, Microsoft will acquire a minority stake in the speech technology company with the purchase of $45 million in Lernout & Hauspie common stock. Microsoft and L&H have agreed to share technologies and expect to co-operate on future speech initiatives. The $45 million purchase represents about 5% to 7% of the L&H's capital. "We believe Microsoft Windows is the ideal platform for providing the benefits of speech technology to customers," said Gaston Bastiaens, president and CEO of L&H. "L&H is looking forward to continuing our tradition of providing the highest-quality speech applications in the most languages on the Windows platform." The alliance brings Microsoft much closer to realizing a vision often expressed by chairman and CEO Bill Gates, that speech will be the computer interface of choice. Microsoft has long held the goal of enabling the Windows operating system to recognize and respond to spoken-words. This agreement is Microsoft's most tangible pursuit of that goal to date. Specifically, L&H will develop applications for currently available and future versions of Microsoft's speech application interface (SAPI). L&H will also continue to pursue its goal of providing the broadest range of speech technologies in multiple languages for horizontal and particularly for vertical markets such as medical and legal, and will embed speech applications into special purpose hardware devices. "For the past several years Microsoft has made great progress toward a vision of the personal computer which can then interact with users via spoken language," said Nathan Myhrvold, Microsoft's chief technology officer. "Through this alliance with Lernout & Hauspie, we are taking a big leap forward in transforming that vision into a reality." Microsoft is using Lernout & Hauspie to build upon its existing speech technology efforts, driven by Microsoft Research, the company's basic research organization. The alliance is expected to accelerate development of voice-enabled computing, which goes beyond today's speech dictation products. "We are pleased to announce this strategic relationship with L&H," said Dan Rosen, Microsoft's general manager of new technology. "Together we plan to capitalize on the core competencies of both companies in pursuit of innovative speech technologies that will ultimately benefit computer users around the globe." Bernard Vergnes, chairman of Microsoft Europe, will join L&H's Board of Directors. Flanders Language Valley Fund
As part of this announcement, Microsoft announced it will also invest $3 million in the Flanders Language Valley Fund, a Belgian-based international technology center dedicated to supporting companies developing speech-based technologies and applications. Microsoft will participate in Flanders Language University, a cooperative program which harnesses the linguistic initiatives and expertise from universities around the world, focused on enhancing education and training in computational linguistics. "Microsoft's active participation in this international speech technology knowledge center and the FLV university program affirms the FLV's leadership role in multi-lingual applications development," Pol Hauspie, co-chairman of L&H. "The additional resources afforded by this investment, in terms of both funds and expertise, greatly enhance the potential for success." The two companies also announced their intent to form a joint venture in Europe to collect and analyze speech and linguistic data. Such data is a necessary component in building future speech products. Industry Reaction
The stock purchase was viewed very positively by analysts and by Wall Street, where L&H stock soared 8 points on the initial news. The deal was viewed as a seal of approval for the Belgian firm and a sign that Microsoft believes its technology is ready for commercial application. However, it does not confirm L&H will be used in the next version of the Windows operating system. The strategic alliance "confirms that L&H is one of the top companies in speech recognition" said Gerrit Ooms, equity analyst at the Belgian firm Vermeulen Raemdonck. "It seems likely that speech technology will be part of future versions of Windows," he said, adding that it increases the chance that Windows 98 may incorporate speech. Lernout and Hauspie already has products which transfer spoken commands to Windows and Word, but these are not integrated in the Windows operating system. "Microsoft's L&H stake means that there is yet another major player who believes in L&H technology and who believes that is possible to turn it into a sellable product fast" said Kurt Janssens, an analyst with Nedee & Co.
Medical Applications from L&H
Lernout & Hauspie Speech Products recently demonstrated the Kurzweil Clinical Reporter 2.0 for Pathology, the first in a series of continuous speech products. The release was followed up by the release of L&H's version 2.0 for Emergency Medicine. The Kurzweil Clinical Reporter Version 2.0 for Emergency Medicine integrates L&H's large vocabulary continuous speech recognition technology, an emergency medicine knowledge base, an automatic report writer and complete integration services into hospital information systems. The addition of continuous speech recognition will allow clinicians to dictate reports using words spoken at a natural pace, rather than employing discrete speech dictation, which requires users to pause between each word. Updates to the knowledge base which support newly imposed HCFA regulations for clinical reporting will help emergency departments adapt to Kurzweil's Clinical Reporter for Pathology. The addition of continuous speech improves upon this product's capability by helping clinicians reduce report turnaround time, decreasing transcription costs and increasing productivity in surgical pathology reporting. Kurzweil Clinical Reporter integrates L&H's large vocabulary continuous speech recognition technology, a pathology knowledge base (developed in conjunction with practicing pathologists), an automatic report writer and complete integration services. The knowledge base guides the user through the report process, establishing quality and control for every patient encounter. Clinical information captured during the specimen examination can then be automatically transmitted to computer-based patient record systems for immediate analysis and review or storage for outcome studies. The product "builds on the success of previous versions and represents a significant advance over the time-consuming dictation-transcription-editing process, currently the traditional approach," said Chris Force, vice president of the Healthcare Solutions Group. "The pathology-specific knowledge base and a continuous speech voice recognizer will deliver even greater user speed and accuracy, and provide the connectivity to capture patient records instantly. That should translate into better medical care, in addition to reduced cost of service." The key features of the pathology product are: savings of up to 70 to 100% in transcription costs; immediate availability of final reports; common protocols to ensure consistent information; data input efficiency in the microscopic description and final diagnosis and point of care and structured recording of pertinent patient data for outcome studies. The estimated cost is between $5,000 and $8,000 per user. Lernout & Hauspie Introduces VoiceCommands
Lernout & Hauspie Speech Products recently announced the availability of Kurzweil VoiceCommands in the U.S. market, a continuous speech "command and control" product. The continuous speech recognition-based software enables users to format and edit Microsoft Word documents by voice rather than keyboard and mouse, reducing the time required to revise and correct documents. The company said that the product is one of a series of continuous speech recognition products, including continuous dictation offerings for pathology and general business, which it plans to bring to the market by the end of the year. Kurzweil VoiceCommands allows users to speak naturally and understands a variety of commands for any given action. "Our primary objective when we acquired Kurzweil AI in June was to leverage the combined speech product expertise of both companies and accelerate our continuous speech product development efforts," said Koen Bouwers, president of L&H's dictation division. "With the natural language processing technology used in Kurzweil VoiceCommands L&H distinguishes itself clearly from the competition in the continuous speech and dictation arena." Key features include: multiple users, enabling users to issue a single voice command to accomplish many functions usually requiring multiple mouse clicks or keyboard strokes. For example, users can issue a command "Insert a table with 3 rows and 4 columns." In addition there is an easy-to-use help system. For more information contact Lernout & Hauspie at http://www.lhs.com. 800 380-1234.
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