Dan Butler's
TNPC Newsletter

And then There Were Two

by Al Gordon

The business pages reported earlier this week that Lernout & Hauspie Speech Products NV, No. 2 in the speech recognition software market, purchased No. 1, Dragon Systems Inc., for about $587 million. Adding Dragon's estimated 48 percent market share to its own 36 percent, L & H now has a dominating position over now No. 2, IBM. Just a typical computer-industry deal, as far as most observers are concerned.

However, as noted on these pages Dragon Systems has a special mind share with me.
http://www.TheNakedPC.com/backissues/v1i14.html

When repetitive motion injury severely limited my ability to use a keyboard or a pen, along came the original version 1.0 of DragonDictate for DOS, which helped me preserve my career as a writer. To me, speech recognition is not just a cool toy, but a lifesaver.

Back then, Newton, MA-based Dragon was locked in combat with its Massachusetts rival, Kurzweil, in a battle for supremacy in that segment. IBM entered the picture somewhat later. Dragon Systems moved slowly but surely into the lead. For a time, it even supplied speech recognition software to Microsoft for the old Windows sound system. Dragon Systems then surprised the world by being the first to market a practical continuous speech system, one that allow users to talk in phrases or sentences instead of having to dictate word-by-word. This article is being written on the latest version of that product, NaturallySpeaking 4.0.

IBM's software only gained a modest following while Kurzweil fell behind. L & H, a Belgian company, subsequently purchased Kurzweil and made a run at Dragon in the marketplace. L & H benefited from an alliance with Microsoft, which invested in the company, and its products were optimized to provide good command and control capabilities in Windows and Microsoft Office. Dragon, meanwhile, was hampered by ties to WordPerfect, which included NaturallySpeaking in some versions of its suites.

Dragon Systems was hampered even more by remaining a closely held private concern under the tight control of founders Charles and Janet Baker. Other than the sale of a piece of the company to Seagate, Dragon remained private and independent long after most analysts would have recommended a sale. Only after Charles Baker had stepped down for health reasons was an IPO proposed last year. But the IPO subsequently was withdrawn, with analysts saying it would not have done well.

The denouement was inevitable. The better-funded fish with the inferior product gobbled up the less-wealthy fish with the better software. Speech recognition--despite its many limitations-- is on the way to becoming mainstream. Already in use in cars and cell phones, its presence in those products will increase substantially, speech recognition probably will find a home in palm-sized devices and to operate household appliances. Firms developing those uses will require deep pockets, and Dragon Systems didn't have them.

Moreover, as always, Microsoft is a looming presence. Speech recognition is expected to be built into future versions of Office, and Redmond has a team working on its own software in addition to the investment in L & H.

So, Dragon as I have known it is history. And all users can do is hope that the new ownership has the good sense to build upon Dragon Systems' technology rather than simply cast another pioneering company into the technology trash can.