Nuance Looks to Go Mobile

In an effort to expand into the mobile communications market, voice recognition software maker Nuance Communications said today it will acquire privately held BeVocal, which hosts large enterprises' voice-automated customer-service software. By merging its software portfolio with BeVocal's, Nuance can offer mobile device users the same hosted voice-automated services their landline counterparts enjoy. If you've ever been offered the choice to press or say three during an attempt to buy tickets over the phone, you're likely dealing one of BeVocal's products; voice automation software that lets you verbally check your account balance, make airline reservations, update bank information, and the like, over an automated phone system. BeVocal brings to the deal such customers as Cingular, Liberty Wireless, Metro PCS, and Virgin Mobile, along with a host of non-wireless businesses. Total consideration for the sale is around $140 million; Nuance expects the acquisition to add between $21 million and $23 million in revenue in fiscal year 2007 and between $65 million and $70 million in fiscal year 2008. BeVocal offers on-demand mobile customer care software specifically tailored to mobile carriers' needs, says Mikael Berner, the company's president and chief executive officer. It's this mobile voice-automated hosting capability that Nuance sees as a way to grow revenue. Paul Ricci, Nuance's chairman and chief executive officer, adds, "The growth of the mobile industry, coupled with the value of speech as a means of accessing information and services in this environment, presents a great opportunity to expand the presence of Nuance solutions in the mobile market." But Sheila McGee-Smith, president and principal analyst at McGee-Smith Analytics, says the acquisition is a sharp departure from Nuance's usual growth method, which is to acquire makers of speed recognition technology. Nor does she see the sale as a move particularly geared toward expansion into the mobile communications realm, because many BeVocal customers like Qwest, MTV, and the Minnesota Department of Transportation are firmly staked to the ground. Though Nuance's horizontal move could backfire, the relatively sound purchase brings with it an ongoing revenue stream, as the voice-automated hosting company continually brings in licensing fees, McGee-Smith said. "This gets Nuance into not only supplying the technology, but also delivering a service directly to companies," she says. "It looks like they want to expand horizontally, but that's not a slam dunk." Related articles: Raging Against the Machine
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