Nuance Acquires Bitter Rival Vlingo

In a surprise move, Nuance Communications today announced plans to acquire rival speech company Vlingo. Financial terms were not disclosed. The acquisition is expected to close during 2012, but no specific date has been determined, according to a Vlingo spokesperson.

Until the closing occurs, Vlingo will operate as an independent company, and its products and services will continue to be available and delivered. After the transaction is completed, the company will provide more information on how the Vlingo-Nuance combination will affect the companies’ combined product offerings, the Vlingo spokesperson says.

Vlingo, which was founded in 2006, offers a mobile phone Virtual Assistant that combines voice-to-text technology with an intent engine to help users complete their desired actions.

Steve Chambers, president of sales and marketing at Nuance and executive vice president of its Enterprise Division, says overlapping technologies are not an issue. “Different technologies can never have too many algorithms or data to throw at speech recognition, so we’re excited,” he says.

The news is shocking given that the two speech tech companies, whose Massachusetts corporate offices are just a few miles apart, have been in and out of court suing each other over patent infringements during the past three years. With the acquisition, Chambers put a different spin on things.

"There's nothing more galvanizing than a big market and a clear competitor," Chambers says. "The idea that every consumer product is going to have a voice interface is exciting, not just phones, tablets, and cars, but even appliances. There's a European coffee maker that wants to add our technology. We [Nuance and Vlingo] both share that vision, and patent stuff aside, there's a recognition that we can do better together than apart."

Chambers is referring to eight patent infringement lawsuits filed between the companies since 2008. Of the eight lawsuits, six were filed by Nuance and two filed by Vlingo. The suits cover a total of 20 patents, 14 held by Nuance and six held by Vlingo.

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."

As part of the suit, which was filed September 1, Vlingo alleged that Nuance tried unsuccessfully to acquire the company and was engaging in an ongoing campaign to "force Vlingo into being acquired by Nuance at an artificially and unreasonably low price." Vlingo claimed that Nuance CEO Paul Ricci tried to coax Vlingo executives into a deal by offering them $5 million apiece. The offers were allegedly made to CEO David Grannan; Mike Phillips, Vlingo's co-founder and chief technology officer; and John Nguyen, Vlingo's co-founder and vice president of engineering, in September 2009.

Grannan once infamously compared the companies' rivalry to having a venereal disease. Neither company would comment about Grannan’s future involvement in the newly combined entity.

With today's announcement, Grannan was conciliatory. "Vlingo and Nuance have long shared a similar vision for the power and global proliferation of mobile voice and language understanding,” he said in a statement. "As a result of our complementary research and development efforts, our companies are stronger together than alone.”

Now that the once-bitter foes are playing nice, the companies said they see the acquisition representing a $5 billion market opportunity as demand soars for voice assistance and natural language solutions.

Nuance supplies its technology to Apple for various products, which reportedly includes the Siri voice assistant, though the company has never confirmed it. The speech recognition Goliath has been on an acquisition spree in recent years, and has bought up companies such as Philips Speech Recognition Systems, SNAPin, eScription, Webmedx, and more recently, Loquendo, PerSay, and Swype.

"Everyone wants to understand what we're doing," Chambers says. "There's such an appetite in the market. I've never seen anything like this."

Even though Nuance is the largest player in the speech recognition space, the acquisition will bolster its share of the pie, Chambers says. "This makes us more formidably competitive," he states. "We will be better able to fend off daunting competitors like Google and Microsoft, and there are a gazillion smaller natural language companies. 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." 

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