Apple needs Nuance, not the other way around

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.

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TOPICS: Telcos, Apple, Networking
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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

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13 comments
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  • Why rent when you can buy?

    A few days ago one of the ZDNet bloggers said Apple should spend some of its $60+billion. Looks like Nuance would be a great buy.
    Rick_R
    • Apple had its own speech recognition in Advanced Technology Group (ATG) ...

      @Rick_R: ... already in 1990s. So, theoretically, Apple can just continue that old development. But if there was really significant pause in the development of this technology, Apple might be lagging in quality of speech recognition comparing to others, and there is no way for them to have high-quality voice recognition right now other than doing something with Nuance.
      DDERSSS
      • RE: Apple needs Nuance, not the other way around

        @denisrs

        That begs the question of how Google is doing its voice recognition on Android. They obviously didn't buy Nuance.
        gotamd@...
      • RE: Apple needs Nuance, not the other way around

        @gotamd@... Nope, they didn't but they are easily 2 to 3 years ahead of where Apple is right now and I would be amazed if Nuance was dramatically better! The Google services are extremely good and integrate well with the Translation Tools.
        slickjim
      • RE: Apple needs Nuance, not the other way around

        @denisrs For once I almost agree with Peter Perry in that Android is ahead of iOS with voice recognition - that is the ONLY thing I miss about WM is the integration of the Microsoft Voice Command program with that OS... it was great... unlike the rest of the OS but that is a gripe for another post. The partnership with Nuance however would place Apple in a much better position in regards to voice recognition capabilities within the iOS - and while Apple does bring some things late (copy/paste being a prime example) the also bring it with style and ease of use. Perhaps the integration of the result of this partnership will be as flawless as the integration of copy/paste was.
        athynz
      • RE: Apple needs Nuance, not the other way around

        @athynz There isn't any denying it, anyone who has used the feature in Android walks away thoroughly impressed regardless of what their favorite platform is.

        Crud, I would so far as to say that every form of input on the Android platform is as Good or Better than iOS.
        slickjim
      • If Nuance is Sync

        Apple is purchasing or renting and older technology than what Android has in voice recongnition.<br><br>I do have a Focus, with Sync, and haven't used it much, Android provides a much superior product.<br><br>Examples are:<br><br>Sync:<br><br>a) Press the Voice command button <br>b) Say "Phone"<br>c) Say "Call George"<br>d) A list of people with the name george slowly scrolls through your radio screen display, similar if you are lucky.<br>e) You need to state the number that relates to your call, provided it understood you (road noise affects you negatively) And if you have more than 10.. you are out of luck!<br><br>Android:<br><br>a) Press the voice button <br>b) State "Call George"! <br>c) A list comes up, one click you are done!
        Uralbas
      • RE: Apple needs Nuance, not the other way around

        @Peter Perry Not having played with the voice recognition software on an Android device I cannot confirm nor deny your statement in that respect. However this" [b]Crud, I would so far as to say that every form of input on the Android platform is as Good or Better than iOS.[/b] I would have to say possibly as good as but definitely not better. But that is purely subjective as all opinions are.
        athynz
      • RE: Apple needs Nuance, not the other way around

        @DeRSSS apple could buy them in a heartbeat - with just the profits of one quarter, if this technology is so impor<a href="http://www.tran33m.com/vb/">t</a>ant. and that's exactly what they built their cash hoard for. strategic invest<a href="http://vb.maas1.com/">m</a>ents, when all the pundits advised them dividends or share buy back programs. smart apple.
        alasiri9
  • chump change

    apple could buy them in a heartbeat - with just the profits of one quarter, if this technology is so important. and that's exactly what they built their cash hoard for. strategic investments, when all the pundits advised them dividends or share buy back programs. smart apple.
    banned from zdnet
    • RE: Apple needs Nuance, not the other way around

      @banned from zdnet Remember, Jobs said they partner with companies and don't enter these other areas... This is how they got beat by Google in the first place, they were using them for back end tools.
      slickjim
      • beat by google?

        @Peter Perry
        beat by google? by what metric? revenue? profit? market cap? brand value? annual growth?
        banned from zdnet again and again
  • What is Nuance's potential with Apple?

    That is what the real issue is.

    ATT saw potential with Apple when the iPhone was nearing completion and they've profited a bit from partnering with Apple.

    Nuance has the ability to work with Apple iOS and that market is growing faster than the other Nuance customers.

    And Apple represents a significant potential for delivering cash to shareholders if a sale or merger is worked out.

    BTW, check out the penetration of iOS into the medical field. iOS is no slouch in that market, from medical schools to hospitals.
    Ken_z