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Dragon’s time alone in the limelight, however, was brief. When the company first shipped NaturallySpeaking in June 1997, IBM responded by slashing the price of its discrete speech recognizer Voice Type, to $49.95. And because word of NaturallySpeaking’s impending release had leaked out months earlier, IBM had already launched a crash effort to move its own continuous speech-recognition program (developed in the same lab where the Bakers had worked in the the 1970s) out the door as fast as possible. The product, IBM ViaVoice, hit the store shelves that August priced to move at just $99.

“IBM really blew things away,” says John Oberteuffer, president of Voice Information Associates, which studies the speech recognition market. “I have used both of them and as far as pure recognition accuracy I would say they are comparable,” he says. Dragon was forced to retrench and slash its price from the hefty initial fee of $700, to $299, then to $199. By the end of the year, Dragon had sold 29,463 copies of NaturallySpeaking, while IBM had sold 46,182 copies of ViaVoice, according to PC Data. But in overall product revenue, Dragon had trumped Big Blue.

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