Bekker's Blog

Blog archive

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 hosting experience.

"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," McCue said.

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 at 11:57 AM


  • Red Petal Closeup Graphic

    Exchange Online Suffers Outage

    Microsoft's Exchange Online service, as well as other Microsoft 365 services, were hit with a a five-hour service incident that occurred on Wednesday Jan. 25.

  • Microsoft 365 and Power BI Services Interrupted Worldwide

    Some Microsoft customers experienced service delays or timeouts on Tuesday, which occurred worldwide.

  • Microsoft Makes Drastic Cuts to Mixed Reality and VR Teams

    Microsoft has eliminated some of its mixed reality and augmented reality development teams.

  • Microsoft Strengthens OpenAI Partnership with Further Investment

    Microsoft announced a "multibillion" dollar increase in funding to OpenAI, maker of the AI-based ChatGPT and image generating tool DALL-E.