Microsoft has swooped in to buy up Massachusetts-based Nuance Communications Inc. The $20 billion deal is the second biggest by value in Microsoft's history, beaten only by Microsoft's acquisition of LinkedIn back in 2016. Nuance is best known for its speech recognition technology and has been in the HEXUS news several times with innovations in voice control of TVs, laptops, cars, and dictation software for PCs. However, I note that our last Nuance headlined report, back in 2014, concerned a possible buyout by Samsung.
In recent years computer/smart device voice recognition and dictation features have become quite commoditized and Nuance has adeptly refocuses its technological efforts to the healthcare / medical sector. Microsoft thinks Nuance will fit right in with its Microsoft Cloud for Healthcare, introduced in 2020.
Nuance tech is already used in 77 per cent of US hospitals with products such as Dragon Ambient eXperience, Dragon Medical One, and PowerScribe One for radiology reporting. Nicely for Microsoft, these technologies are built on Azure. Elsewhere in the healthcare industry Nuance tech is used in Electronic Health Records (EHRs) and other 'Telehealth' functions as its conversational AI is good at listening and responding accurately to folk on the phone.
The Microsoft news blog reports that Nuance Healthcare Cloud revenue experienced 37 per cent year-over-year growth in the last financial year. Thus, this acquisition should double Microsoft’s total addressable market (TAM) in the healthcare provider space to nearly $500 billion.
"Nuance provides the AI layer at the healthcare point of delivery and is a pioneer in the real-world application of enterprise AI," said Satya Nadella, CEO, Microsoft. "AI is technology’s most important priority, and healthcare is its most urgent application. Together, with our partner ecosystem, we will put advanced AI solutions into the hands of professionals everywhere."
Wedbush Securities analyst Dan Ives told the BBC that the deal was "a strategic no-brainer in our opinion for [Microsoft] and fits like a glove into its healthcare endeavours". Microsoft will be paying $56.00 per share for Nuance, which is a nice 23 per cent premium on Friday's closing price. The transaction is expected to close this year.