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From portals to vortals to profits
16 April 2003

In the heady, anything goes days of the dotcom boom, a number of start-up companies decided to give the web a voice.

Building a speech-based front-end for the internet and partnering with content distributors such as news services, restaurant guides and business information providers, companies such as HeyAnita, BeVocal and Tellme Networks, all based in California, enabled consumers to do everything from checking stock quotes to obtaining the latest weather report, from the comfort of their telephone receiver.

These voice portals, or "vortals" as they were known, soon ran into trouble. The voice recognition technology they employed sometimes failed to process callers' requests accurately, and their business models were also found wanting.

"The voice portal companies never figured out how to make money," says Martin Schwirn, consultant with SRI Consulting Business Intelligence, a spin-off from the Stanford Research Institute.

Since the technology market crash, "vortal" has become a dirty word. While many of the dozens of voice portal providers that vied for consumers' ears and advertisers' dollars have shut down, the survivors, such as the three Californian companies and Eckoh in Europe, have improved the accuracy of their technology and changed course strategically.

Rather than trying to reach the consumer market directly, they are now working with enterprises, mainly hosting voice-technology based applications for call centres.

This brings them up against the interactive voice response (IVR) suppliers in the market for replacing long, laborious touch-tone menus - the "traditional" IVR product of the 1990s - with modern speech technology. "These companies are moving into the IVR space because that's where the money is," says Mr Schwirn.

Although Tellme still operates its consumer portal, available to callers who dial 1-800-555-TELL, this part of the business has become a sideline. "[It] is more of a demo for the technology than anything else," says Mike McCue, Tellme's president and chief operating officer.

Instead, the company threw its weight behind its "Voice Application Network", a VoiceXML-based network run on a voice recognition engine, from US-based Nuance Communications, through which it hosts voice applications for other companies.

Managing voice-activated dialling, directory assistance and 1-800-prefixed call centre numbers for clients as diverse as AT&T, Merrill Lynch, E*Trade and Domino's Pizza, Tellme differentiates itself by focusing on automating calls, rather than selling hardware and software to its clients.

Other companies are taking a slightly different approach. HeyAnita and BeVocal are concentrating on working with telecommunications companies and licensing their products as software and hardware packages.

"We saw early on that telecoms services have loyal users," says C. Mikael Berner, BeVocal's chief executive. "So we became experts at consumer applications as resold through telcos." BeVocal counts Cingular Wireless and Virgin Mobile among its customers.

HeyAnita also works with telcos, including SprintPCS and Verizon Wireless. In addition to providing a network-based call centre solution to its clients, the company offers 30 different pre-packaged applications.
One of its products, VoiceManager for Microsoft Exchange, is an "off-the-shelf" solution that allows individuals to access their e-mail via the phone.

In the current tough economic climate, with enterprises slashing their technology budgets, outsourcing voice applications is becoming increasingly popular in the enterprise sector.

"Outsourcing voice applications has several specific selling points including access to the latest technologies - providing higher accuracy, risk mitigation through sharing the technology and cost risk with your delivery partner, and faster deployments leading to faster savings," says Daniel Hawkins, a lead consultant with Datamonitor, a research company.

Customers of voice solutions companies agree. For example, Merrill Lynch, which handles 50m client calls per year and runs a 24-hour call centre, outsources its voice operations to Tellme.

"If we didn't outsource, we'd have to house and maintain the infrastructure ourselves," says Chris Reimers, director of client service technologies. "When Nuance comes out with a new technology, Tellme simply integrates it and sends us an e-mail to let us know. This allows us to focus on our customers."

Mr Reimers says Tellme's voice solution is a sound investment. "We have saved money through increased automation rates and reduced hardware, infrastructure and maintenance costs."

Despite strategic and technological advances, the voice technology market continues to present challenges for vendors. One problem is the ongoing standards war between VoiceXML and Salt.

Another, and perhaps more immediate problem, is the overcrowded speech technology marketplace.

While the ex-vortals are moving into the IVR market, the traditional IVR players are broadening and improving their speech offerings in an attempt to become "one-stop-shops" for companies looking for voice packages.

"The speech technology industry will without doubt experience more buy-outs and bankruptcies," says Mr Schwirn. "Smaller providers will have to explore viable market niches or develop close partnerships with the main players."

Fortunately, companies such as BeVocal are aware of the challenges. Not only are they marketing themselves as experts in particular areas, but they are working closely with the major speech recognition companies, such as Nuance, ScanSoft and SpeechWorks.

For example, Nuance might design an application for a customer and draw upon the expertise of a Tellme or BeVocal for the front end.

"As these companies have changed, they've moved from being our customers - buying software licences and core technologies from us - to being our partners," says Matthew Keowen, Nuance's director of corporate marketing. "They play a vital role in the ecosystem."