Computers Will Act More like Humans

Speech recognition is the process of converting a speech signal to a sequence of words. Speech recognition applications that have emerged over the last years include voice dialing, call routing and simple data entry (like entering a credit card number). This is a very fascinating technology and a market with huge potential. However after decades of development, speech recognition applications still hasn't fully evolved. There is plenty of risk at stake.

Importance of speech recognition:
Early applications were termed big flop. However that is changing now. Computing time has reduced, the storage capacity has increased and become cost effective, and the technology itself has been refined. There is now a huge market for speech recognition applications, not to mention text-to-speech applications. Applications include, internet, cell phones, in-vehicle navigation and communication, consumer electronics and a list of computing devices.

Additionally the chip size is getting smaller and smaller, and so are the devices. How do we fit in the numeric keypad ?

Speech recognition could be the answer we are looking for. Instead of asking humans to act more like computers, the computers will act more like humans.

* Just for starters, think of everything that is driven by touch-tone menus. Those will be voice-driven someday soon.

* Many companies have made web-based content such as stock quotes and entertainment information available via speech.

* Booking airline tickets and tracking packages are just a few more examples of applications already in place.

* Drivers in many metro areas can access information to help them through the commute by talking their way through voice-driven real-time reports on traffic conditions and public transit.

* Back office/call centers would benefit from this technology through automation.

Conclusion: It may be a few more years before speech-recognition becomes a mainstay in our lives, but the businesses built around this technology are making progress and it's hard to deny this will eventually be a huge market.

Recommendation: I believe the speech recognition industry is going to see solid growth in the coming years and is definitely a worthy buy. One of my personal favorite is Nuance Communications NUAN. Nuance is one of the leaders in speech recognition software. They have survived the rough times, but now they have pushed themselves into profitability. They have also entered into partnership with AT&T T to automate it's 1-800-YellowPages to raise their profile with investors.

Technical Analysis
Analyst are predicting EPS = 0.47 in this qtr. from 0.37 last qtr, with the sales expected to rise to $559 million from $389 million. The earnings growth rate is expected to average 22% over the next five years.