Nuance Plays Its Cards Right With Swype

The technology segment has never been this exciting. With the launch of upgraded tablets and Apple's (NAS: AAPL) much-awaited iPhone -- despite the fact that users got the 4S version instead of the promised 5 -- the market has been thrown wide open for newer, better technologies.

One company that has jumped onto the bandwagon is Nuance Communications (NAS: NUAN) . Nuance, a speech recognition and digital imaging software company, last month acquired its competitor, mobile-tech firm Swype, for $102.5 million. Swype's patented technology, which makes typing on screens of mobile devices, tablets, televisions, and game consoles easier, is expected to boost Nuance's growth.

Profitable nuances
Nuance has been looking to expand aggressively in order to tap into the fast-moving smartphone and tablets market. In the past year, the company has acquired three more businesses, all of which were related to mobile device technologies. In addition to a business partnership with Apple -- iPhone 4S' Siri technology is based on its speech-recognition technology -- Nuance also supports Google's (NAS: GOOG) Android-based mobile devices. In fact, Nuance's acquisition has sparked speculation about Google's interest in buying out the company for its speech-recognition technology. According to one analyst, Swype had 15 manufacturing partners and 50 million devices shipped in the last 18 months. The acquisition means that Nuance gets Swype's current business partnerships and much more.

Swype's acquisition is seen as a big move for Nuance, as core speech-recognition technology allows the company to provide raw materials to big players. Potential customers for its latest technology include leading mobile device manufacturers such as Research In Motion (NAS: RIMM) , Nokia (NYS: NOK) , or Motorola Mobility (NYS: MMI) .

Tracing an aggressive growth path
Nuance is leaving no stone unturned in its effort to capture market share in the mobile devices and tablet segment. In line with its expansion plans, Nuance recently partnered with distributor Mindware for the promotion of its products in the Middle East. Investors have been happy with the moves. Since the iPhone 4S was launched, Nuance's stock has risen nearly 15%, recently hitting a 52-week high.

Foolish opinion
Speech technology in mobile and tablet devices promises to be the next big thing in the technology segment. With smart acquisitions, expansion strategies, the right product mix, and big partnerships, Nuance seems to be playing its cards right. In addition, its growth is tied to the progress made in the mobile devices and tablet market, which is only expected to move northward.

Vibhuti Shah does not own any shares in the companies mentioned above. The Motley Fool owns shares of Apple and Google.Motley Fool newsletter serviceshave recommended buying shares of Nuance Communications, Apple, and Google.Motley Fool newsletter serviceshave recommended creating a bull call spread position in Apple. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

At the time thisarticle was published

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.