Microsoft Nabs Nuance for $19.7B to Bolster Cloud for Healthcare | Wall Avenue

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By John P. Mello Jr.

April 13, 2021, 3:00 p.m. PT

Microsoft announced Monday that it is buying Nuance Communications, a natural language computer processing company, worth $ 19.7 billion.

As part of the cash transaction, Microsoft will purchase all of Nuance’s outstanding shares for $ 56 per share, a 23 percent premium over its share price at market close last Friday. The deal, which is Microsoft’s largest since it acquired LinkedIn in 2016 for more than $ 26 billion, is expected to close by the end of the calendar year.

Mark Benjamin will remain CEO of Nuance and Scott Guthrie, executive vice president of cloud and artificial intelligence at Microsoft, will report, the company said in a statement in Redmond, Wash.

“Nuance’s popular healthcare products and services provide Microsoft with immediate revenue streams and relationships with existing Nuance customers,” said Charles King, principal analyst at Pund-IT, a technology consultancy based in Hayward, California.

“More importantly,” he told the E-Commerce Times, “Nuance will open the door for Microsoft to sell and sell other healthcare services and solutions.”

Nuance solutions are currently used by more than 55 percent of physicians, 75 percent of radiologists, and 77 percent of hospitals in the United States, according to Microsoft.

In its last fiscal year, which ended in September, Nuance Healthcare saw sales grow 37 percent year over year.

The acquisition will double Microsoft’s total addressable healthcare market to nearly $ 500 billion, the company added.

Play catchup

“Nuance provides the AI ​​layer at the point of delivery in healthcare and is a pioneer in the real-world application of enterprise AI,” said Satya Nadella, CEO of Microsoft, in a statement.

“AI is the number one priority of technology and healthcare is its most pressing application,” he continued. “Together with our partner ecosystem, we will bring advanced AI solutions to professionals around the world to make better decisions and create more meaningful connections as we accelerate the growth of Microsoft Cloud for Healthcare and Nuance.”

The acquisition will help Microsoft catch up with its cloud competitors, said Jack E. Gold, founder and principal analyst at J. Gold Associates, an IT consulting firm in Northborough, Massachusetts.

“Microsoft is way behind AWS and Google when it comes to natural language processing in the cloud. Microsoft came third,” he told the E-Commerce Times.

“Nuance gives Microsoft the ability to attack the company, which is very important for Azure, but it also gives them instant credibility as it gives them a real natural language processing system,” he said.

“Instead of developing everything in-house,” he continued, “they needed something to get them off to a quick start, and Nuance gives them that.”

Look beyond healthcare

The acquisition of Nuance gives Microsoft a powerful presence in the healthcare sector, but the acquisition of Nuance will bring a lot more to the Redmond crew going forward.

“AI spending will reach $ 110.7 billion by 2024,” noted Ritu Jyoti, program vice president for global AI and automation research practice at IDC.

“Banking, retail, manufacturing and healthcare will account for nearly half of global spending,” he told the E-Commerce Times. “While Microsoft may initially focus on healthcare solutions, the longer-term focus will be much broader.”

He explained that beyond healthcare, Nuance brings AI expertise and loyalty solutions for interactive voice response (IVR), virtual assistants, and digital and biometric solutions to businesses around the world in all industries.

“This expertise will go with the breadth and depth of the Microsoft cloud,” he said, “including Azure, Teams and Dynamics 365 to deliver next-generation customer loyalty and security solutions.”

Nuance will also benefit from being under Microsoft’s wing.

“It is expanding the markets for Nuance dramatically,” said Gold. “It will help get it out of its niche. With Azure, it can be in almost any room.”

King stated that while Nuance has had good results since shifting its focus to health solutions, it appears to have hit the cap on business and revenue growth.

“Being part of a much bigger and better-funded company like Microsoft should do it [provide] Nuance and its employees have a better future, “he said.

Key Healthcare Tech

The acquisition of Nuance shows not only the importance of healthcare to Microsoft, but also the importance of speech recognition technology to the future of healthcare, said Paddy Padmanabhan, founder and CEO of Damo Consulting, a growth strategy and digital transformation consultancy in Villa Park, Illinois works with healthcare companies and global technology companies.

“Voice-activated health care is still at the very early stages of its potential impact. There is a huge market waiting to be opened,” he said in a statement.

“Conversational AI tools like Nuance’s have started to make a huge difference in clinical environment computing, especially when it comes to transcribing doctor-patient encounters,” he noted.

“The next phase of growth for the voice will be clinical decision support, made possible through greater integration with EHR systems. This will come in the form of AI-enabled features that improve the quality of the patient experience and outcomes,” added Padmanabhan .

He said that as digital transformation accelerates, the use of new technologies such as voice will drive care in the hospital and at home.

“Amazon has already taken significant steps in home care, including its Alexa voice services as a key component,” he noted. “Microsoft’s Cortana offering has not caught on as much in healthcare as Alexa.”

“Microsoft had to take a step to meet the competition directly and acquiring Nuance is possibly the best bet there can be now,” he continued.

“The field has been essentially limited to two players in the voice-activated healthcare field,” he added.

Next gen interface

The acquisition of Nuance also shows the role of conversational AI in Microsoft’s roadmap for the future.

Lian Jye Su, principal analyst for artificial intelligence and machine learning at ABI Research, said in a statement that Microsoft attempted to build its own conversational AI through both in-house development with Cortana and through acquisition through the purchase of Semantic Machines in 2018 to strengthen.

“All of this has not yet enabled Microsoft to replicate the success of Amazon, Google and Apple in the consumer sector and IBM in the enterprise sector,” he said.

Su added that Microsoft is also feeling the threat posed by the AI ​​conversation skills of AI players in China like Alibaba, Baidu, iFlyTek, Mobvoi, Zhuiyi and Unisound.

“The acquisition of Nuance Communications will enhance Microsoft’s capabilities and enable Microsoft to develop both consumer and business-centric conversational AI solutions,” he said.

He added that Microsoft’s move also recognizes the importance of conversational AI and natural language processing capabilities to the future of AI.

“This announcement confirms the efforts of many hardware and software startups in natural language processing,” he said. “As the market matures, voice control and control can replace touch control in many use cases and become the primary method of interaction for the next generation user interface.”

John P. Mello Jr. has been a reporter on the ECT News Network since 2003. His focus areas are cybersecurity, IT topics, data protection, e-commerce, social media, artificial intelligence, big data and consumer electronics. He has written and edited for numerous publications, including the Boston Business Journal, the Boston Phoenix, Megapixel.Net, and Government Security News. Email to John.

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