Nuance Acquires Bitter Rival Vlingo

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In a surprise move as the countdown to 2012 was starting, Nuance Communications acquired rival speech company Vlingo for an undisclosed amount.

The news came as a shock to most given that the two companies, whose Massachusetts corporate offices are just a few miles apart, have been in and out of court suing each other over allegations of patent infringements and worse since 2008.

"There's nothing more galvanizing than a big market and a clear competitor," says Steve Chambers, president of sales and marketing at Nuance and executive vice president of its enterprise division. "The idea that every consumer product is going to have a voice interface is exciting," he says. "We [Nuance and Vlingo] both share that vision, and patent stuff aside, there's a recognition that we can do better together than apart."

The legal feud between the two companies really heated up at the end of the summer when Vlingo filed suit in a U.S. district court in Massachusetts claiming that Nuance engaged in "unfair competition under federal, state, and common law; commercial bribery; breach of contract; and intentional interference with prospective advantageous relationships." Nuance had levied a few false advertising charges at Vlingo as well.

But now that the once-bitter foes are going to be part of the same team, the companies said they see the acquisition representing a $5 billion market opportunity as demand soars for voice assistance and natural language solutions.

"I think one of the ways to frame this is that you get the best of the lifelike rendering of recognition of what people mean when they talk to their devices," says Dan Miller, senior analyst at Opus Research. "It seems like they're going to put aside their differences and bring an excellent product out."

The entire speech industry got a boost when Apple introduced Siri, its voice-enabled virtual assistant, to the latest iPhone 4S model, and now "there is an expectation in the marketplace that voice-based services that are mobile and recognize intent are just going to get better and better," Miller says.

Chambers says the acquisition better positions Nuance to compete in the mobile space with Google and Microsoft. "With the integration of our voice recognition and natural language, we're in a great position, with no shortage of people who want this technology in their products."

Miller also expects Amazon to enter the fray with greater voice capabilities in future versions of its Kindle product line. "Nuance/Vlingo is in a better position to compete in the deep end of the pool, which is mobile search, mobile e-commerce, etc. It's a statement that speech is part of the mix in the natural user interface now," he states.

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