To seize market share, Nuance adapts mobile business model

To court startups developing new mobile applications, Nuance is giving away access to its speech recognition tech. The decision may actually get it more business.

Olga Kharif has a great little piece in Bloomberg Businessweek last week about how Nuance -- the speech recognition giant behind Apple's Siri, among others -- is coming to terms with the fact that sometimes you just need to give your product away to gain more business.

Sure, it's an ages-old strategy employed by cupcake vendors and software makers alike, but for a company that mostly does business with other businesses -- not consumers -- it's a slight shift.

The company traditionally sells its speech recognition software to healthcare and financial companies. But in September, Nuance began offering free tools to software developers for building mobile applications using its technology. The number of apps using its technology is growing, helping the company embed itself in the space.

Kharif reports:

“It’s a way to seed the market with our technology,” says Matt Revis, a vice president at Nuance Mobile, which makes money when appmakers upgrade to plans that offer customer service or more features. Siri is an example of “the types of situations we are looking to develop: smaller companies using us becoming big.”

In other words: startups. Lean new ventures weren't seeing the value of Nuance's tech when they were forced to pay for it every time they used it; the new structure frees them to explode in popularity without blowing out the budget, too.

It's a necessary move if Nuance wants to keep the future within reach. As it expands its potential revenue streams at a rapid clip -- phones, tablets, in-car tech, with television and many more not far behind -- the company needs to get there before speech recognition rivals Microsoft or Google do.

Those companies have businesses developing the products to leverage speech recognition technology; Nuance hopes it can outflank them by getting its established tech in place elsewhere in the market before the less mature players get their act together.

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