The speculation is over. Although Nuance has not confirmed the terms of the deal, Loquendo’s parent company, Telecom Italia, issued news over the weekend that it will sell the speech processing specialist to Nuance for an estimated 53 million Euros (about $75.5 million).

The companies are on track to finalize the deal by the end of September and have already started contacting Loquendo’s customers and go-to-market partners regarding Nuance’s roadmap for combining the companies core product lines. Dan Faulkner, Nuance’s Vice President of Product Management and Marketing, sees a very good fit between Nuance and Loquendo. For one thing, the Italian company has real strengths in markets where Romance languages are spoken, meaning Western Europe and Latin America.

Loquendo takes great pride in its investment in R&D, with an emphasis on product development. It relies on go-to-market partners to bring complete solutions to enterprise customers. This approach will help avoid channel conflict as the combined company defines both its product portfolio and go-to-market strategies.

As Faulkner puts it, the purpose of the acquisition is “to amp up the adoption of speech on a global basis” by adding high-quality ASR, TTS and voice biometrics assets into Nuance’s product portfolio. For skeptics, who see the elimination of competitors as lost opportunity to promote price competition, Faulkner points out that there are at least three formidable competitors on a global basis making significant investment in “broad solutions” that include speech processing, business process automation and self-service.

As I see it, the acquisition marks a watershed for speech applications, self-service, and conversational commerce in general. It has been a while since enterprise customers bought speech-enabled IVRs or added speech self-service to their offerings based on the accuracy of the recognizer. Decisionmaking has moved to how quickly a system integrator or other solution provider can bring up a new capabilities, features or functions that promote a better user experience. Nuance and SpeechWorks were strong rivals (until the merger). Then IBM or Loquendo or Lumenvox or Prophecy would appear as the “strong seconds” in the context of competitive bids and RFPs. Going forward, that role will be played by other speech technology providers (like Lumenvox, Voxeo/Prophecy or regional specialists).

At SpeechTEK 2011 in New York last week, there was a lot of talk of divorcing speech processing (ASR and TTS) from interactive voice response (IVR) and marrying it more closely to the computer resources that promote natural language understanding (NLU), speech analytics, customer relationship management, call routing and other business processes that are key to quick resolution of a caller’s issues. Speed to market and rapid response to customer queries are the first-order concern of today’s customer care professionals

If you “zoom out” from the enterprise server close up (and even of you keep that focus, but add speech-enabling Web services, rather than IVR apps) you see strong competitors to Nuance/IBM/Loquendo’s product portfolio. Real competition (and source of price/performance pressure) will come from Google, Microsoft and a few others. And if the battle is for market share on a regional level, there are strong, niche-y competitors with a variety of languges and dialects for ASR, TTS and embedded products.

Categories: Articles

Tags: speech processing, Voice biometrics, Nuance, Loquendo, Mergers and Acquisitions