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Nuance Announcement Could Signal the Death of Darby

On June 18th, Nuance Communications issued a brief press release stating that Nuance Voice Search will be an integral part of "future Directory Assistance services" at Verizon. Given the three-year agreement between Tellme Networks, Verizon LiveSource and VoltDelta providing a foundation for Verizon's automated handling of DA calls, the announcement raises more questions than it answers.

The troika of technology providers creates the foundation for "Darby," the automated operator who fields the vast majority of 411-based calls from Verizon fixed-line customers. In addition, Tellme, with live agent back-up from LiveSource (and others), has been the automated DA vendor to AT&T Wireless -- first as AT&T Wireless, then Cingular and now AT&T Wireless again. "Darby," named after long-standing voice talent Darby Bailey, is the product of significant tweaking and tuning of Nuance's core automated speech technologies by Tellme Networks (along with other components from Cantata and Envox, as well as VoltDelta).

The announced Nuance agreement signals that Verizon is backing a number of approaches to offering responses to customer queries, be they traditional DA "what city? what listing?," billing questions or product searches. Because U.S. telcos inherited so much core technology from Bellcore (now Telcordia Technologies) they have maintained a schism betweeen "business office" functions (sales, marketing, customer care) and directory assistance (DA) . The former was reached through a traditional telephone number or the abbreviated "611" dialing code; the latter was available by dialing either 555-1212 or 411. Verizon's agreement to work with Nuance Voice Search signals an acceleration of the trend toward marrying traditional DA, service delivery and traditional customer care.

The future services that Verizon contemplates will most likely start with pushing a button and speaking a query rather than dialing a number and reacting to prompts. The collective efforts of Nuance, Verizon, Tellme and a cohort that includes V-Enable, VoiceSignal (which is being purchased by Nuance), Ydilo (in Spain) and Vodafone, among others, heralds the era of P-T-DA (Push To Do Anything) that enables callers to use their voice to carry out everyday business.

Reuters - June 18, 2007

Excerpt:

The number of U.S. mobile Internet users is expected to more than triple to 110 million in 2011 from the current 32 million, according to Sterling Market Intelligence and Opus Research.

Greg Sterling, founding principal of research firm Sterling Market Intelligence, said the iPhone and the new MSN portal reflect how companies are trying to address consumer dissatisfaction with surfing the Internet on mobile phones.

"The majority of users are not surfing the mobile Internet yet, but there is pent-up demand for content on mobile phones," said Sterling, noting that small screens and slow networks contributed to a poor experience for most users.

From the article, "Microsoft launches new-look MSN for mobile phones", by Daisuke Wakabayashi, Reuters, June 18, 2007

Jingle to Assert Patent Against Competitors

USAToday writes about a recently awarded patent (No. 7,212,615) obtained by Jingle Networks, which operates the 1-800-Free411 ad-supported directory assistance service. After conducting several searches at the USPTO and elsewhere I was unable to find a copy of the patent itself. However, according to the article:

Jingle's patent, which it bought from inventor Scott Wolmuth, is for a system that plays an ad related to the listing a caller requests on a free 411 service. So, according to [Jingle CTO Scott] Kliger, a rival service that examines a caller's request for, say, Domino's Pizza in Atlanta, identifies the category (pizza) and then plays an ad for Pizza Hut likely would infringe on the Jingle patent.

Taking this on its face, it would implicate any of the competing services that feature contextually relevant advertising -- for example AT&T's not yet full rolled out 1-800-YellowPages. But it would not currently affect Goog411 or Microsoft's Tellme, which (as of today) run no such ads.

Competitor 1-800-411-Save, in the article, cites earlier patents that may conflict with or limit the scope of what Jingle can assert. Indeed, a quick search on Google Patents on the phrases "directory assistance" or that query combined with "advertising" reveals scores of patents. It's unclear how many of these might be relevant to this discussion -- without undertaking the tedious process of examining them -- but it illustrates that there's something of a potential IP mine field out there in the directory assistance segment.

But what about this "local search" patent, which also has mobile implications? Perhaps it s broad enough to require anyone offering location-based services in a mobile context to pay fees. But then there are also many patents tied to mobile location-based services. All of these issues will ultimately have to be negotiated in a game of "my patent's broader than yours" or litigated to the appellate court level.

Here's where one inserts the 2000 word essay on what a mess the whole arena of "business method" patents is.

The "cynical" view of the USAToday piece is that Jingle might be publicizing this patent as a way to interest, for example, an AT&T in acquisition talks. Jingle has raised more than $60 million from investors and while it's the market leader the company is not yet profitable. It says it has perfected the formula to keep costs at $.15 per call, however it needs more ad coverage to monetize the increasing number of calls it handles monthly.

It will take a fairly massive "liquidity event" for Jingle investors to get their money out of the company: either an IPO, which has been discussed, or a big acquisition by a big competitor such as an AT&T or Verizon.

In a consumer market survey conducted last year for Jingle, comScore found a strong preference for free directory assistance over current carrier models where consumers pay. A full 74 percent of respondents said that would "probably" or "definitely" opt for ad-supported directory assistance over traditional directory assistance. Eighty eight percent said they would also likely use these free services more frequently.

Opus Research has forecast that ad-supported mobile directory assistance services will overtake traditional carrier mobile directory assistance in the next three years in terms of consumer call volume and could generate up to $3 billion in ad revenue in the U.S. within the next four years. Accordingly there's a good deal at stake in the category.

As I've tried to argue in the past, voice-initiated mobile search (whether through a phone number or embedded in the handset) is an immediately accessible mass-market approach to local mobile search because it draws on an existing, installed base of mobile directory assistance users and doesn't require any real learning or consumer behavior change.

VoiceSignal Taps AdMob for Ad Inventory

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Voice technology provider VoiceSignal and has teamed up with mobile ad network AdMob to provide ad inventory for its "VSearch" embedded voice search product. The technology is "baked" into handsets made by OEMs, with Samsung as the first manufacturer to offer the platform in Europe. Pressing a dedicated button on the handset and speaking the query initiates a search, whose results can be delivered in multi-modal form. VoiceSignal also has a partnership with InfoNXX, which provides the content and search capability to VSearch.

According to VoiceSignal, here's how it works:

VSearch is activated via a button on the handset and prompts the user to speak the location and name or category of a business. The system sends the processed audio information to the VSearch server via the mobile data network where the user's query is converted into text by the VSearch speech recognition engine. This unique combination aims to offer the highest accuracy and reliability in all environments for the consumer. The requested listings along with relevant, interactive advertisements are sent to the device and displayed on the screen. The user can review the information, place a call to the business, and get a map of its location and more.

As an ad-supported voice-interface, mobile search application, VSearch loosely falls into the category of ad-supported directory assistance now dominated in the U.S. by Jingle Networks (1800-Free-411), but also occupied by Google's Goog411, AT&T's new 1800-YellowPages and several others.

Last month Nuance announced it would acquire VoiceSignal for $293 million in cash and stock. AdMob is considered an acquisition target and was profiled at length in the Wall Street Journal in January (subscription req'd).

What's the Future of 'Point and Search'?

The image “http://gesterling.files.wordpress.com/2007/04/bar-code.jpg” cannot be displayed, because it contains errors.San Francisco-based GeoVector and Japanese company CyberMap Japan Corp. (the consumer application is Mapion) have introduced the "2.0" version of their "point and search" application. According to the press release:

Mapion Pointing Application is an exciting tool that allows users to easily find and launch rich content by pointing and clicking mobile phones at retailers, restaurants, historical sites or any of Mapion's 700,000 Points of Interest (POI) across Japan. The service combines Mapion's POI data with GeoVector's pointing based technology and spatial search engine, providing the world's first truly personal local search.

The new release builds upon the success of Version 1.0, user feedback and solid experience, greatly improving functionality and ease of use. New capabilities include user driven opt-in advertising, sponsored categories and preferred placement.

The service was initially launched over the KDDI network in January of 2006 and is now available for download with Sony Ericsson models W32S, W41S, W44S and W51S phones, the W41K by Kyocera, the W42CA by Casio and, in July, the W52S from Sony Ericsson.

Beyond the intriguing possibilities of tying together the mobile and physical worlds, there are two things that are quite interesting about the technology and use case: 1) it accommodates the current limitations of cellphones and 2) it's more "passive" than other forms of local mobile search. In other words, the input mechanism is easier and more intuitive than working with a Wap browser or text messaging.

There's a natural advertising model here too that marries the user location with a "search mentality." When a user is searching online, he or she is seeking information about a product or service. As they say in the yellow pages industry, there's a "ready to buy" mindset -- or at least potentially ready to buy. (As we know, search engine users typically don't buy in the same session.) But mobile users looking for a place to eat are probably "ready to eat."

This is a technology to watch because it's very different from other forms of mobile search. It has the potential ease of use of directory assistance but offers a broader array of possibilities.

While this has traction in Japan, one can't necessarily generalize that experience to the US or Europe. But bar codes that can be read by camera phones have started to make their way to this country, so I'll suspect we'll see some version of "point and search" roll out in the US market over the next 12-24 months.

Not-So-Fast411

FastCall411, a start-up that will "soon" introduce a service that adds currency to search-initiated, pay-per-call connections to local merchants, has completed a "survey" of 5,000 local businesses showing that two-thirds of those listed in local Internet-based or mobile directories are not available for immediate response to queries.

FastCall411 made mid-day calls that essentially delivered "live leads" to local service businesses. An automated message explained that it offered a service free of charge and was ready to put the business in touch with a local customer in need of immediate service. According to a company-issued press release, 36% of those surveyed said they they would accept such a call, the other 64% were disconnected or busy-no-answer.

Fast411 will introduce a search service that supports location-aware category search for shoppers, then "refines" the search so that results include only those service providers that are prepared to answer a call.

The findings are testimony to the fact that - while the Web may be "Always On" - real world refinements are required at the interstices.

LMS in the News: The Economist - June 7, 2007

Excerpt:
The market for embedded speech-recognition technology, which goes into mobile phones, car-navigation systems and so on, will grow from $46m in 2006 to $239m in 2011, says Dan Miller of Opus Research, a consultancy based in San Francisco.

An area of great interest at the moment is in that of voice-driven "mobile search" technology, in which search terms are spoken into a mobile device rather than typed in using a tiny keyboard. With technology giants Google and Microsoft getting into the picture, "we have the makings of very robust mobile-search capabilities," says Mr Miller. Microsoft acquired Tellme Networks, a voice-recognition company based in Mountain View, California, in March. The software giant plans to use Tellme's software to enable users of mobile phones and hand-held computers to search the internet using voice commands.

From the article, "Are you talking to me?" The Economist, June 7, 2007

The Economist - June 7, 2007

Excerpt:

The market for embedded speech-recognition technology, which goes into mobile phones, car-navigation systems and so on, will grow from $46m in 2006 to $239m in 2011, says Dan Miller of Opus Research, a consultancy based in San Francisco.

An area of great interest at the moment is in that of voice-driven "mobile search" technology, in which search terms are spoken into a mobile device rather than typed in using a tiny keyboard. With technology giants Google and Microsoft getting into the picture, "we have the makings of very robust mobile-search capabilities," says Mr Miller. Microsoft acquired Tellme Networks, a voice-recognition company based in Mountain View, California, in March. The software giant plans to use Tellme's software to enable users of mobile phones and hand-held computers to search the internet using voice commands.

From the article, "Are you talking to me?" The Economist, June 7, 2007

Leading Industry Analyst Firms Form New Service to Track Multi-Billion-Dollar "Local Mobile Search" Market

Opus Research and Sterling Market Intelligence combine expertise, resources to offer advice and consulting about Internet's most promising opportunity area; first report addresses "Speech-Enabled Mobile Search"

SAN FRANCISCO, Calif., June 6, 2007 -- Two veteran industry and technology analysts joined forces to launch a new advisory service for participants in the fast-growing Local Mobile Search (LMS) marketplace. Opus Research and Sterling Market Intelligence apply their unparalleled expertise in search engine marketing, directory assistance, mobile services, wireless technologies and business strategy to provide forecasts, market intelligence and strategic assistance to a growing community of service providers, carriers, device makers, content providers and marketers.

"There is pent-up consumer demand for access to relevant local content on mobile devices," said Greg Sterling, LMS Program Director. "The market is just starting to recognize and deliver on this real-time communications opportunity."

The new service provides timely reports, commentary and quantification focusing on advertiser spending and marketing tactics, improving the user experience, monetization strategies, mobilizing social networks and related global developments.

Dan Miller, senior analyst at Opus Research, explains, "With 2.5 billion wireless phones in the world, portable handsets outnumber PCs by a factor of two. A new ecosystem has emerged to extend the Web's support of social networking, collaboration and commerce to the mobile masses."

The program's first report, "Speech-Enabled Mobile Search: Delivery Models for Information, Entertainment and Services," is now available for clients. There will also be a public blog at LocalMobileSearch.net (http://localmobilesearch.net/).

"The most important opportunity in this new marketplace is timely delivery of local content and geo-targeted advertising to mobile devices," Miller observes. "LMS clients will benefit from a 360-degree view of the marketplace growing out of Sterling's deep expertise in search engine marketing and Opus Research's complementary knowledge of directory assistance, carrier infrastructure and device capabilities."

About Opus Research
Opus Research was founded in 1985 by Dan Miller. He coined the term Conversational Access Technologies (CAT), and provides analysis, advice and forecasts for speech and call processing, Web services and real-time communications. Miller was the sole industry analyst at The Kelsey Group from 1994 through 1999 and oversaw the launch and implementation of advisory services in local online commerce, voice-and-wireless commerce and directory assistance.

About Greg Sterling and Sterling Market Intelligence
Greg Sterling is an expert on search and the leading analyst and expert on local search. His coverage historically has focused on the Internet's impact on offline consumer purchase behavior and the array of online platforms and sites mediating the relationship between buyers and sellers. Prior to joining the LMS practice, Sterling formed the consultancy Sterling Market Intelligence. In that capacity, Sterling has worked with all the major Internet companies and search providers, as well as numerous startups.

Contact:
Pete Headrick
Director of Business Development
Opus Research, Inc.
E | [email protected]
P | 415-904-7666

Comments About Ask3D

I've spoken to lots of press people about Ask3D and there are lots of comments out there from me accordingly. Some of those comments seem contradictory. I've had a couple of email exchanges with people about it. So I feel compelled to clarify:

Here's what I think:

  • Ask3D is a big improvement over the old Ask
  • In some ways it definitely points to the future of search (at least in term of usability, content integration and interface changes)
  • Results are not always better than Google (in my limited testing), but very helpful and in some cases dramatically better because of the additional/enhanced content
  • Ask has done a great job integrating lots of content and more context into search results without creating clutter or confusion
  • Ask will gain immediate notice/attention and some increase in usage. It will very likely build more frequency among the millions of "casual" Ask users who conduct searches on the engine once a month. It's much harder to predict longer term market share trends.
  • Despite Ask3D offering what is in many respects a superior user experience, Google's brand is extremely powerful and its ongoing investment in search means that it will continue to lead the marketplace for some time to come. Ask could, however, make share gains against others.

LMS in the News: San Francisco Chronicle - June 5, 2007

Excerpt:
Greg Sterling, founder of Sterling Market Intelligence, called Ask's redesign a smart departure because it immediately makes the Web site stand apart from the competition. But he added that the market leaders players don't have to fear being supplanted.

"I don't think there is any danger from Google's perspective or Yahoo's perspective, in the near term, that Ask is going to unseat them," Sterling said.

From the article, "When it came to search, the butler didn't do it", by Verne kopytoff, San Francisco Chronicle, June 5, 2007

San Francisco Chronicle - June 5, 2007

Excerpt:

Greg Sterling, founder of Sterling Market Intelligence, called Ask's redesign a smart departure because it immediately makes the Web site stand apart from the competition. But he added that the market leaders players don't have to fear being supplanted.

"I don't think there is any danger from Google's perspective or Yahoo's perspective, in the near term, that Ask is going to unseat them," Sterling said.

From the article, "When it came to search, the butler didn't do it", by Verne kopytoff, San Francisco Chronicle, June 5, 2007

Wall Street Journal - May 31, 2007

Excerpt:

"The billions of calls made every year to directory-assistance services are a healthy precedent for voice-based search services," says Dan Miller, a senior analyst at Opus Research, a San Francisco-based consultancy that tracks the interactive-services sector.

Free mobile search, however, is more bad news for the paid directory-service business. Opus Research predicts this business will drop from $3.5 billion in annual revenue in 2006 to $1.8 billion by 2010, mostly because searching for most phone numbers is free on the Internet. People also will likely begin calling free directory services from their landline as well as their cellphones. The advertiser-supported free model is expected to increase to a $3 billion business in 2010 from $203 million in 2006, according to Opus.

Technology companies are moving toward ad-supported business models partly because voice recognition has reduced the cost of providing directory services. It costs 25 cents to 27 cents for a live operator to answer a call, but only 8 cents to 10 cents when the answering process is automated, according to Opus Research's Mr. Miller.

From the article, "Mobile Search Is Dialing Up Voice Recognition", by Samar Srivastava, Wall Street Journal, May 31, 2007 [subscription required]

YellowPages.com Beefs Up Sales Force

There were a bunch of things I couldn't get to yesterday. One of those was YellowPages.com's announcement:

Dynamic growth and a rising demand for more local-search advertising options have prompted YELLOWPAGES.COM a subsidiary of AT&T Inc. (NYSE: T) , to roll out an unprecedented coast-to-coast expansion of sales offices, the company announced today.

New YELLOWPAGES.COM sales offices have opened, or are scheduled to open, during the first half of the year in Seattle, Portland, Denver, Minneapolis, Virginia Beach and Richmond, Va.; Idaho, Iowa and New Mexico, while offices in Phoenix and Salt Lake City are planned for later in 2007. The new locations, which will serve as regional offices for hundreds of new sales professionals working with businesses to reach local consumers, join the list of current YELLOWPAGES.COM field offices in New York City, Philadelphia, Washington, D.C., Boston, Pittsburgh, Harrisburg, Pa.; Henderson/Las Vegas, Nev.; and Charlotte, N.C.

Kate Kaye at ClickZ covers the news and provides a bit more context. As she mentions in the article, IAC's Citysearch has recently opened an Atlanta call center and is making a big sales push.

If I had to boil down success in "the local Internet" to two things they would be: the strength of the destination brand (user experience is a significant factor) and the efficacy of the sales channel(s) or partners. Using those criteria, YellowPages.com is in a strong position. While the user experience is not as strong as it certainly could be, YellowPages.com's existing assets and multi-platform capabilities (including wireless, free directory assistance) make it a powerful competitor.

What I would do if I were YellowPages.com is improve usability and overhaul the search results pages and interface (not the front door) and spend a boatload of money on consumer marketing, which they are, to establish the brand as a unified way into local content: print, Internet, mobile, voice.

San Francisco Chronicle - May 20, 2007

Excerpt:

"Within five years, 10 percent of small and medium business advertisers will be do-it-yourself pay per click," said Internet expert Greg Sterling of Sterling Market Intelligence. "Anecdotally, it's clear to me that more small businesses are trying to pursue online marketing, and paid search is a subset of that."

From the article, "Narrowing Online Market Focus", by Ilana DeBare, San Francisco Chronicle, May 20, 2007

Speech-Enabled Mobile Search: Delivery Models for Information, Entertainment and Services

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Precis

Local Mobile Search Report
This Opus Research report explores the evolution and transition from "traditional" wireless directory assistance (DA), where the revenue is supplied by consumers on a pay-per-use basis, to a "free," potentially ad-supported model we're calling speech-enabled mobile search (SEMS). In 2006, wireless carriers, device makers, mobile subscribers and advertisers combined to spend more than $4 billion on resources that used spoken words to extend the ability to search onto mobile devices. By 2010, that dollar value will exceed $7.5 billion.

SEMS is one of basically four flavors of mobile search based on the current segmentation of the mobile user experience: Voice (SEMS), WAP, Text/SMS and downloaded mobile search applications. However, these categories or "modalities" may merge or blur significantly over time. In subsequent reports, Opus Research will explore the challenges and opportunities associated with the broader range of mobile search experiences and modalities. All future discussions will grow from this assessment as we forecast the transition of directory assistance traffic to advertiser-supported local search and, ultimately, SEMS.

Non-Clients Click Here to View the Report Summary

Featured Research is available to registered users only.

For more information on becoming an I2G client, please contact Pete Headrick ([email protected]).


Nuance with VoiceSignal: Hands-Free Leader in Speech-Enabled Mobile Search

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Precis

Local Mobile Search Advisory
The heated rivalry between two market leaders in embedded speech processing ended today when Nuance Communications acquired VoiceSignal for cash and stock valued at $293 million. Using its acquisition of Dictaphone as a model, Nuance seizes an opportunity to accelerate market share and technology leadership in a fast-growing market area, resulting in a $55+ million boost to its top-line revenue next fiscal year. Dan Miller discusses the wider LMS implications in this Opus Research advisory.

Featured Research is available to registered users only.

For more information on becoming an I2G client, please contact Pete Headrick ([email protected]).


Investor's Business Daily - May 15, 2007

Excerpt:

"The combined company will cover all of the major device manufacturers, portable operating systems and a good deal of the carriers themselves around the globe," said Dan Miller, an analyst with Opus Research. "It's going to be an accelerant to speech-enabled mobile search."

From the article, "Nuance To Acquire Rival VoiceSignal In Big Mobile Push", by Patrick Seitz, Investor's Business Daily, May 15, 2007

Red Herring - May 15, 2007

Excerpt:

A report by Opus Research forecasts that total spending by carriers, device makers, subscribers, and advertisers on mobile search will grow from $4 billion in 2006 to $7.5 billion in 2010.

Customers of the combined company will include handset makers like Nokia, Motorola, Palm, and RIM, as well as AOL, Toyota, and AT&T.

From the article, "VoiceSignal, Nuance Sing Harmony", by Ken Schachter, Red Herring, May 15, 2007

WebProNews.com - May 14, 2007

Excerpt:

An Opus Research report by Dan Miller and Greg Sterling said that mobile search success will start with a word:

The spoken word is the most natural way to initiate mobile searches -- For safety reasons in the short-term, and convenience in the long-term, the seamless integration of a speech-based interface should take hold.

Driving the mobile commerce market, which the report predicts will move from $4 billion last year to $8 billion in 2010, will be the ever-familiar search metaphor. Moving around the mobile web will start with search, just as the PC-oriented web does today.

From the article, "Mobile Search: Speaking Truth to Profits", by David Utter, WebProNews.com, May 14, 2007