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Commentary: Lernout & Hauspie likely to weather the storm

The company's financial woes and management shake-up will be unsettling for a time, but may be the stimulus it needs to get back on track.

By Jackie Fenn, Gartner Analyst

Allegations of financial improprieties aside, the stepping down of Lernout & Hauspie's founders Jo Lernout and Pol Hauspie from senior management positions is a sign of deeper turmoil about the basic direction of the company. Gartner believes Lernout & Hauspie will weather the present storm, however, because of its strong underlying technologies and product diversity.

Lernout & Hauspie has built itself into

See news story:
Lernout & Hauspie lowers forecast as co-founders resign
a powerhouse of speech and language recognition technologies partly through growth, but also through acquisition of companies such as Dragon Software. Unfortunately, the office dictation side of the industry, which Dragon represents, is not growing. Most of the excitement in voice-recognition technology these days centers on telephone-based speech recognition, which has suddenly become a hot commodity because of the rapidly growing popularity of voice Internet portals. Several smaller companies, notably SpeechWorks and Nuance Communications, have been doing very well in this area, but Lernout & Hauspie hasn't been able to grab a part of that market.

Lernout & Hauspie will probably take a more licensing-oriented approach for its office-dictation products in the future, while being forced to adopt a service-oriented approach in the telephone-based speech recognition area. While Lernout & Hauspie itself is probably too large to tempt another to buy it, it's quite conceivable that the company might try to unload one of its divisions--for example, its health care dictation business.

In the final analysis, Lernout & Hauspie's great strength is its underlying diversity of technologies, with products ranging from embedded speech recognition for automobiles to dictation and natural language control software for home computers. The company's financial woes and management shake-up will be unsettling for a time, but may be the stimulus it needs to get back on track.

(For related commentary on speech recognition, see registration required.)

Entire contents, Copyright ? 2000 Gartner Group, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.