Apple Inspired This Acquisition
As the saying goes: "If you can't beat 'em, join 'em."
Voice-recognition specialists Nuance Communications (NAS: NUAN) and Vlingo have been dueling for years. Once upon a time, Vlingo CEO Dave Grannan said: "Competing with Nuance is like having a venereal disease that's in remission. We crush them whenever we go head-to-head with them. But just when you're thinking life is great -- boom, there's a sore on your lip."
Compete no longer, as Nuance has now agreed to acquire Vlingo. It follows Nuance CEO Paul Ricci's long-standing strategy of trying to beat down rivals with lawsuits and competition and then graciously offering to acquire them on the cheap. The company has a track record of suing companies over patent infringement and then turning around and buying them.
Nuance had previously tried picking up Vlingo in 2009. Ricci had called to proposition Grannan and Vlingo's co-founders, Mike Phillips and John Nguyen, with a $5 million offer to each to persuade Vlingo's board to sell the company to Ricci. The alternative was for the trio to bail and defect to Nuance, and they would still get the $5 million and another $5 million if they stayed for two years. Vlingo's board was "flabbergasted" by the audacious offer.
Today's announcement is directly attributed to the successful introduction of Apple's (NAS: AAPL) Siri, along with Nuance's own popular Dragon Go! dictation app. Vlingo also makes a virtual assistant apps for iOS, Google (NAS: GOOG) Android, and Research In Motion (NAS: RIMM) BlackBerrys, among other platforms, while Nuance powers Siri's back-end voice-recognition engine.
Vlingo even boasts that its app tops Siri because of its support of third-party app controls. That might change if Apple ends up opening up Siri to developers, though.
Nuance has always been peeved that Big G gives away its own speech-recognition technology built into Android, while Nuance sells its competing service. The company sees the booming demand for voice-enabled virtual assistants as a $5 billion market opportunity among all the different platforms. Even Amazon.com (NAS: AMZN) might be getting in on voice recognition.
Financial terms weren't disclosed, but it reinforces Nuance's acquisition habit. Vlingo is Nuance's sixth acquisition this year. Fortunately, its relatively high intangible-assets ratio has been mostly stable -- 75.1% last quarter.
Investors like the news, with shares up 6% today. Keep it up, Nuance.
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At the time this article was published Fool contributorEvan Niuowns shares of Apple and Amazon.com, but he holds no other position in any company mentioned. Check out hisholdings and a short bio. The Motley Fool owns shares of Apple and Google.Motley Fool newsletter serviceshave recommended buying shares of Nuance Communications, Amazon.com, Google, and Apple and creating a bull call spread position in Apple. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.