Dragon Dictation comes to the iPhone (updated 2x)

This is one of those "why didn't I think of that?" kind of apps. Dictation and transcription has come to the iPhone and iPod touch via an innovative and free app.

Nuance, developers of popular dictation software Dragon Naturally Speaking and the speech recognition engine in MacSpeech Dictate, have released an iPhone app called Dragon Dictation (free, iTunes).

Sure, there are a ton of voice memo apps, including Apple's own, but Dragon Dictation takes it to the next level by performing speech-to-text transcription of your voice.

It works like this: tap a button to start recording, speak to your heart's content. Once your spoken missive is recognized (which is surprisingly quick, btw) tap on the share button for three choices about what to do with said text. Options including sending it to Mail, Messages (SMS and MMS) or to the clipboard - where you can conveniently paste it just about anywhere, including Twitter, Facebook or Docs to Go.

TUAW reports that voice recordings are "transmitted to Nuance servers where a speech recognition algorithm is run against your data." While it's not quite as good as the voice recognition that's built into the Droid – it's sure getting close.

Very cool and very free.

Update: There appears to be a privacy issue being raised by some recent one-star ratings in the iTunes Reviews. Reviewers are reporting that the company's EULA (which you have to agree to) states that "your contacts will be read an stored on the originating server."

Update 2: Nuance responded to the privacy concerns stating that its use of contacts is limited to names and that it uses them to aid in transcribing names you may dictate. Seems logical to me.