Automotive Voice Technology Market Expected to Hit $6.5 Billion by 2013

According to new research by Strategy Analytics, the automotive voice technology market is forecasted to become a $6.5 billion industry, with 78 million units sold, by 2013. In 2005, it was a $4.4 billion industry, with 22.8 million units shipped, the Boston-based electronics and wireless industry analyst firm found.

In a report published this week, Strategy Analytics predicted that momentum will continue in the areas of voice-controlled automotive communications, navigation, and entertainment systems, but suggested that other opportunities could develop for voice control of things like windows, lights, and climate settings. Though less likely, there may even be a market for wireless automotive computer systems that could, for example read emails or text messages and allow drivers to respond to them by voice, the report said.

"We expect significant opportunities and strong growth in automotive voice control applications," wrote Kevin Mak, an industry analyst in Strategy Analytics’ Automotive Practice and author of the report. "While there are greater volumes to be had in voice-enabling portable music devices and content in the vehicle, suppliers must be careful not to remain too focused on those applications that are dictated by fast-moving consumer market trends. Despite the lower volumes, far higher margins can be found in widening the [human/machine interface] applications that can be voice-enabled, particularly for SMS messaging or operating ventilation systems and electric windows."

Among its predictions, Strategy Analytics expects that by 2013:
• 85 percent of all cars manufactured in the United States, Europe, and Japan will have embedded hands-free voice-enabled communications systems;
• 55 percent will have embedded voice-enabled connectivity for portable music players; and
• navigation systems, most of which are already voice-enabled, will become standard equipment on most cars.

Those technologies have already seen widespread use of voice technologies. As of last year, of more than 200 in-car navigation systems evaluated, only three lacked voice technologies entirely and one offered it as an option. Strategy Analytics estimates that in 2005, 6.3 million embedded navigation systems were shipped across North America, Europe, and Japan, of which more than 95 percent featured voice guidance technology, and around 12 percent (or 750,000 units), featured voice guidance and voice recognition technology (VRT) capabilities.

Additionally, Strategy Analytics estimates that in 2005, 2.9 million in-vehicle premium integrated communications systems were shipped across North America, Europe, and Japan, of which almost all featured voice recognition technology (VRT) capabilities. Also, 3.2 million in-vehicle professionally installed cellular phone systems were shipped, of which around 80 percent (2.5 million units), featured VRT.

With increasing legislation to curb distracted driving, consumer demand for those systems in particular will escalate. "Around the world, most of the people on the road are commuters, and the biggest things they want to do is talk on the phone and listen to music on their way to work," says Mark Fitzgerald, senior analyst in Strategy Analytics’ Automotive Practice. "Making these things hands-free is one of the simpler things to do."

But expanding the use of voice technologies in cars up to this point has been inhibited largely by price, as most systems can cost $600 or more, making them an affordable option only for luxury car manufacturers like Acura, Audi, BMW, Cadillac, Infiniti, Jaguar, Lexus, and Mercedes-Benz.

Ford Motor Co., however, is breaking the price barrier, installing Microsoft’s Sync (a voice-enabled system that uses voice technologies from Nuance Communications to control Bluetooth-enabled mobile phones and portable digital music players) as standard equipment in all its 2008 Ford, Lincoln, and Mercury models.

Automotive use of voice technologies has also been hindered by background noise—from the road, the engine, and inside the car, but Fitzgerald expects that hurdle to be overcome as well. "For now, voice needs work in the automotive sector, but [the industry] has already made great strides with that in telephones," he says.

Another challenge the industry will need to tackle is making systems that are speaker-independent and that can work with many languages. "Because the [automotive industry] is so global, we’ll need systems that work everywhere, and they have to be easy for the customer to use," Fitzgerald says.

To achieve the numbers that Strategy Analytics predicts by 2013, "suppliers will have to work closely with their clients to develop more consumer-friendly voice systems, adding voice systems to other applications, such as HMI, and making these systems more affordable, especially for economy and mid-range car segments," Mak concluded in the report.

Taking the lead in that regard is Nuance, a company that already "is working with the widest selection of automotive customers compared with its competitors," Mak said. Other companies will have to build partnerships as well to achieve cost-efficiencies, he adds.

Strategy Analytics did, however, identify several other key players in the speech industry that are expected to maintain strong market position in automotive. They are: Acapela Group, Andrea Electronics, Asahi Kasei, CSR, Denso, Fonix, Fortemedia, IBM, Loquendo, Mitsubishi Electric, Noise Cancellation Technologies, Siemens VDO, SVOX, Visteon, VoiceBox, and Wavemakers.