The DEMO conference is never a kind forum for those trying to do voice recognition applications. That proved true again just now as Scott Maddux, vice president of product marketing at Promptu, tried to do a voice-command product demo at the show.

Menlo Park, Calif.-based Promptu has a new application, dubbed ShoutOUT, for the iPhone. The application recognizes your speech in your own words and converts the words into written text messages or voice commands for things such as buying rail tickets over the phone.

ShoutOUT tries to recognize what you say and convert that into text. It tests its accuracy by playing back what it thinks you said in a computerized voice. Maddux used the system on stage to tell people what he was doing. He said he was “on the DEMO stage,” but the voice recognition system came back and said he was on the “dental stage.” The crowd got a few laughs out of that.

But the system was interesting. You could use it to send a text message to a friend over the iPhone. Or you could post a message on Twitter or a status update on Facebook. The company already launched a couple of products last year. One lets people order train tickets in Italy via voice commands.  Another app lets you order a cab in Italy via a mobile phone. Thousands of people are using those apps now.

The challenge is clear. The system requires sophisticated voice recognition technology that can discern words regardless of accents or voice inflections. And it has to recognize just about anything you say. If it gets it wrong, as was the case with Maddux’s demo on stage, you can correct it by typing the corrected words into the text message.

The company will launch a product similar to ShoutOUT in the European market in the next four weeks. It will launch in the U.S. in the second quarter. The company is looking for partners such as carriers and handset makers, and wants to raise a round of venture capital. Rivals include vlingo, Jott, SpinVox, and reQall. One of these guys, one of these days, is going to get the voice-recognition user interface right as the processing power of mobile phones gets better and better.

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