Raymond Gunn, President and CEO, Clarity

Q What is CVC™?

A Clear Voice Capture is a proprietary signal processing software solution that extracts the properties of speech from unwanted background noise.

Your ear and brain work together to readily differentiate sounds of interest from noise. But machines - such as voice-activated mobile devices - currently lack the same capabilities for sound discrimination. Noise degrades the quality of voice signals and the ability to process instructions. The result is limited functionality, disappointed users, and a low adoption rate of otherwise prolific technology. Clarity's CVC technology changes all that.

Q Why is it important for speech recognition?

A Several trends drive the need for Clarity's CVC technology:

1. The ubiquity of the cellular phone, wireless devices and the Internet. People are increasingly "going mobile," using small, portable devices to communicate. For instance, more than 70 percent of wireless calls are placed from an automobile, yet, the quality of cellular communications is undeniably poor. Drivers today are severely distracted by higher listening efforts due to noise, and higher cognitive loads from poorly performing speech recognition engines. To address such safety issues, more than 40 states and 23 countries have adopted laws or are considering legislation to ban or modify the use of cell phones unless using acceptable hands-free systems.

2. There is a growing trend toward voice-based interfaces to control wireless communications, PDAs (Personal Digital Assistants), Internet appliances, PCs and more. This is especially important for small footprint devices where voice is being substituted for inconvenient or impractical keyboard interfaces.

Q Please provide supporting evidence where you have significantly contributed to enhance speech recognition rates with your CVC.

A The following table provides independent evidence of speech recognition rate performance in today's automobile telematics command and control modules.

The test was performed independent of Clarity to evaluate speech recognition results in the automobile by one of Clarity's many customers. The purpose was to learn of the results achievable with CVC.

The results of the independent test are consistent with Clarity's findings with all speech applications in the demanding automobile environment, where diffuse and transient noise is present.

Q You have recently started a new division called, Clarity Labs™, please tell us about this concept and why you started the division.

A Clarity Labs™ is a services division of Clarity LLC, offering a host of new services to its customers on a fee-for-service basis. Clarity Labs has developed powerful automatic software testing tools and along with its expertise can benchmark speech recognition performance in minutes using a proprietary database of voice recordings in many conditions and environments.

Many companies deploying speech recognition applications as a feature in new product offerings are not equipped to evaluate the variety of solutions and arrive at a decision that supports their needs. Clarity has developed software tools and expertise with many customers and decided to offer these services to the market.

Even sophisticated companies deploying speech recognition software often use traditional means to do so, and this process can take weeks or even months, and can be expensive.

Clarity's tools and expertise improve the customer's chance of selecting the right ASR engine to support their product launch, accelerating time-to-market and time-to-profitability.

Q Are the other labs not meeting the demand for these services? Why are you different than other technology testing labs?

A Our customers needs are not being met by other facilities. They are coming to Clarity with basic questions for their specific application and we made a strategic decision to step into the void and help accelerate this industry. Clarity is in a unique position with no bias to help this industry move forward.

Voice recognition is a bit of an esoteric and sophisticated field. The applications for speech are just now being developed and the solutions are being customized and optimized in the field. It takes expertise from this industry to address the unique challenges we all face to be successful.

We all have a vested interest in seeing this industry prosper and we need to set the right expectations in the market to deliver acceptable solutions.

Q What do you believe will be key market drivers for this technology in the short-term? Long-term?

A Short-term, it is essential that automobiles and devices being utilized in the automobile (hand-held wireless devices) are productive for hands-free. To meet this need, there are immediate aftermarket devises and systems via car-kits and Bluetooth and in the factory install business there are the manufacturers deploying various forms of Telematics which utilize speech technology to keep hands on the wheel and eyes on the road.

Longer-term, speech will penetrate every aspect of our life. Speech will be found in the home, the office, the hospital, the plant floor and the warehouse. Smaller vocabularies will captivate consumers, then their expectations will move towards larger models deploying natural language. We will need to deliver large vocabularies in the car to dictate and retrieve email with increased accuracy. Talking to our machines is where this is headed and our machines are everywhere.

Q Are there any governmental issues that may have an impact on speech technology adoption? Please provide both positive and negative legislative impacts.

A The wind is at our backs in the automobile regarding hands-free systems. As for other areas of government, speech recognition will be deployed in call centers with essentially every agency that deals with constituents as those people represent customers. From the IRS to the military, the government agencies represent the single largest customer opportunity in the near-term for speech technology.

Q What are the reasons we are not seeing increased spending on behalf of customers for speech technology solutions?

A All IT spending is constrained due to the perilous economic position our country is in. First, the dot.com bubble was created and exacerbated Y2K spending. When Y2K dissolved and the revenue from the dot.com business models did not surface, the capacity created through this frenzy was not met with equal demand. Speech technology is the unfortunate beneficiary of these events and more, including 9-11, corporate scandals and now a fragile economic recovery.

Q What are the automobile manufacturers saying about speech technologies? What are their customers saying about using speech technology?

A I have a CVC-enabled Bluetooth device in my car with speech recognition and it is a riot. I love it and do not want to be without it now that I have experienced it. The consumers do not know how much they will love having speech in their cars. Studies show that they will use their phones even more than they do now, so the carriers have the most to benefit.

The auto guys are still trying to figure out how to capture the new but elusive revenue stream in the car. It is the carrier's opportunity to lose, but the car guys have lots to gain on a transactional basis (optionally hardware) to deploy the right form factor in your new car.

Some of our thoughts here are proprietary, so I cannot give you the secret sauce, but suffice it to say, the best way for the car guys to win is to collaborate with the carriers (not easy for the car guys as they culturally have been unwilling to collaborate on other such opportunities) and deliver customers a seamless solution that sends us one bill each month and keeps our phone number constant for social ease.

Q What is on the calendar for Clarity for 2003?

A Clarity has many customers to satisfy and a growing pipeline of interested prospects. Clarity will grow revenue, add personnel internationally, strengthen its balance sheet further, look at acquisitions and make CVC a must have in all of its target markets.

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