For those of you following the gradual disclosure surrounding PerSay’s acquisition, now it can be told that Nuance Communications is the firm that successfully acquired one of the leaders in voice biometric-based solutions. [Because of known inaccuracies we've removed the link to previous coverage].

Early coverage in Israel took a speculative look at how the underlying transaction affects PerSay’s investors and shareholders. In doing so, it fails to discuss the impact the transaction will have on Nuance, PerSay and the voice biometrics community at large. That’s where Opus Research sees the transaction as a Win/Win/Win.

Let’s start with Nuance. The acquisition of PerSay augments its product line (by adding the text independent authentication and authentication on iPhones to the product portfolio among other items, including audio mining). It also expands the existing customer base to include some of the largest known customer-facing authentication app for telecommunications firms, government agencies, and financial services companies around the world. Looking ahead, as Nuance follows its three year plan to incorporate the intellectual property and development horsepower acquired from IBM, the prospects are bright for voice biometric based solutions that fulfill on the promise of conversational authentication in a variety of enterprise, customer care and mobile settings.

For PerSay, affiliation with Nuance removes one of the primary objections that prospective deployers have voiced for a years; that is, concern over size and longevity. Though impressed with PerSay’s underlying technology and the quality of its sales execs, engineering personnel and technology partners, business demographics (size, financial strength, indemnification…) remain part of the vendor selection criteria for technologies that are both “leading edge” and destined to stay in service for decades to come. While PerSay’s base of reference customers is impressive, Nuance, with a market cap approaching $5.5 billion these days, provides a greater sense of security.

As for the general voice biometric ecosystem, consolidation brings more coherence to the marketplace. For a variety of reasons, voice biometric solutions are plagued by long sales cycles. Decisionmaking is shared among marketing, customer care, contact center automation and security personnel. Any one of them can charter a pilot or proof of concept installation and any team member can delay the decision while resolving claims or counter-claims from multiple vendors or teams of vendors.

Prior to the acquisition, PerSay and Nuance were both leaders in among a community of roughly 20 firms with voice biometrics-based platforms for authentication (described in a research report issued May 2010, entitled “Voice Biometrics 2010: A Transformative Year for Voice-Based Authentication”) and available here. The list of competitors (each with its own voice biometric engine) remains long and includes: Agnitio, VoiceVault, VoiceTrust, STC/SpeechPro, CSIdentity (using the IP acquired from VoiceVerified), Fujitsu (with IP from Kaz). Small firms like Porticus, Voice Biometrics Group and a few others have targeted specific geographies or market niches that add speaker identification to their repertoire.

Nuance’s acquisition of PerSay marks the beginning of market rationalization. The physics of the modern marketplace normally nurtures only three or four contenders in a given category (think TV networks or Detroit autos in the old days or videogame consoles and social networks today). For voice biometric-based solutions, we’re still in the demand creation stage of marketplace establishment. Nuance and competing solutions providers are literally defining the problems that their technologies solve (convenient, strong, phone-based methods for user validation and authentication) as well as its economic value to the companies and government agencies ready to deploy their products and services.

The acquisition is a signal moment for the nascent voice biometrics industry.

Targeting the growing ranks of iPhone and iPad users, PerSay has announced that its VocalPassword functionality has been modified to allow app developers to include voice authentication with “minimal resources.” By adding voice biometrics to traditional methods of authentication, including login IDs and passwords, the new capability enables a multi-factor authentication.

The additional layer of security can provide app users with a “sleek and innovate authentication experience,” says Almog Aley-Raz, CEO of PerSay in the press release. The company is touting the solution for applications such as mobile banking, social networks, payment services and membership clubs.

PerSay is not alone in developing a voice biometric solution for iPhone. VoiceSafe, created by Voice Trust, is an application to securely store personal information on an iPhone. As well, Palo Alto, CA-based SecuriMobile offers a platform to manage large deployments of voice biometric-enabled mobile phones with support for BlackBerry, iPhone, Android smartphones.

The deployment as a milestone in a couple of respects. The mobile market holds huge potential for speaker authentication for customer care and electronic payments. In addition, Vodafone Turkey clearly sees subscriber authentication as a source of differentiation in a long-standing battle for share versus Turkcell. In that pursuit, SPEECHOUSE has successfully integrated speaker authentication into the IVR-based Vodafone Voice Portal Platform. The immediate result is the use of a spoken password for secure self service applications the mobile equivalent of password reset, GSM PUK (Personal Unlocking Key) reset.

We’ll be learning more about the details and timing of the complete in the coming days to include in an advisory, and in our long-standing set of company and deployment dossiers.