Appleinsider points us to an AT&T Research project called Watson. The goal of Watson is to provide speech processing capabilities as a web service.
At AT&T we extended this successful paradigm with speech processing capabilities and created the AT&T WATSON Speech Mashups - a new software framework that casts AT&Ts WATSON speech recognition as a web service to economically bring speech processing technologies to the larger web and mobile developer community.
This web-based speech recognition will work on many mobile multimedia devices including the iPhone.
AT&T provides a video of the YellowPages.com application with speech recognition on an iPhone.