Microsoft Acquires Speech AI Leader Nuance Communications

Massachusetts-based Nuance Communications is an early speech recognition pioneer that has since grown to be one of the leaders of conversational speech artificial intelligence (AI) innovations. The company provides voice and language solutions for businesses and consumers around the world in a variety of verticals, including healthcare, mobile, consumer, enterprise customer service and imaging.

This week, the Wall Street Journal reported that Microsoft has agreed to buy Nuance for $16 billion. The acquisition is part of a long-term plan of Microsoft CEO Satya Nadella’s to acquire companies that will accelerate Microsoft’s growth across numerous verticals industries, including the growing vehicle telematics industry. Microsoft will pay $56 per Nuance share, which is a 23 percent premium over last Friday’s closing price. The acquisition is Microsoft’s second largest after the 2016 acquisition of LinkedIn for $26 billion.

"This acquisition brings our technology directly into the physician and patient loop, which is central to all healthcare delivery,” Microsoft CEO Satya Nadella told Reuters in a statement. “The acquisition will also expand our leadership in cross-industry enterprise AI and biometric security."

Forrester Research noted that the acquisition will be particularly significant for Microsoft in the realm of healthcare.

“For companies using Microsoft and/or Nuance, this acquisition will provide them with more depth and breadth in the healthcare provider space, enterprise customer care, and enterprise cloud services,” according to the analyst group.

Beyond healthcare, Nuance provides AI expertise and customer engagement solutions across Interactive Voice Response (IVR), virtual assistants, and digital and biometric solutions to companies around the world across all industries. This expertise will come together with the breadth and depth of Microsoft’s cloud, including Azure, Teams, and Dynamics 365, to deliver next-generation customer engagement and security solutions.

“Over the past three years, Nuance has streamlined its portfolio to focus on the healthcare and enterprise AI segments, where there has been accelerated demand for advanced conversational AI and ambient solutions,” said Mark Benjamin, CEO of Nuance. “To seize this opportunity, we need the right platform to bring focus and global scale to our customers and partners to enable more personal, affordable and effective connections to people and care. The path forward is clearly with Microsoft —  who brings intelligent cloud-based services at scale and who shares our passion for the ways technology can make a difference.”