Apple needs Nuance, not the other way around

Summary:Nuance Communications has received a good amount of attention on reports that Apple is looking to partner with the voice recognition giant. Which side has more negotiating leverage? Hint: It's not Apple.

Nuance Communications has received a good amount of attention on reports that Apple is looking to partner with the voice recognition giant. Which side has more negotiating leverage? Hint: It's not Apple.

TechCrunch reported that Nuance may be used in Apple's data center in North Carolina. On Friday, TechCrunch reported Apple may partner or buy Nuance, which saw its shares spike on Monday.

These reports---as well as some of the followups---are all viewed through the Apple prism, but the reality is that Nuance would be fine if it didn't friend Steve Jobs & Co. Sure, Apple would bring a lot of revenue to Nuance's table, but it's no surprise that these negotiations are tough. Apple needs Nuance a lot more than the other way around.

Google's Android is clearly ahead on voice recognition. Microsoft has its TellMe unit for voice recognition. Faced with that competitive reality Apple has to use Nuance's technology and integrate it well.

If you were to handicap any talks between Apple and Nuance, the latter party may have an advantage. If Apple does have to pay up to partner with Nuance at least it won't be alone. Nuance's technology spans multiple verticals. You just haven't noticed. Nuance is partnered with IBM to bring Watson to healthcare. Ford's Sync is powered by Nuance voice recognition and becoming more conversational by the day. That robot you just talked to during a customer service call? Yup that's Nuance.

In other words, Apple will be just another Nuance partnership. Now Apple is clearly a consumer favorite, but Nuance has many customers just as impressive. It's just folks aren't paying attention.

Let's roll the customer base from Nuance's annual report.

  • In healthcare---Nuance's most promising business in my opinion---the company counts Banner Health, Cleveland Clinic, Department of Veterans Affairs, HCA, Mayo Clinic, Sutter Health, Tenet and U.S. Army as representative customers.
  • In mobile and consumer, Nuance counts Amazon, Apple, Audi, BMW, Ford, Garmin, HTC, LG Electronics, Mercedes Benz, Nokia, Samsung, T-Mobile and TomTom as customers. Apple's new Nuance deal is most likely a tighter integration than what's there today via the company's Siri unit.
  • On the enterprise side, Nuance names ATF, Exxon, FBI, IBM, Texas Dept. of Family Protective Services and Zurich. Toss in Bank of America, Cigna, Citibank, Disney, FedEx, United Airlines and Wells Fargo for good measure.

These customers come to Nuance because it has the intellectual property locked down. Nuance has 2,100 issued patents and another 1,900 patent applications beyond that. So if Apple needs voice recognition mojo it can go to Microsoft, Google or Nuance. Hell will freeze over for the first two and that leaves Nuance.

Topics: Telcos, Apple, Networking

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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