Voice-enabled Applications on the Rise; Entering IT Mainstream

The market for enterprise and telco-grade voice processing infrastructure will grow from $250 million in 2002 to $600 million in 2007, according to a newly issued report from Zelos Group, a research and advisory services firm that assists technology companies and service providers in the interactive services sector.

Growth will be application-driven and focus on expanded role in self-service and control over everyday tasks, like voice-activated dialing, directory assistance and Web-like support or order entry.

"Core technologies are getting more affordable and simpler for both carriers and enterprises to deploy," explained Dan Miller, senior analyst at Zelos Group and the report's principal author. "Price reductions for automated speech recognition (ASR) and text-to-speech (TTS) software temper revenue growth, but also reduce risk for investors and cultivate broader acceptance among enterprise and telco customers."

Over the next five years, Zelos Group forecasts a shift in the revenue mix from core technology licenses to application software, integration and tuning the user experience for vertical market segments. As a result, speech recognition and voice technology licenses' share of total revenue will decline from 30 percent in 2002 to 20 percent in 2007, while revenues accruing to vendors of packaged applications will grow to 17 percent from 6 percent over the same period.

"Now, attention turns from core technology to pre-packaged applications and the resources to integrate them," Miller explains, indicating that past focus had been on speech specialists like Nuance, SpeechWorks, ScanSoft, IBM and global players like Loquendo or Telisma.

The report indicates that the beneficiaries of the change in focus will be the application development partners of core technology providers along with Oracle, Microsoft and Hewlett Packard. Telco infrastructure stalwarts Cisco, Alcatel and Avaya, are also in the hunt.

"It's a buyers' market," Miller observes. "The firms that succeed will be those that concentrate on helping their customers leverage existing infrastructure and promote the lowest total cost of ownership (TCO), while fostering the highest quality experience for their self-service customers."