Right on cue with the issuance of our Mobile Speech Report, AT&T and Vlingo have forged a licensing agreement and strategic alliance whereby AT&T is acquiring a “minority stake” in Vlingo (without making the terms public).

Renewed interest by AT&T’s in speech recognition serves as a bellwether for anticipated revenue growth and marketing activity surrounding mobile speech on a global basis. In a recent conversation Vlingo CEO Dave Grannan asserted that mobile speech adoption has hit an inflection point. Apparently AT&T agreed. In a not-so-veiled swipe at IBM and Nuance, Grannan asserts in a press release that, Vlingo has “seen significant accuracy and performance gains with Watson compared to other core speech technologies that will allow us to create a dramatically improved user experience.”

In fact, Vlingo told us that it reached the 2 million user mark based on the accuracy and automation rates attainable with its current recognition engine, licensed from IBM. We do not have a “lab” here at I2Go but have been told that the today’s recognition engines from Nuance, IBM, AT&T Watson, Novauris and Microsoft can all be tuned to reach accuracy rates in the 90% range in the field. This is a marked improvement from the 40% or less achieved with early services. Because accuracy can never reach 100%, the next step in marketing and service development will be to start managing user expectation so that failure to recognize that one word out of 10 is not the equivalent of a PC’s “blue screen of death.”

Over the years, Vlingo has made great strides in promoting a mobile voice user interface and defining distribution plans and pricing strategies. On the Blackberry, for instance, it offers a free version that supports Twitter updates, Web-based search and voice dialing and also offers a premium version ($17.99) to add text messaging and email origination. AT&T’s renewed interest in mobile speech provides some market validation and portends heightened competition among a set of well-heeled leaders (Nuance/IBM, Microsoft/Tellme, Google) and a group of service-oriented innovators that includes Vlingo (now with AT&T), Novauris, Yap, Ditech Networks (with Simulscribe) and a couple dozen others.

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Tags: mobile services, mobile speech, AT&T