Nuance Communications Inc. (NUAN), Microsoft Corporation (MSFT): Are Speech Recognition Companies A Good Investment? Ask Siri

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Last week, I had a day where everyone I happened to chat with here in Silicon Valley was complaining of wrist pain.  No wonder, between our work and new found social media habits, many of us spend upwards of ten hours per day just typing on our beloved laptops or iPad keyboards. Enter speech recognition to save the day.

Nuance Communications Inc.The top dog

The undisputed leader of the speech recognition field, and the first to bring a real product into the mainstream consumer market, is Nuance Communications Inc. (NASDAQ:NUAN). Nuance Communications Inc. (NASDAQ:NUAN), the unsung hero and creator of Apple’s Siri, is, in my opinion, a definite good buy and could become a future ten-bagger if it can keep the copycats and alligators nipping at its heels at bay.

From the Speech Technology Group website,

In speech recognition, “they skated to where the puck was going,” says Daniel Ives, a research analyst who follows the company for the investment bank FBR & Co. “Both organically and through acquisitions, they’ve built a massive treasure chest of technology and customers. They’re miles and miles ahead of any other competitor.”

With it’s solid Dragon product line of PC and Mac-based solutions for the computer environment, as well as the Dragon Mobile assistant for mobile devices, it appears that Nuance Communications Inc. (NASDAQ:NUAN) and the puck are skating toward the goal line.   Sweetening the pot is that Nuance Communications Inc. (NASDAQ:NUAN) seems to have fixed the issues that plagued early speech recognition programs that spawned many jokes, although Siri still does have some laughable mix-ups from time to time. It is a real challenge to create speech recognition software that works for not only other languages, but also responds accurately when different accents and dialects are used. Think, “Hey y’all Siri, I’m fixing to et somthin. Where can I find a good ole Mickey D’s?” Ok, maybe that one wouldn’t fly, but we are close. You get the picture.

The puck just keeps on moving, and Nuance Communications Inc. (NASDAQ:NUAN) knows that. The next direction the company is taking looks like a solid one to me – vehicle speech recognition. Dragon Drive, being tested in many new vehicles, allows you to play a certain song just by asking, or initiate a call through your vehicle’s central control system. This is a precursor to the day when speech recognition software, as part of “the Internet of Everything,” will allow you to ask about the weather or initiate an automated drive to your destination of choice using only voice commands, and wake you up upon arriving at your destination, or at another time specified by your voice request. That means a nap in the car after a hard day at work. I can hardly wait!

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