TellMe + Microsoft (Nuance and Google)

UPDATE as of 3/14:  It looks like it will be Microsoft + TellMe. Some additional insight from Om:

1. The price is over $800 million but below a billion dollars. Microsoft and Tellme are not disclosing financial details.

2. While Microsoft has been trying to position Microsoft Business Division President Jeff Raikes as the guy who took the lead on this deal, the truth is that Microsoft CEO Steve Ballmer was personally handling this deal. I have confirmed this with two people.

3. Mobile search is the impetus behind this deal, but TellMe is making over $100 million a year from selling automated call-center services to large companies like FedEx.

4. TellMe is going to become an independently run subsidiary of Microsoft.

5. Mike McCue and other senior executives are going to stay with the company.

So where does this deal leave us now.  Nuance-BeVocal, Microsoft-TellMe, Google - ?, Yahoo - ?

 

Speech based access to content - think mobile devices - and search of content - think audio and video search - continues to see significant growth opportunities...and therefore consolidation.   

The space has been consolidating over the past year and it is not over yet.  Examples of consolidation include:

• Cisco acquisiton of Metreos and Audius
• Genesys acquisition of VoiceGenie Technologies, Telera
• Cantata merges with Excel and Brooktrout which had acquired Snowshore earlier
• Voxeo purchase of Vocomo
• Microsoft bought Unveil and Vocalocity's VoiceXML technology
• Scansoft acquires Nuance among others

As we move through 2007, one of the big battles worth watching is the strategic positioning between Nuance, TellMe, Google, Microsoft and Yahoo.  Rumors abound about TellMe and its future as an IPO candidate or an acquisition candidate. 

When Scansoft bought Nuance in 2005 both Google and Yahoo took advantage of the opportunity to poach the top speech gurus at the new Scansoft/Nuance.   Both G and Y see the opportunity of speech driven search and access as core technologies to their future mobile applications.   Rumors continue to swirl around Google's interest in acquiring TellMe... and yet to me, it seems as likely that Google builds their own VXML interpreter.  Google and Yahoo have the ability to host these applications on their existing infrastructure and certainly have an installed user/customer base to penetrate with speech access and applications.  What they both need is the VXML engine that powers TellMe's service...but not necessarily the whole TellMe solution.   

Given Nuance's strategy to offer applications on top of their speech platform, their legal case against TellMe and recent acquisition of BeVocal, it seems unlikely that there's a play here.

But, if Google or Microsoft wanted to seize the speech access and search market, acquiring the whole of TellMe prior to their anticipated IPO would give them immediate consumer and enterprise dominance.

For Microsoft, this would require a strong shift toward VXML vs. their commitment to SALT.  But, such a move would provide a strong platform to significantly differentiate their UC offer and accelerate their mobile search offer.

We'll know which way this will play out soon enough. We now know!

Comments

[interested party]

Interesting speculation. Where does Microsoft fit into this picture? They are certainly interested in mobile, and have strong R&D roots in speech.

And AFAIK, Tellme doesn't depend only on nuance. They use multiple ASR engines...

[ivr/asr vet]

Hmm .. "Tellme doesn't depend only on Nuance". When it comes to robust over-the-telephone speech recognition, there is only one supplier: Scansoft/Nuance bought up everything worthwhile.