One step’s done and another’s begun as Nuance announces plans to acquire rival virtual assistant provider, Vlingo.

Last October, when Apple elevated Siri (beta) to a “showcase” position on the iPhone 4S, it accelerated speech processing’s momentum into the mainstream of the mobile user interface. It also attracted serious investment among the software, search, e-commerce and mobile giants as they battle for share of an inchoate Conversational Commerce marketscape, where the $5 billion annual market cited by Nuance’s Mike Thompson in this press release is just table stakes.

When it comes to aggregating and assimilating companies that have developed important elements of the mobile user interface, Nuance has been prolific. As a result, the conversational user interface that spans automated speech and text entry drives more than half of the $975 million in revenue Nuance generated in first 9 months of its current fiscal year. Its “Mobile and Consumer” division accounted for over $270 million, while its “Enterprise” group, whose growth is increasingly driven by mobile and cloud-based services, accounted for $212 million.

While duking it out both in and out of court, both Vlingo and Nuance introduced impressive mobile assistants. As we chronicled last February, Vlingo’s roadmap for its virtual assistant includes voice dialing; originating and receiving email, text messages or tweets; and taking control of search and navigation are all done with great accuracy and ease-of-use. Its path to growth involved geographic expansion and the addition of new languages and features. However, from out point of view, the real differentiator has been truly hands-free operation, as demonstrated by Vlingo’s T.J. Leonard in this video.

Meanwhile, Nuance has proceeded to build momentum around its Mobile Advantage services and the “Prodigy” development initiative. Dragon Dictate has an growing corpus of utterances and supports multiple languages. Dragon Go! demonstrates the power of adding natural language understanding while integrating a limited number of destination sites on the Web to support e-commerce and better outcomes for general search. Nuance’s challenge now will be to integrate the best of Vlingo into the Prodigy project. Right now, supporting both brands and services will be the least disruptive path for current Vlingo users.

Regarding Nuance’s acquisition of Vlingo, antitrust should not be much of a concern. Efforts to build the conversational mobile user interface involve direct competition among Google, Microsoft, Apple and Amazon.com, today and will add every major mobile device maker, mobile carrier and “cloud” service provider in the very near term. Collectively, these companies and a number of smaller, earlier stage technology firms will continue to compete and constantly improve the overall user experience as spoken input and command of the features and functions of phones, tablets, TVs and autos becomes routine (when appropriate).

Categories: Articles

Tags: speech processing, Nuance, Vlingo, Mergers and Acquisitions, Mobile Apps