Frost & Sullivan Reviews North American Speech Market

Speech technologies and solutions are once again in the spotlight, as improving economic conditions combined with enhanced performance and strong value proposition encourage businesses and carriers to more aggressively invest in them.

"The speech technology and solution markets are moving from the early to the mass adoption stage, with a greater variety of customers expressing interest in them, says Frost and Sullivan Industry Analyst Elka Popova. "As a wider range of applications becomes available, the market is likely to experience improved stability and growth momentum."

New analysis from Frost and Sullivan, North American Telephony-Based Speech Technology and Solution Markets, reveals that the North American telephony-based speech technology license and professional service markets generated revenue of $108 million in 2003.

Catering to this wide variety of customers is one of the primary challenges facing the market. Increasingly, vendors are realizing that offering balanced portfolios that include both inexpensive packaged solutions and complex custom solutions is the most effective way to penetrate diverse customer groups and accelerate the pace of growth.

The novelty and complexity of speech technologies will continue to require a substantial amount of customization in deploying speech-enabled solutions. Vendors will, therefore, need to continuously enhance their professional service skills to cater to clients with highly specific and complicated custom solution requirements. As technologies mature and channel partners gain experience and expertise in deploying speech applications, demand for packaged solutions will increase.

"Packaged solutions can help vendors and integrators extend their reach to the cost-conscious small- and medium-sized enterprise (SME) market. This segment is most likely to show interest in turnkey, off-the-shelf solutions that are easily installable via an indirect channel," says Popova.

Microsoft's recent introduction of the Microsoft Speech Server that utilizes the speech applications language tags (SALT) specification is a significant event in this regard. If, as promised, the company is able to develop affordable, SALT-based solutions, it is likely to play a key role in penetrating the SME segment.

As the number of participants aiming to offer both packaged and customized solutions increases, partnerships and alliances among them are expected to grow since few participants are able to provide complete solutions on their own. This trend is expected to result in numerous small ecosystems that enable faster and more efficient technology development.

"Consolidation in the speech technology and solution markets is a double-edged sword," observes Popova. "While it may inhibit creativity and price competition to a certain extent, it is likely to help improve the financial stability of individual market participants and the viability of the market as a whole."

North American Telephony-Based Speech Technology and Solution Markets, part of Frost and Sullivan's ongoing speech technology and solution markets coverage, is an analysis of the core speech technology markets (automatic speech recognition, text-to-speech, and speaker verification) and speech solution markets (interactive voice response, enterprise unified messaging, auto attendant, directory assistance, and carrier enhanced services platforms). It analyzes the competitive environment in detail, covering major trends and profiling select participants.

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