Microsoft is moving deeper into the realms of voice recognition software through the formation of a partnership with Lernout & Hauspie.
Under the agreement, Microsoft will invest $45 million (#28 million) in the Belgian speech recognition software house.
Lernout & Hauspie has long been one of the leading players in the growing speech market, and has been moving forward aggressively of late through a programme of investment and acquisition. The company has denied that Microsoft's investment, which represents a stake of about 8%, is the prelude to a buyout.
Microsoft's investment in the speech firm is part of CEO Bill Gates' oft-cited wider vision of a world where people will interact with computers in a variety of more user friendly ways than the traditional keyboard.
The company's investment in a research lab in Cambridge earlier this year was also partly geared to helping Microsoft develop speech interfaces.
"For the past several years, Microsoft has made great progress towards a vision of the personal computer that can interact with users via spoken language," claimed Nathan Myrhvold, Microsoft's chief technology officer.
"Through the alliance with Lernout & Hauspie, we are taking a big leap forward in transforming that vision into a reality."
As a result of the alliance, Lernout & Hauspie will develop applications for current and future versions of Microsoft's speech application programming interface (SAPI). The two companies will also form a joint venture in Europe to collect and analyse speech and linguistic data, an essential preliminary to building future speech products.
In a further move related to the partnership deal, Microsoft will pour another $3 million into the Flanders Language Valley Fund. This is a Belgian-based international technology centre designed to support companies developing speech-based technologies and applications.
Neither partner would reveal plans for any specific products expected to arise from the deal.
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