Read My Lips

Belgium-based Lernout & Hauspie Speech Products wrapped
up its half a billion dollar stock buyout of privately held Dragon
Systems
yesterday. But it’s been just another day at the office for
retail investors who’ve seen Lernout on a
shopping spree since the mid-90’s scooping up guppies.


The speech recognition software maker has been using some of the run-up in
its stock price to beef up its collection of speech technology resources.
With more than a dozen acquisitions in the last few years, I really applaud
Lernout & Hauspie’s move toward aggressive consolidation. If you got it,
spend it. ‘Cause tomorrow, you may not have it.


The company picked an opportune time to give itself a little makeover
earlier this year, combining its speech recognition software, PDAs, Linux,
and wireless Net access into a new gizmo dubbed Nuk, the Hawaiian word for
“echo.” Its new strategic direction shot Lernout’s stock price out of a
cannon, nearly tripling in less than a month on the news.


Personal Digital Assistants enjoyed the flavor of the month back when
Palm hit the new issues market back in March.
But these days, rival Handspring
can’t seem to squeeze its big behind through the constricted IPO pipeline.
Which is a shame, considering Palm’s
ex-founders (an oxymoron, but it’s got a nice ring) run circles around the
3Com spin-off.


But that’s the way things go when start-up market caps are built and razed
overnight.


Massachusetts-based Dragon
Systems
boasts its flagship NaturallySpeaking product suite that
promises to transcribe voice to text in six different languages. Business
was booming before Lernout & Hauspie came a knockin’, but losses kept pace
and Dragon needed this exit strategy in a big way.


Dragon unsuccessfully attempted to shake the IPO money tree last year with
a portly $100 million offering with blue chipper Morgan Stanley at the
wheel. In the end, the start-up tried to panhandle badly needed funds from
retail investors who hadn’t yet warmed to the idea of voice recognition
players. At that point, finding a dance partner wasn’t a luxury but a
foregone conclusion.


While there’s been bucket-loads of attention showered on the voice
recognition software industry, I’m still trying to figure out when this
stuff will live up to its hype. Dragon is a graybeard in its business, but
when will it be able to put together some halfway decent voice software for
normal human beings?


I’ve tried them all at one time or another, and the technology has light
years to go before it can be considered a reasonable alternative. I second
the motion that there’s definitely a place for voice recognition
applications in hands-free mobile devices, but wake me when I can toss out
my keyboard.


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