Gartner and OPUS Weigh in on the Scansoft Acquisitions
Gartner:
First Take: Consolidation continues in the speech recognition market. These deals will strengthen ScanSoft's capabilities in three areas:
- Phonetic provides ScanSoft with enhanced technology for directory assistance applications.
- Rhetorical increases ScanSoft's already strong presence in the text-to-speech market, with extended language coverage and better tools for adding new voices more rapidly.
- ART, which focuses on embedding speech capability into mobile devices, broadens ScanSoft's capabilities to address the mobile handset market.
However, ScanSoft still must:
- Assimilate this large and wide-ranging set of acquisitions, along with its earlier ones, while avoiding the chaos and lack of control that has befallen other industry players that grew rapidly through acquisition
- Demonstrate to the financial community that it has exploited its technology and investments in intellectual property to expand the speech recognition market
- Increase its revenue share in higher-profit-margin services and applications, while maintaining its strong relations with application partners
- Maintain its dominant position in speech technology and be more than just a "technology play" for mega-vendors that have entered the market, such as IBM and Microsoft
Recommendations:
- ScanSoft enterprise customers should ask ScanSoft to explain the impact of these acquisitions on its product road map, and to confirm that they will not result in accelerated retirement or abandonment of products.
- Phonetic, Rhetorical and ART customers should demand that ScanSoft define a product road map and migration path, to ensure that their technology investments continue to be supported.
Analytical Sources: Steve Cramoysan and Bernard Elliot, Gartner Research
http://www3.gartner.com/resources/124900/124991/latest_acquisit.pdf
OPUS:
OPUS Research, Inc. released the research advisory: "ScanSoft's Rollup Machine: Consolidation Continues."
In a comprehensive acquisition campaign dubbed Project Tsunami, ScanSoft acquires three companies. In text-to-speech, it purchases Scottish pure-play Rhetorical Systems for $6.9 million. Israel-based automated DA leader Phonetic Systems is the biggest catch, with a $35 million pricetag. Another Israeli-based embedded speech solution, ART (Advanced Recognition Technologies) fetches $21 million. The initial total cash outlay by ScanSoft is only $27.4 million, with the remainder of $63 million total consideration due later, almost all of it in cash.
To read this advisory, go to: http://www.opusresearch.net/reports/aca0mp111604.pdf .