Until the recent market slump, Nuance Communications (NYSE:NUAN) was not friendly territory for a bear. Glancing at opinions over in the CAPS community, I'm clearly swimming against the current on this one (good thing I had salmon for lunch). While I hate to be the Debbie Downer at this party, I have reason to believe it's last call and time to find a ride home.

Great product = great stock?
Just to be clear, I'm not debating the value of speech recognition software. Its potential applications -- from AT&T (NYSE:T) call centers to consumer products for the home -- are countless. However, great products alone aren't enough to create great companies. How many would argue that McDonald's (NYSE:MCD) serves the best burger in fast food, yet they are the industry's undisputed leader.

When it comes to Nuance as an investment, I'm more concerned with the company's ability to create a sustainable and profitable business model than with the software itself. Unfortunately, I don't see much evidence that this is happening. In the last three years of operating history, a dime in profit has yet to trickle down to the bottom line, in spite of the fact that one of their divisions, ScanSoft Imaging Solutions, is a well-established carryover from the company's former Visioneer days.

Return and investment remains negative, while issuance of debt and stock to fund further development continue, along with a dizzying array of acquisitions that make a true "investment" in Nuance a near impossibility for most individual investors. In reality, it's more like a speculation, rolling the dice in hopes that everything will come out all right in the wash.

Competitive advantage?
In other words, does Nuance have any? While bulls are glad to talk about the company's recent exponential growth and speculate on future prospects in speech recognition, it's not like potential competitors are standing idly by. For one, there's that little software company in Redmond, although Microsoft (NYSE:MSFT) might sooner swallow Nuance whole than compete with them. And while neither seems to be nearly as successful as Nuance, NMS Communications (NASDAQ:NMSS) and Voxware (NASDAQ:VOXW), along with a number of privately held companies, are chomping at the bit for a share of this market.

Of course, I wouldn't be concerned about competition if I were convinced that Nuance could fend them off. What concerns me is that speech recognition software could soon become yet another commodity product, causing these companies to compete more on price than quality. That's always a bad formula for shareholders.

Can you hear me now?
Thanks to CAPS, I have a number of fellow Fools who can make at least one point on my behalf: the very question of speech recognition's practicality. A number of Fools call out Nuance's Dragon Dictate by name, questioning its accuracy; its difficult to argue with those who recount bad experiences attempting to enunciate for a computer over the phone. What happened to the "good ol' days" when we could simply press a number?

In spite of our best efforts, software cannot replace real human beings who have no difficulty distinguishing your voice from the background noise of a passing truck. I'm sure there are many opportunities for speech recognition to grow more prominent in our daily lives, especially as its quality improves. Still, my enthusiasm remains tempered. We've seen companies like Dell (NASDAQ:DELL) stop sending so many customer service jobs overseas after receiving complaints. If, under pressure from Wall Street to meet growth expectations, Nuance pushes its technology too soon, it could easily meet similar resistance.

For me, the bottom line is that there are too many questions surrounding Nuance as a business (and even the concept of speech recognition) to convince me that this company will reward investors better than the market. Considering the number of compelling values currently available among more tried-and-true companies, why speculate here?

You're not done with the Duel yet! Go back and read the other entries, sound off in CAPS, and then vote for the winner

For a different opinion on Nuance, take a look at Motley Fool Hidden Gems, where Bill Mann has recommended this stock.

Fool-contributor Jason Ramage owns shares of McDonald's. You can view his TMF profile here. Dell is both a Motley Fool Inside Value and Stock Advisor pick. Microsoft is a Motley Fool Inside Value selection. The Fool takes its disclosure policy very seriously.