Microsoft's entry to stir speech recognition market

Nuance, fingered by Mastan as Microsoft's chief rival, agrees with the analysts and goes a step further. "Microsoft is developing an inexpensive and easy way for developers to design really bad applications," said Kevin Chatow, principal product manager at Nuance in Menlo Park, California. Adding speech to Web applications may not result in usable applications, he said.

While Microsoft may like to position Nuance's product as obscure, Chatow pointed out that Nuance supports VoiceXML 2.0, a recognized standard, and not SALT, which is still making its way through the standards process. Furthermore, the Nuance product isn't tied to Microsoft technologies, but also works with Java application servers.

Nuance on Tuesday plans to announce the third major release of its Nuance Voice Platform product. Release 3.0 adds support for Linux in addition to Windows and Solaris and a new application design and deployment environment that promises to cut development costs by about a third, the company said in a statement.

While in terms of acquisition cost the Nuance Voice Platform may be more expensive than Microsoft's Speech Server, the Microsoft offering may end up costing more and paying back for itself later because of technology upgrades, development quirks and other costs associated with setting up and running the product, Chatow said.

Gartner's Cramoysan said that while Microsoft does plan to offer its product at a lower price, that indeed does not mean it will work out to cost less over a longer timeframe. "Although Microsoft is talking about fairly aggressive pricing, it is an unproven product. We would caution people in terms of assuming that it would be lower cost in terms of total cost of ownership," Cramoysan said.

About 600 customers participated in Microsoft's Speech Server beta test and 30 in an early adopter program. One early adopter is Seattle-based Grange Insurance Group, which with the help of a consultancy company developed a system its customers can call to check the status of their payments.

Grange uses Microsoft software across its business, except for its policy management system, which runs on an IBM mainframe. Going to Microsoft for speech recognition was a clear decision, said Ralph Carlile, chief information officer and vice president of technology at Grange.

"I didn't see any technology out there that I was interested in going after. Other products had high failure rates and did not offer integration into our back-end systems," he said.

Development of the speech recognition components only took two to three weeks, Carlile said. The company did have some issues getting a telephony board for the server and hooking that up to its phone system, he said. But now Grange is testing the speech applications with 750 of its policy holders and the results are good, he said.

Pricing for Microsoft's Speech Server products will be "an order of magnitude lower" than competing products, Mastan said. Details will be announced next week. Yankee Group's Schoeller in his research note predicted Microsoft will undercut the competition by about 30 percent.

Microsoft will offer free 180-day trial versions of its Speech Server software, which will initially only be available in U.S. English. General availability of the software is expected to be a few weeks after launch.