Nuance buys VoiceSignal, eyes mobile voice control

$293 million deal would give the voice-recognition vendor VoiceSignal's control software for mobile devices, allowing Nuance to further expand into the mobile market

Nuance Communications has agreed to buy VoiceSignal Technologies for about $293 million, hoping to help users control mobile devices by voice.

Nuance is a major vendor of voice-recognition software for PCs and call centers and has delved into the mobile market with Nuance Voice Control, which lets users retrieve information via mobile phone by asking for it verbally. VoiceSignal makes search, messaging, and device control software for a range of mobile devices.

Voice recognition is crossing over from futuristic plaything to practical tool as software gets better at understanding what people are saying without having to be trained for a particular speaker's voice. Faster processors are also helping. It's especially suited to mobile devices because of small screens, limited keypads, and the need to walk or drive while using them.

With the addition of VoiceSignal, Nuance expects to reach more than 1 billion customers in the next three years and expand its mobile revenue to $125 million, according to a company statement.

Nuance would pay $15.28 per share for 5.8 million shares of VoiceSignal plus $204 million in cash. It expects the deal to close by year's end.

The two companies' technologies go beyond simply dialing a number by saying a name. For example, VoiceSignal's VoiceMode software lets you dictate a text message, and its VSpeak can read out one you just received. Its VSearch software lets users find sites by asking for them and then drilling down to a map with directions. The tools can also be used in navigation systems and cars. Nuance already counts Toyota and Ford, as well as Sprint Nextel and Rogers Communications, among its customers.

VoiceSignal has a strong foothold in the market with its software built into handsets from Nokia, Motorola, Samsung, Research in Motion, and other vendors.

"Buying VoiceSignal catapults them into a much stronger mobile position," said analyst Avi Greengart of Current Analysis.

Voice control will become more important as phones get sleeker, Greengart predicted. Apple's eagerly awaited iPhone, for example, has virtually no buttons, though it can bring up a QWERTY touchscreen. But consumers have to be able to find and use the tools easily, such as by hitting a specific button to start up voice control, he added. And once services such as search start listening for commands, they'll need to have the right stuff on the back end, too, he added.

"If you could talk to Google, you wouldn't necessarily get useful information out of it," Greengart said.

This story was updated on May 15, 2007

Copyright © 2007 IDG Communications, Inc.

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