Siri-speech sorcerer Nuance is latest snap-up in Microsoft spending spree

Microsoft is seemingly set to continue its ongoing acquisition spree, having added speech-recognition company Nuance Communications to the fold. The two announced in April that they have closed a $19.7bn deal.

Nuance is best known for having provided the speech recognition engine that powers Apple's smart assistant Siri, although it predominantly makes its money from selling tools and transcribing speech in doctors’ visits, customer service calls and voicemails.

The brand reported $7m in net income in the fourth quarter of 2020. Nuance was founded in 1992 and had 7,100 employees as of September last year.

However, it's unlikely that the potential acquisition of Nuance would mean a revival of Microsoft's own smart assistant Cortana. The voice-controlled artificial intelligence assistant has long been on life support after failing to become as popular as Siri or Google Assistant. Now, Microsoft is slowly shutting down its life support. The latest move to that affect happenedrecently when the tech company switched off the Cortana app for iOS and Android.

Rather than bringing Cortana back from the brink, it is more likely that Microsoft is viewing the deal as a way to boost its voice software capabilities elsewhere. It already offers transcription and voice-command services for its Bing search engine and its Teams app.

David Bicknell, principal analyst of Thematic Research at GlobalData, offers his view that Nuance’s capabilities will “only increase Microsoft’s AI strength.”

“Conversational platforms is one of the most commonly used artificial intelligence (AI) technologies,” says Bicknell. “Microsoft and Nuance are strong in the AI theme. Nuance is also very strong in conversational platforms, particularly for healthcare providers, suggesting its expertise will undoubtedly strengthen Microsoft’s enterprise strategy in the lucrative healthcare industry.”

The deal has been in the works for some time, with Microsoft having first approached Nuance in December, according to a person familiar with the deal speaking withCNBC. The Redmond, Washington-headquartered tech titan has now publicly said that it bought Nuance for $56 per share for Nuance in an all-cash transaction valued at $19.7bn.

That makes it one of Microsoft's biggest acquisitions to date, second only to its $26.2bn acquisition of LinkedIn in 2016.

More importantly, the potential deal would suggest that Microsoft is not finished growing via acquisitions yet. Looking at theGlobalData Technology Themes database, it is clear that the tech firm has been on a bit of a merger spree of late. The database lists several completed and rumoured deals.

In March its $7.5bn acquisition of the video game studioZeniMax was approved by the US Securities and Exchange Commission and the European Commission. Around the same time Microsoft completed its acquisition of theMarsden Group, an industrial technology innovation and rapid prototyping company. In 2020, it acquired Metaswitch Networks, Softomotive, CyberX, Orions Systems and Smash.gg.

Microsoft is also making headways in Asia with investments in Singapore and India. The most recent is $234m in funding led by Microsoft and GIC in Bukalapak, an Indonesia-based online marketplace.

TheGlobalData Technology Themes database also highlighted that the company has been rumoured to acquireSega and Pinterest in this year alone. Discord was also on that rumour list, but late-April saw the game chat platform end its acquisition talks with Microsoft on a deal reportedly worth $10bn.

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