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Spend another 20 billion dollars to buy nuance, where did Microsoft spend its ten-year "cash" capability?

via:博客园     time:2021/4/13 15:17:09     readed:209

Today, Microsoft and nuance, an AI and voice technology company, jointly announced that the two sides have reached a final agreement that Microsoft will acquire nuance with a cash transaction value of $56 and $19.7 billion per share. This price is not only about 23% higher than the closing price of nuance last Friday, but also makes nuance officially the second largest acquisition in Microsoft's history, second only to the $24 billion acquisition of LinkedIn in 2016.


What company is nuance and why can Microsoft make a big bet? Looking back at Microsoft's acquisition footprints over the years, what is the technology giant planning?

Before the disclosure of this huge acquisition, I believe many people have never heard of nuance, but in the field of speech recognition, nuance is famous.

The speech recognition engine used by Siri, the familiar voice assistant of apple, was developed by nuance, and many senior members of Google's speech recognition department were poached by Google from nuance in those years.

If you want to find a company with similar business in the Chinese market, it should be iFLYTEK. Nuance has a much longer history in the field of speech recognition than iFLYTEK, which was founded in 1999.

Nuance was founded in 1992 and headquartered in Burlington, Massachusetts. At the beginning of its establishment, nuance was mainly engaged in image recognition business. Later, in the process of development, nuance gradually transformed to voice recognition and natural language understanding solutions. Through a series of intra industry acquisitions and technology patent research and development, nuance became a giant enterprise in the US voice recognition market.

How early did it do speech recognition? In the era when full screen smart phones represented by iPhone haven't begun to be popular, nuance has begun to apply voice recognition to mobile terminals. For example, as early as 2007, nuance has been cooperating with BlackBerry to launch voice recognition services, such as making phone calls and sending text messages via voice.


Figure voice recognition service jointly developed by BlackBerry and nuance in that year

Later, when developing Siri, apple did not hesitate to find nuance as the basic supplier of Siri's speech recognition. At the same time, it also provides on-board voice technical support for dozens of major global automobile manufacturers, such as Audi, BMW, Daimler, Ford, SAIC, etc., and then splits the on-board voice business and goes on the market separately in the name of cerence in 2019.

In addition to providing technical support for mobile voice recognition, nuance also provides automated customer service solutions for many financial and Internet institutions. Today, nuance has more than 1000 patented technologies, and its voice products can support more than 50 languages, with more than 2 billion users worldwide.

However, with the rapid development of mobile voice in recent years, major companies have begun to build their own teams to develop voice assistants, and the industry competition is becoming more and more fierce. Therefore, nuance has gradually shifted its business focus to the healthcare field in recent years, which is also the focus of Microsoft's acquisition.

It has been proved that nuance is also developing rapidly in the medical field. According to the official website of nuance, their AI driven solutions have been adopted by 90% of the hospitals and 10000 medical organizations in the world, and more than half of the doctors in the United States are using the intelligent medical services provided by nuance.


In the latest fiscal year, nuance achieved a revenue of $1.48 billion and a net profit of $91 million. Does that sound like a small profit? However, we need to know that they still lost 217 million US dollars last year, and their profits quickly turned positive in just one year, which is enough to see their huge development potential.

Since the first acquisition of forthought in 1987, Microsoft has completed more than 270 acquisitions, with an average of six companies purchased each year. It can be said that Microsoft is one of the most favorite companies among the technology giants.


Figure the number of acquisitions and finance of Microsoft in recent years. The picture is from geekwire

Among these acquisitions, including nuance today, there have been 13 acquisitions with a value of more than $1 billion.

From top to bottom, they are: LinkedIn (26.2 billion US dollars), nuance (19.7 billion US dollars), Skype (8.5 billion US dollars), zenimax (7.5 billion US dollars), GitHub (7.5 billion US dollars), Nokia (7.2 billion US dollars), and digital marketing platform Aquantive (US $6.3 billion), game developer Mojiang (US $2.5 billion), 5g collaboration platform confirmed and technical drawing software Visio (both US $1.4 billion).

Looking at these companies that Microsoft has bought at a high price, many people may be confused. They feel that Microsoft is buying everything, one for mobile phones, one for platforms and one for games. They don't know what kind of chess they are playing.


As of the end of 2018, the picture of Microsoft's large acquisition is from cbinsights

But when we look at the essence of these acquisitions, we will find that the acquisition of Microsoft has been carried out around the main line of SaaS (software as a service).

However, with the rapid rise of Google, apple and Amazon in the early 20th century, under the huge market challenge, Microsoft finally came to realize and started the Internet strategy rapidly from 2005. Therefore, when we look back at the acquisition history of Microsoft in recent years, we will find that Microsoft's large-scale acquisition cases basically occurred after 2005.

In the next decade, Microsoft started the transformation from PC software to Internet services, and comprehensively explored SaaS solutions based on cloud. Since then, whether Skype, GitHub, LinkedIn or nuance are acquired, in fact, they are all aimed at enabling their products to quickly cut into a wider Internet field, link to more users, and then make profits by selling software and services.

Of course, in recent years, from Microsoft's choice of segmentation entry point, games, social and medical services are undoubtedly Microsoft's current focus.

The second segment: social field. From Skype to LinkedIn, mixer to GitHub, and even the rumor of last year's acquisition of tiktok, all show Microsoft's intention to access more Internet users through social platforms.

Of course, because Microsoft lost the first chance in the wave of mobile Internet, in the more than ten years of determined reform, many times it relied on money to indulge in crazy gambling, spent a lot of money, and finally lost. Like, um, Nokia.


Lay out the future: invest heavily in AI healthcare in recent years

Failure to enter health wearable devices

In 2014, Microsoft announced its first wearable device, Microsoft band, and then launched the Microsoft Health cloud health information management service application to help users track heart rate, steps, sleep and other health data. Although the app will be officially closed in 2019, it is also seen as a major attempt by Microsoft to get involved in the field of health.


In 2017, Microsoft announced its cooperation with the University of Pittsburgh Medical Center and jointly launched an AI medical plan called healthcare next to study how to use artificial intelligence to complete electronic medical record data input, AI triage, auxiliary outpatient work, etc., and make use of Microsoft's advantages in AI and cloud technology to carry out medical innovation.

Officially released medical cloud platform


In the promotion of these major strategies, Microsoft also cooperates with many medical institutions and technology companies around the world, including nuance. Before today's acquisition, nuance has actually cooperated with Microsoft for more than two years.

Nuance and Microsoft reached a cooperation for the first time in 2019, mainly using nuance's technology in speech recognition, signal enhancement, document summarization and other aspects to help Microsoft better realize intelligent clinical management.

In the medical cloud platform launched by Microsoft, the cooperation between the two companies is further deepened. Microsoft directly embeds nuance's Dragon ambient Excellence (DAX) environmental clinical solution into Microsoft team services. For example, automatically capture and record the dialogue between doctors and patients, analyze the context through AI and automatically create clinical records.

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