Microsoft to Acquire Tellme Networks

Microsoft announced plans March 14 to acquire privately held Tellme Networks, a provider of nationwide directory assistance, enterprise customer service, and voice-enabled mobile search, in a move that will dramatically advance the software giant’s presence in the $7 billion mobile search market.

Terms of the deal were not disclosed, but it has been rumored to be worth about $800 million, making it Microsoft’s largest acquisition since 2002.

In addition to the mobile search technology, which has been Tellme’s specialty since it was founded in 1999, the acquisition also brings to Microsoft expanded capabilities in the areas of hosted customer service solutions, voice user interfaces, interactive voice response (IVR) systems, and software as a service over the Internet. Microsoft also expects to integrate Tellme’s technology into the unified communications platform that it will release this summer, and will challenge its developers and industry partners to build new speech-based products and services on top of Tellme’s scalable, open standards-based platform.

Jeff Raikes, president of the Microsoft Business Division, said during a conference call that the addition of Tellme will help strengthen Microsoft’s speech recognition prowess, an area where it "has only scratched the surface of what is possible" so far. Microsoft has already built voice capabilities into its recently released Vista operating system, Office 2007 suite, Microsoft Mobile, and Microsoft Automotive. It said that some new products that could potentially result from the deal are voice-enabled customer service software and the addition of speech recognition to its Windows Live Search engine.

"The acquisition of Tellme will bolster Microsoft’s existing speech capabilities, bringing both immediate and longer-term value to our customers and partners," Raikes stated during the call.

"Speech is universal, simple and holds incredible promise as a key interface for computing," Microsoft CEO Steve Ballmer said in a statement. "Tellme brings to Microsoft the talent, technology and proven experience in speech that will enable us to deliver a new wave of products and revolutionize human-computer interaction."

Tellme’s software provides voice-enabled directory assistance search services and also supports the delivery of sports scores, driving directions, flight itineraries, stock quotes, weather, news, movie listings, and more to mobile phone users. Users initiate the searches via voice through their mobile phones and can have accompanying graphics, such as maps, driving directions, and quotes, show up on the phones’ display screens. And because its applications are based on the open VoiceXML standard, Tellme’s services can be accessed on devices from just about any manufacturer.

The company claims to handle nearly half of all the directory assistance calls in the United States and to field more search inquiries than both Google and Yahoo! combined. It reportedly fielded 2 billion calls last year alone, either on its own through its 411 services or on behalf of its customers, which include FedEx, AT&T, Domino’s Pizza, and American Airlines.

"Tellme was founded with the idea that anyone should be able to simply say what they want and get it from any device, starting with the phone," Mike McCue, its co-founder and CEO, said during the conference call. "Voice is a very powerful interface for the phone and lots of other devices. Now, with Microsoft, we’ll be able to extend that vision to millions of businesses and consumers around the world."