updated 3/25/2004 3:52:51 PM ET 2004-03-25T20:52:51

Hours after his company was penalized by the European Union for abusing its dominant position, Microsoft Corp. chairman Bill Gates launched a drive into a new market with a speech-enabled server that undercuts competitors' prices.

Gates, speaking Wednesday at a conference of software developers, did not mention the EU's ruling. Instead, he focused on upcoming technical products aimed at increasing the company's presence everywhere from businesses to mobile devices.

With the launch this week of Microsoft Speech Server 2004, the software giant is jumping into a relatively small but growing area. Microsoft says its aggressive pricing will expand the market for everyone, not just itself and its partners. (MSNBC is a Microsoft - NBC joint venture.)

"Speech has to be very low cost," Gates said. "It's our traditional approach to take a high-volume, low cost-approach."

The unlimited edition of Speech Server will cost $18,000 per processor, and a version limited by the number of callers accessing is priced at $8,000. Costs are 50 percent to 80 percent less than existing products, said James Mastan, marketing director for the Microsoft Speech Server.

"Microsoft is following their usual playbook here in that they're coming into a market after it's had some time to evolve," said Chuck Berger, chief executive of Nuance Technologies Inc., the current leader in the market.

Microsoft Speech Server, like rival offerings, is targeted at voice-automated call-in centers where consumers state a problem or a question that would be recognized by the software. It then responds with information or redirects the caller to the appropriate place.

It could be deployed by phone companies for automated directory assistance or by businesses that want to streamline operations by having workers or customers call in with questions and get information without ever speaking with a live person.

Another benefit to Microsoft's server, Gates said, is that applications can be built using its popular Visual Studio development tools — the same used to make programs for Windows, Windows Server and Microsoft's mobile operating systems.

Some worried over Microsoft's entry
But Nuance isn't eagerly awaiting Microsoft's entry.

"Anything Microsoft does that I'm anywhere near worries me," said Berger. "If it's dancing around you, you better pay attention to where its feet are landing."

Competitors and analysts question whether Microsoft's speech engine will be accurate enough, particularly given the fact that it's the new kid on the block.

"Speech doesn't work well unless you've got really good speech people doing the app," said Art Schoeller, a senior analyst at the Yankee Group research firm. "It's not just, 'Let's grab a bunch of Web developers, run them through some speech courses and let them loose.'"

Microsoft claims its product is just as accurate as those of its rivals.

Still, few expect a replay of the browser wars — or even the media player wars.

With Speech Server, Microsoft has signed up partners and will even support a non-Microsoft speech engine, if the customer chooses. It will run on its Windows Server 2003 but not Unix or Linux, unlike the rivals' offerings.

Microsoft also is using a relatively new standard called Speech and Language Tags over a much more widely used technology called Voice XML. This year in North America, Voice XML will handle 10 billion calls, Schoeller said.

For the foreseeable future, at least, it looks like Microsoft can capture some market share with low prices but isn't likely to dominate.

"This is not one where Microsoft will kill Netscape," Schoeller said.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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