Microsoft Acquires Nuance Communications for $19.7bn

Deal is Microsoft’s second largest, behind only LinkedIn

Microsoft has acquired voice recognition provider Nuance Communications for $19.7bn to increase its presence in the healthcare space.

This acquisition is Microsoft’s second-largest behind the $26.2bn takeover of LinkedIn in 2016.

“Nuance provides the AI layer at the healthcare point of delivery and is a pioneer in the real-world application of enterprise AI,” said Microsoft CEO, Satya Nadella.

 

“AI is technology’s most important priority, and healthcare is its most urgent application. Together, with our partner ecosystem, we will put advanced AI solutions into the hands of professionals everywhere to drive better decision-making and create more meaningful connections, as we accelerate growth of Microsoft Cloud for Healthcare and Nuance”

Nuance specialised in voice recognition from its inception in 1992, but the company is perhaps best known for its work with Apple which led to the creation of Siri. Nuance did not publicly acknowledge its involvement with Siri until years after the AI assistant was launched.

Microsoft and Nuance have worked together in the past, particularly around healthcare initiatives. Nuance’s cloud-based healthcare offerings are also built on Azure.

The Redmond-based vendor said the acquisition doubles its total addressable market in the healthcare provider space.

Nuance also has a sizeable play in the customer experience space, which Microsoft said will be brought together with Azure, Teams and Dynamics 365 to “deliver next-generation customer engagement and security solutions”.

Industry experts have long predicted that Microsoft would make a move in the CX space, but a definitive deal was yet to materialise, with the vendor choosing to go down a partnership route.

Microsoft’s Azure Communications Services is also now generally available, which could signal an increased interest in the CX arena.

The acquisition has been approved by the Nuance board but is awaiting shareholder approval, with Microsoft expecting the deal to close this calendar year.

Nuance CEO, Mark Benjamin, will remain at the helm and will report to Microsoft’s cloud and AI boss Scott Guthrie.

Benjamin said: “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.

 

“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, which brings intelligent cloud-based services at scale and who shares our passion for the ways technology can make a difference. At the same time, this combination offers a critical opportunity to deliver meaningful and certain value to our shareholders who have driven and supported us on this journey.”

 

Andy Fletcher our MD commented “Microsoft have positioned this acquisition as mainly benefiting their healthcare play, but I’m excited for the technology it will bring to Teams and Azure.”

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