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Insight & Analysis

3 Reasons Why Microsoft Just Acquired AI Firm Nuance for $19.7 Billion

Microsoft has acquired AI speech tech company Nuance for $19.7 billion, making it the second-largest acquisition by the tech giant since it purchased Linkedin in 2016.

Over the years, Nuance has proven itself to be an AI pioneer with the launch of its Dragon Software which uses deep learning to transcribe speech, adapting to the user’s voice over time to increase accuracy. The software powers many services including Apple’s Siri.

According to The Verge,  Microsoft will pay $56 per share for Nuance, including the firm’s net debt. Here are some of the reasons why Microsoft has made this strategic move.

1. To Gain a Share of the Health Care Market

Nuance is known to sell a lot of products in the health sector and Microsoft has been attempting to break into this industry by offering more cloud services to hospitals and doctors. For the past two years, it has been collaborating with Nuance in developing an AI software that helps clinicians capture patient conversations and incorporate them into electronic health records, as well as incorporating Nuance’s products into its Teams chat app for telehealth appointments.

2. Expand its Enterprise Software and Cloud Computing Business

Microsoft’s enterprise software sales and cloud computing account for nearly two-thirds of its revenue, so upgrading its transcription services for cases like these make perfect sense. Nuance’s technology may be integrated into existing applications, such as Teams, or sold separately as part of Microsoft’s Azure cloud market.

3. To Take the Lead in Digital Transcription

Digital transcription continues to improve in accuracy, offering solutions in a variety of contexts; from medical appointments to board meetings and university lectures. Microsoft wants to be the major player that decides this narrative.

New opportunities have arisen as a result of the increase in remote work. With so many video meetings, it’s easier to provide customers with transcriptions through software that’s built right into the call. Zoom, for example, integrates with third-party providers like Otter to provide automated transcription. This makes the digital transcription industry even more lucrative.

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