I have worked on technology demo's that are totally unbelievable. We did one with a lip-synced text to speach engine so that the babe could talk to you using a character designed in Pulse 3D as the conversation progresses a box with suggested questions appears and you could select a suggested question by saying into a mic!! This formed a basic speech to speech animated interface and that has never been done before! (Now lost forever
) The text to speech engines have come a long way over the past year and they are getting very good now.
The biggest problem we had was pricing - because of the amount of RnD and work involved with the assistants we were selling em at £250,000 - £500,000 each! Unsurprisingly companies were reluctant to invest that much money in em! They have got fantastic potential though - imagine the money a company could save by using an avatar as a customer service assistant - the reduction in help desk costs a lone would pay for it over a few years! They will always be expensive because of the amount of work you need to put in the database to make it appear intelligent so it may be a little while yet before they become commonplace.