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Aug. 12, 2009

Speech recognition developer Nuance Communications and a few other companies are feeling the auto manufacturers’ aggressive cost reduction endeavors that are occurring across all components that enter into a modern car today.

Auto OEMs (original equipment manufacturers) consist of usually large companies with considerable buying power, and they tend to flex it with all of their suppliers, including Nuance, said Chairman and CEO Paul Ricci in a conference call with financial analysts late Tuesday.

Nuance reported GAAP revenue of $241 million in its third fiscal quarter compared with less than $217 million in the same 2008 quarter.

Nuance could be a big beneficiary if lawmakers pass a federal ban on texting while driving. Ricci didn’t comment directly on those efforts, but he did say the growing concern among regulatory agencies about distractions posed by operating a communication device of any form has resulted in broad engagement of Nuance’s technology across the auto industry.

However, it will take some time for those technology advances to show up in next-generation models, independant of which make or model.

During the quarter, Nuance’s non-GAAP revenue for healthcare and dictation solutions rose 27 percent from the year-ago quarter. Revenue for its enterprise and mobile solutions was up slightly, and the company won significant new contracts with HTC, LG, MiTAC/Magellan, Samsung and Vodafone.

For now, Nuance is concentrating itself mostly on Detroit-produced American cars. However, the company did hint that it will soon take a serious look at approaching the Japanese, German and South-Korean car makers as well.

Most industry and law enforcement observers now say there's a 90 to 95 percent chance that a U.S. federal ban on texting while driving will be enacted before the year is over.

The new law would also make it a serious federal crime for anybody that would attempt texting while driving or operating a public transportation vehicle such as a bus, cable car, subway, train, ship, airplane or any other type of public transportation or mass transit.

Last year in Los Angeles, many people lost their lives when a train engineer caused a fatal train derailment while texting, and there's been a few similar fatal accidents in the U.S. and Canadian public transit segment.

Canada said it is also seriously considering enacting a federal ban on texting while driving before the end of the year.

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Source: The LiMo Foundation.