Did you ever watch that video where a Microsoft rep. demonstrates voice recognition for Windows Vista and everything goes wrong? While unrelated to this acquisition, speech recognition in general has always posed a challenge and interest to the software giant. Microsoft announced this week the acquisition of Tellme Networks, which specializes in directory assistance, enterprise customer service, voice-enabled mobile search and runs a popular mobile search service.

“Speech is universal, simple and holds incredible promise as a key interface for computing,” said Steve Ballmer, chief executive officer of Microsoft. “Tellme brings to Microsoft the talent, technology and proven experience in speech that will enable us to deliver a new wave of products and revolutionize human-computer interaction.”

Microsoft expects to apply Tellme Networks’s expertise in a new breed of innovative solutions. The financial terms of the transaction have not been revealed, but if rumours are to be trusted, Microsoft is said to have spent up to a billion dollars in the company.