There isn't a lot to say about DSpeak just yet, as it is a very limited demo here at E3 2005. DSpeak will work over the Internet using WiFi (which is how it was set up at the show), and you will be able to get alerts when you friends come online, similar to an instant messenger program.
Nintendo has tiny earpieces with microphones attached, which clip onto your ear, similar to what you might find packaged with a cell phone. Voice quality was difficult to ascertain, due to the incredibly loud convention center, but for the most part, the demo was working as shown.
The most interesting part was that a Nintendo character (in this demo, Mario and Wario) was shown on the upper screen, and his lips are synchronized to the speech coming from the person on the other end of the conversation. In a way, you can "see" the person you're talking to.
No word yet on whether or not Nintendo will be releasing "DSpeak", but we'll keep you posted.
