Lynda Smith, Vice President & Chief marketing Officer, Nuance

Q What does Nuance's recent voice platform announcement mean to your customers?

A Over the last several years, an increasing number of customers have asked Nuance to play a larger role in the development and deployment of their speech solutions. We have also seen increased customer interest in VoiceXML-based solutions as well as alternative, software-based platforms that are optimized for speech and built to maximize the cost savings and customer satisfaction that these systems can provide. To meet this need, Nuance has expanded its offerings beyond speech-enabling technologies and software, to also include the Nuance Voice Platform, a platform designed specifically for deploying speech solutions.

Nuance also recognizes that many customers prefer to do business directly with our partners, taking advantage of the unique set of products, skills and expertise that these partners can offer. As such, Nuance continues to be fully committed to its partnership model, working with partners to deliver world-class speech solutions built using Nuance technologies (speech recognition, voice authentication and text-to-speech software).

Customers now have available to them an expanded set of options, each with its own unique benefits, allowing them to get the best speech solution possible given their unique requirements and preferences.

Q Why did you make this decision?

A Nuance made a decision to broaden its approach to the market. This goes beyond introducing a new platform and also includes the introduction of packaged applications, and a stronger direct sales capability to augment our indirect selling model. This new approach also includes new partner programs, such as the Nuance Certified Consultant Program that are designed to enhance success in this market. Nuance made the decision to shift its approach for fundamentally three reasons:

Reason #1: As noted earlier, customer demand was a big part of our decision process. Especially in the last year, customers have sought a more direct relationship with Nuance relative to deploying their speech solutions. We have also seen increasing customer interest in VoiceXML-based solutions as well as alternative, software-based platforms that are optimized for speech.

Reason #2: For years, partners and industry influencers have asked Nuance to play a bigger role in driving the adoption of speech -- to help expand the market and enable more customers to realize the maximum benefit voice-driven systems can offer. We believe that growth in the speech market will be spurred by a number of factors, including:

·Accelerating and easing the deployment of speech solutions
·Lowering initial system cost and total cost of ownership
·Providing rapid access to the most advanced speech technologies
·Customer proof points/references of success with speech

Our new offerings of an open, standards-based platform and packaged applications, along with an increase in the number of successful speech deployments by partners and ourselves will contribute to this.

Reason #3: To strengthen and build a sustainable business model so that Nuance will have the longevity to drive adoption of speech and support partners and customers for years to come.

Over the past several years, we found that Nuance typically needed to be heavily involved in the selling and implementation process surrounding speech solutions. This meant that Nuance often had all the costs of a direct sales model, but received only a small percentage of the ensuing revenue (typically only 10-15%). This model did not compensate Nuance for its contribution and efforts, nor did it support the costs of broadly evangelizing the benefits of automated speech solutions to build the market for speech.

We believe that the changes to our model enable everyone to win - more customers will realize the true value of speech and partners will have access to the best speech technology from a speech vendor with the ability to support them in the long-term.

Q How can a company become a certified Platform VAR for Nuance and what does this mean?

A Platform VARs resell the Nuance Voice Platform and add value by providing all the other components required for a complete solution. Platform VARs provide application design, development, deployment, systems integration services and ongoing support services.

Nuance provides training on speech system implementation to Platform VARs through Speech University training courses, both in the classroom and over the Internet. Nuance's Certified Consultant Program enables Platform VARs to validate their expertise and certify their speech consultants in implementing and designing voice solutions.

If a company is interested in becoming a Nuance partner, they should visit http://www.nuance.com/partners/becomepart.html where they can learn about Platform VAR requirements and download and submit a Nuance partnership application.

Q Nuance and your partners have invested a lot of time and money into your relationships. How does this move affect your partners?

A We will continue to be very partner focused. What is different is that we now have two types of reseller partners: those who resell Nuance engine technology and those who resell the complete Nuance Voice Platform. Our partners will continue to have access to our world-class speech technology, and we will continue to make advanced and new technologies available - for example we just announced an Australian English version of our Vocalizer 2.0 text-to-speech software and partners like Avaya, Dimension Data, Edify, VeCommerce and Viecore announced their plans to support it. Furthermore, we plan to offer new versions of all our core speech engines (speech recognition, voice authentication and text-to-speech software) in 2003.

Most successful software companies (and many of our current partners, in fact) employ a hybrid distribution strategy in order to provide multiple paths to market for their technology. This is what Nuance is doing.

Q You have said that using the Nuance Voice Platform can save as much as 35% of hardware costs with speech deployments. How is this possible?

A A number of traditional IVR vendors have designed their solutions to run on proprietary hardware rather than inexpensive, off-the-shelf servers (e.g., Sun, Dell or HP) and telephony interface components (e.g., Intel Dialogic or NMS). Nuance Voice Platform, being an open-standards-based platform, enables customers to use less-expensive, widely-available server and telephony interface hardware for a potential savings of over 35% compared to hardware investments required by propriety solutions.

Q Does this new platform have multimodal capabilities and will developers be able to program using SALT as their markup language?

A Nuance is committed to driving the establishment of standards for multimodal applications. To this end, Nuance is actively working as a member of the W3C to evaluate different options, including SALT, in order to develop a unified standard. Nuance has designed the Nuance Voice Platform to be "SALT-Ready," meaning that the entire underlying infrastructure is in place to support SALT, or whatever standard is ultimately adopted by the W3C.

As a testament to Nuance's partner focus, which we discussed earlier, Nuance is working closely with a number of companies to build multimodal applications running on the Nuance Voice Platform and Nuance is also supporting partners who are running multimodal applications using the Nuance speech engines in conjunction with their own platforms.

Q Tell us about the new role of the applications group within Nuance. How will this help enterprise customers deploy speech?

A The applications group is building pre-packaged speech applications designed to reduce speech application deployment time by as much as 50% and reduce the costs and complexities of maintaining custom application code. These applications will incorporate the best practices of application design established by Nuance through hundreds of deployments. As noted earlier, we believe packaged applications will help accelerate the market for speech, and we encourage partners to follow this direction. Our vision is for customers to be able to take advantage of packaged applications from this group at Nuance as well as from a host of certified application partners who have developed their applications on the Nuance Voice Platform.

Q How will Nuance ensure it has the requisite skills in these new areas to effectively compete and not spread itself too thin?

A The key to success is focus. Nuance is focused on countries and industries that we believe to be ready to adopt speech and where speech applications can provide the most value. We are focused on speech applications that solve customer problems, significantly reduce operational costs, and increase customer satisfaction. Nuance will focus its resources where they can have the most impact - both to the adoption of speech and to Nuance - and will continue to rely on partners to compliment Nuance's capabilities in the delivery of speech solutions.

It is important to note that Nuance has decided not to pursue development in a number of areas in which our competitors are investing. This enables us to focus resources on areas, such as the development of a platform, which our competitors cannot. For example, several other speech vendors have chosen to build and support embedded speech technologies in-house, while Nuance has chosen a partnering approach in that area. This is just one of many examples I could point to where Nuance's focus enables us to continue to provide our partners the best speech technology available, as well as to provide voice solutions to the market, while not spreading ourselves "too thin."