The News: Microsoft has agreed to buy Boston-based voice recognition AI technology company Nuance Communications, for $19.7 billion. Read more at The Wall Street Journal.
Microsoft to Buy Nuance, a Voice Recognition AI Leader for $19.7 Billion
Analyst Take: Microsoft’s rumored negotiations with Boston-based voice recognition AI technology company Nuance Communications have moved quickly, with the announcement of an acquisition for $19.7 billion announced just this morning.
This will be the second largest acquisition for Microsoft, after its 2016 $26.2 billion acquisition of LinkedIn and one of many deals the tech giant has been exploring over the course of the last year, including Discord, Pinterest, and TikTok.
Nuance’s Focus in Healthcare is Key
Nuance, the developer of the technology powering Apple’s Siri, was one of the early developers of speech recognition artificial intelligence (AI). In what I think is a key factor here, while the company hasn’t had booming revenues for the past couple of years, spinning off some business units and devoting renewed focus on healthcare and specific markets has resulted in some positive wins for the bottom line.
Microsoft and Nuance have partnered for the last couple of years, with Nuance transcription being used with Microsoft’s Microsoft Teams’ product allowing doctors to use the technology to capture voice comms from visits and enter that data into patients’ medical records. Add a global pandemic to the mix, which has unmistakably catapulted telehealth services into high demand, and it’s easy to see the value and the opportunity for Microsoft here.
Also worth noting is that to date Microsoft hasn’t been able to gain much traction with its investments in speech systems. The Nuance acquisition should change that.
Nuance Will Help Microsoft Speed (and Sell) Digital Transformation for Customers
Microsoft has been on a buying streak over the course of the last couple of years and Nuance and its technology is a perfect fit for Microsoft’s already impressive natural language processing AI capabilities. Moreover, this move will augment the company’s focus on continuing to build its enterprise cloud business at a rapid-fire pace. Not only is Nuance Communications’ technology applicable in healthcare, it’s easy to see this very attractive functionality translate to industries like banking and finance, along with retail, for starters. It’s likewise easy to see that the Nuance Communications acquisition will help Microsoft continue to make significant inroads with its enterprise cloud business.
Futurum Research provides industry research and analysis. These columns are for educational purposes only and should not be considered in any way investment advice.