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Nuance’s Dragon Dictation for iPhone raised some privacy concerns upon launch due to the server-side nature of its transcription and the apparent transmission of users’ contact list to Nuance’s servers. Addressing at least some of these concerns, Nuance has posted the following statement:

Some people have expressed concern about what the new Dragon Dictation for the iPhone application does with your contact information. As you may have experienced already, Dragon Dictation for the iPhone goes through your contact list on your iPhone and uploads the names to our server. We do this for a pretty simple reason: we found that people are often dictating names from their address book and expect the names to be recognized.

We take this information and create an anonymous user profile for your device that understands what names are likely to dictate into a document. It’s important to note that we only upload the names, not the e-mail addresses, phone numbers or any other personally identifying information from your contacts.
Even though there is no personally identifying information, we still treat all of this information with the highest privacy standards. All of our servers are located in the United States and meet the most stringent privacy and security standards. We conform to these high standards because we use the same data centers for other areas of our business where we are required to store personal information.

All of this is spelled out in our license agreement that comes with the Dragon Dictation for the iPhone application. Since most people only see that license agreement briefly when they are installing the software (and they usually can’t wait to start using their software, so they don’t spend 30 minutes reading a complex legal document…), we provided a link to that agreement here: http://www.nuance.com/company/privacy/.

So the bottom line is that nothing scary is happening with your data and we only use a little bit of information from your phone to help make the dictation accuracy as high as possible. If you have any questions, comments or concerns, feel free to post them here.
Michael Thompson, Senior Vice President & General Manager, Nuance Mobile

Of course, Nuance is storing all your transcriptions on their servers, which while not dissimilar to Google, Microsoft, Yahoo!, or Apple storing all your email, documents, location, etc. is an important factor for users to keep in mind so as to make informed decisions about services and the companies behind them.
Let us know what you think of the statement, and if it does indeed address your concerns (or not).