We'll Tell You About Microsoft's New Acquisition
In announcing on Wednesday that it will acquire voice services provider Tellme
Networks Inc., Microsoft picked up another puzzle piece that could fill holes
on several puzzle boards -- unified collaboration, speech-recognition solutions,
mobile applications, even software-plus-services, Microsoft's take on software-as-a-service
(SaaS). The question is, which of those puzzles will get this particular piece?
There was notable confusion on a media and analyst call to announce the purchase
of the privately held Tellme Networks, which is based in Mountain View, Calif.
Not least about the purchase price, which is rumored at $800 million, but which
neither Microsoft nor Tellme executives would comment on.
While financial analysts seemed generally supportive of the deal, several of
the callers did wonder exactly how Microsoft plans to use Tellme's capabilities,
which overlap with speech recognition research and technologies that Microsoft
has been working on for a decade.
Microsoft Business Division President Jeff Raikes said Microsoft is buying Tellme's
"Why Tellme? Because Tellme has the best hosted speech platform for services
today. [It's] used by 40 million people per month," Raikes said. "Their
investments in speech recognition and voice will enhance our own technologies."
Tellme co-founder and CEO Mike McCue added that the company's volume of calls
-- Tellme's customers include American Airlines and the Domino's Pizza chain
-- is as much a driver of platform maturity as any laboratory work.
"Last year alone, we did almost 10 billion speech utterances. What that
has allowed us to do is to make the platform smarter and better and more capable,"
There are two areas right off the bat where the announcements could benefit
Microsoft partners. If Microsoft integrates the Tellme hosted capabilities quickly
into its unified communications platform and its speech platforms, those platforms
will be richer for solution provider and ISV partners to start building on.
There are challenges in both areas. Microsoft has just released Exchange Server
2007 with its unified collaboration technology set, so some technology will
need to be elbowed out or enhanced. Same goes on the speech platform side, where
Office Communications Server is pretty well-baked.
Other areas where the technology could fit include mobile services and search,
which would be primarily an opportunity for Microsoft to compete with Google
for the broad search market. Raikes also positioned the acquisition as an important
step in Microsoft's software-plus-services effort. However, the company is calling
that a longer-term opportunity.
All of these areas make sense. But even in a company with Microsoft's size and
available cash, priorities have to be set. You can't do everything all at once,
at least not well. Stay tuned for more details on which of these opportunities
will get priority.
Posted by Scott Bekker on March 16, 2007