VoiceMarket Update, New Opportunities

Market Update, New Opportunities

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The recent VoiceXMLPlanet Conference was a
great opportunity to hear from vendors and potential customers to
get a better picture of the state of the market. It also gave me a
glimpse into potential new markets that may emerge as a result of
the technology. In this article, I will provide a list of the top insights that I took away from the conference.

Customers will buy VoiceXML solutions

First, the good news is that customers are taking VoiceXML
seriously and will be either replacing older IVR technology or
developing new systems based on voice technologies. Most companies
were evaluating vendors or in an early pilot stage of an initial
project rollout. However, customers are moving cautiously and are
taking more time to evaluate the products and companies.

Vendors are supporting voice

One trend that I’ve been watching very closely is the rate at
which IVR vendors integrate VoiceXML into their products. Edify and
IntervoiceBrite, two well-recognized vendors both talked with me
about how they were integrating VoiceXML functionality. Edify will
be adding VoiceXML to their existing platform. IntervoiceBrite will
actually be offering a separate product line based entirely on
VoiceXML, which will provide customers with a nice migration path.
Sun has partnered with BeVocal and Nuance to offer carrier solutions
that will compete with other high-end offerings such as the Lucent
Speech Server. Now that existing vendors are moving hard to support
VoiceXML, it’s possible that other VoiceXML gateway companies that
are not already partnered with a larger vendor will do so. The good
news is that the large vendor movement into this space validates the
technology and will provide the momentum that some customers have
been waiting for before making a move. 

The Voice ASP Market is shifting

Most new voice portal startups initially moved to the ASP model
after the consumer voice portal market failed to materialize. Since
then, these voice ASPs have refined their focus or decided to get
out the general voice ASP business. Telera sold the hosting part of
its business to Qwest. Tellme is focusing on large enterprise
customers. BeVocal is shifting their focus to carrier hosting
solutions. Voxeo has picked up some of the slack and will likely
serve a
large portion of the small to medium sized business market. I
predict that existing call center service bureaus and IVR hosting
providers will begin offering voice-enabled services within the next
2-3 years and with the large telecommunications carriers, will take
a majority of the voice ASP market.

 Focus on carrier customers

A large percentage of vendors and service providers I talked to
are focusing on serving the large landline and wireless carriers.
This isn’t a surprise because the carrier business spends more money
on telephone solutions proportionally when compared other
industries. The problem with that strategy as I see it is that the
carrier business is not doing so well these days. When you consider
bloated capacity with large-scale layoffs at companies like Verizon and the elimination of many CLECs, it’s hard to believe that there will be
enough revenue to prop up the entire marketplace in over a long
period of time. Add to that the
long sales cycle of up to a year or more for each carrier customer,
along with the limited number of stable carriers in the business. Given these clues, I have to question whether this focus will be detrimental to a few of the
companies that rely almost entirely on the industry for their

It would be wrong to say that everyone is carrier focused though.
For example, General Magic, which offers an enterprise Java-based
voice platform, is focused on selling integrated voice solutions to
the enterprise. This approach seems to make more sense in the long
run, however, the rate of adoption of VoiceXML in the enterprise is
not happening as fast as some would like.

I think everyone realizes this situation and is making plans to
enter the enterprise marketplace and eventually the medium-sized
business market in the long run. It will just be a matter of timing.
Given that, the market has still progressed faster than I expected.

Confusion about who the customer is

 Who is the customer? Is it the IT manager, call center manager, or telephone
systems manager? Actually, it’s all of the above. They all have to agree
that VoiceXML solutions are a good thing. The problem is that IT
departments don’t understand how to wire up a telephone patch panel
any more than a telephone technician understands how to code a Web
application. A coming together of these various branches as well as
a unified education process will have to take place. Technical
jargon will have to be translated among disciplines and the groups
will have to learn to work together more closely than before if
voice technologies in the enterprise are going to work. What this
tells me is that voice technology in the enterprise will likely have
to be accepted and adopted at the CEO/CTO/CIO level before companies
will implement it. This means that voice solutions may take more
time to sell than say a database system or development tool where
the demand and customer are clearer to identify. Over time, selling
will become easier as people become more familiar with the
technology and the benefits it brings. In the mean time, the market
will need to continue the education process.

VoiceXML Rollouts Will Pickup in 2003

There are still many customers who have been working on adding
speech recognition to their legacy IVR systems. Right now, I have
counted more Fortune 500 companies that are using speech recognition
without VoiceXML than with. There will certainly be some large
VoiceXML deployments this year within the telecommunications carrier
and financial services market, but so far, the majority of
deployments and case studies that I have been gathering have been
speech recognition without VoiceXML. This is ok–VoiceXML will
probably come at the next upgrade cycle for some of these
deployments. Some of the companies developing new systems based on
VoiceXML may begin rolling them out later this year or early next
year. The bottom line is that companies are working on these systems
now and we will see deployments begin to pick up in 2003.

SMB Market Underserved = Opportunity

Right now, most vendors are focused on serving large customers.
This doesn’t mean that there isn’t a market for voice systems. In
fact, I believe that the small- to medium-sized business market is
being underserved. There are companies offering communication
solutions such as voice mail, auto attendant, email, and other
productivity and standard telephone services to small businesses,
but there is a much broader opportunity for serving vertical
segments of the SMB market. There are so many more possibilities
than just “a better PBX system.” One example is RadioVoodoo, a company that
has developed a product that allows listeners of radio stations to
request songs, participate in surveys, provide feedback on
programming and build customer loyalty. That’s real value in a
package that doesn’t have to be targeted at the large enterprise or
telecommunications carrier market.

Improvements in ASR and TTS Needed

Despite the great improvements that have been made that enable
speech recognition to work on the telephone for production call
automation systems, the complexity and time required to develop
speech recognition grammars is still too high for the average
developer at the average company. In addition, text-to-speech
quality is still not good enough to replace recorded prompts.

Here are the two challenges that must be overcome for speech
technology to gain the same level of adoption as the Web:

  • speech recognition engines must reach the point where they are
    over 90% accurate without requiring pre-defined grammars
  • the difference between speech synthesis output and a human
    speaker must be indistinguishable.

About Jonathan Eisenzopf

Jonathan is a member of the Ferrum Group, LLC  which specializes in Voice Web consulting and training. He
has also written articles for other online and print publications
including WebReference.com
and WDVL.com. Feel free to send an
email to eisen@ferrumgroup.com
regarding questions or comments about the VoiceXML Strategy series,
or for more information about training and consulting

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