Microsoft Makes $20 Billion Bet With Artificial Intelligence Firm

Microsoft has announced its plans for a $20 billion purchase of the artificial intelligence firm that helped Apple develop its Siri speech recognition functions.

Microsoft has published details of a $20 billion acquisition of Nuance Communications, which mark the second-largest purchase in the company’s history, following its acquisition of LinkedIn back in 2016 for $26 billion. 

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The company in question, Nuance Communications has been one of the industry’s leaders for deep learning software, known as Dragon, that translates speech recognition into digital functions, and can learn over time.

One of the most famous licensing agreements of Nuance’s Dragon software is Apple’s digital assistant known as Siri.  

Microsoft has agreed to pay Nuance $56 per share, which represents a 23% increase of the company’s last share price close, with the deal including Nuance’s existing net debt.  

Microsoft’s CEO, Satya Nadella has issued a statement saying that “Nuance provides the AI layer at the healthcare point of delivery and is a pioneer of the real-world application of enterprise AI.” 

“AI is technology’s most important priority, and healthcare is its most urgent application,” Microsoft’s CEO said. 

According to Microsoft, more than 80% of hospitals in the U.S. are existing customers of Nuance Communications, meaning that Microsoft’s reach into the healthcare industry is set to grow dramatically. 

“Together, with our partner ecosystem, we will put advanced AI solutions into the hands of professionals everywhere to drive better decision-making and create more meaningful connections, as we accelerate growth of Microsoft Cloud in Healthcare and Nuance.” 

Microsoft Makes $20 Billion Bet With Artificial Intelligence Firm

Microsoft has said in a blog post that “by augmenting the Microsoft Cloud for Healthcare with Nuance’s solutions, as well as the benefit of Nuance’s expertise and relationships with EHR systems providers, Microsoft will be better able to empower healthcare providers through the power of ambient clinical intelligence and other Microsoft cloud services.” 

Dan Ives of Wedbush Securities has told the BBC that the deal represents “a strategic no brainer in our opinion for Microsoft and fits like a glove into its healthcare endeavours at a time in which hospitals and doctors are embracing next-generation AI capabilities from thought leaders such as Nuance.” 

“Clearly, Microsoft is on the offensive around M&A with the company in a clear position of strength to capitalise on its entrenched position in the cloud going forward… [it’s] another feather in its cap,” Ives said. 

Authors at The Verge write that “digital transcription has become more reliable in a range of settings, from medical consultations to board meetings and university lectures.”

That report continues to state that “for Microsoft, which makes roughly two-thirds of its revenue from enterprise software sales and cloud computing, improving its transcription services for scenarios like these makes complete sense. The company could integrate Nuance’s technology into its existing software, like Teams, or offer it independently as part of its Azure cloud business.”

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