The market for speech technology embedded in devices such as phones and auto dashboards - worth about $125 million in 2006, according to research firm Datamonitor - is expected to quadruple to $500 million by 2010, powered by the rapid spread of voice-command features on phones and cars with increasing levels of talking electronics, from music players to navigational systems. Ultimately, some experts say, voice-recognition systems are likely to be built into almost every gadget, appliance and machine that people use.
The surge in demand is already triggering investment from established voice players and newcomers alike.

In 2006, ( ) bought Dictaphone to enhance its presence in the health-care industry, even as Nuance's sales grew 20 percent to more than $300 million.
( ) new Vista operating system comes with voice technology that, after suffering embarrassing glitches, is now winning kudos from reviewers. ( ) has said that it's studying technology to enable search-by-voice.

Venture capitalists, meanwhile, are lining up to fund entrepreneurs with voice-recognition ideas all over Silicon Valley and beyond. Speech technology, says Datamonitor analyst Daniel Hong, is finally transitioning from a cool technology to a business solution.

Progress since has been halting, but with the advent of far more powerful computing components and years of plain old trial and error, systems today have finally reached the point where they can cope with innumerable accents, dialects and quirks of speech.
VoiceBox Technologies, a startup in Bellevue, Wash., in 2004 unveiled a prototype whose components had to be carried in a steamer trunk.

Today roughly the same system fits on a device the size of a credit card and could be the brains of Toyota's voice-command dashboard systems (see correction below).
VoiceBox systems are now so sophisticated that they can analyze context to, say, figure out if the command traffic refers to road congestion, tunes from Steve Winwood's old band or a dope-smuggling film starring Michael Douglas.
Today's systems also have powerful capacity to essentially teach themselves.

Tellme Networks, a startup in Mountain View, Calif., makes voice-recognition software used for corporate call centers and telecoms' 411 information systems. Tellme's platform captures some 10 billion utterances annually and constantly analyzes them, improving the system's precision literally every day.

Voice recognition is all about pattern recognition, says Tellme executive Jeff Kunins. The more data you have, the better the recognition gets.

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And the more valuable voice recognition becomes as a customer tool. Call centers and customer service departments are notorious for the infuriating Press or say 1 purgatories that older speech-recognition technologies created, but customer outrage isn't the only penalty: The average call-center call costs $5 if handled by an employee but 50 cents with a self-service, speech-enabled system, according to Data-monitor.
Online brokerage E-Trade Financial uses Tellme to field about 50,000 calls a day; half never go to an E-Trade employee.

The company says Tellme's system is saving it at least $30 million annually.
Startup TuVox is also racking up customers in the call-center and corporate markets. Its VP for marketing, Azita Martin, has her team dial a call center and record the typically torturous, multistep efforts to, say, reach the billing department.

Then they create an audio file that reveals what the interaction could sound like if Martin's target used TuVox's software for routing calls with advanced voice-recognition technology. She e-mails the two interchanges to the CEO of the company using the call center. The contrast has helped Martin sign up numerous clients during the past few months - one reason TuVox's annual revenue is growing at double-digit rates and its customer base has quadrupled in 12 months.

Telecom New Zealand, one of its new customers, reports a tripling of call-center customer satisfaction since it installed a TuVox system.
While call centers and autos are expected to continue to be growth markets for voice recognition, the real bonanza will likely come in improved systems for all manner of mobile devices. Start with cell phones: Telecom companies think consumers will pay for a host of additional services such as dictating e-mail or searching for a restaurant if there's an easy-to-use voice interface on mobile phones.

Indeed, Opus Research says telecoms expect to earn an additional $5 to $15 per month from every customer who opts for a voice-enabled phone.
Numerous startups are scrambling to provide that technology, including Promptu. Founded in 2000 by speech-technology veterans, the Menlo Park, Calif.

, startup has developed a package of voice-recognition features that will be offered through several carriers later this year. The telecoms are calling us now, says Brady Bruce, a Promptu senior vice president. I love that.

Real

Creative uses

Other startups are developing voice features for everything from MP3 players to handheld GPS devices to laptops.