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Nuance's approach as an app developer, third-party SDK maker, and supplier to OEMs is odd but effective

Nuance Communications (NUAN) is a bit of an enigma.  While its brand isn't yet a household name, its quietly squirreled its voice recognition software into hundreds of millions of devices, which include everything from Siri on Apple, Inc.'s (AAPL) iPhone 4s to Ford Motor Company's (FMyFord Touch.  

I. The Double Life of Nuance

As the world of personal electronics finally approaches the fantasy of naturally talking to your devices and having them respond, Nuance is among just a handful of voice recognition giants that have the capability to unleash science fiction-worthy advanced voice analysis solutions.

We recently spoke with Mike Thompson, SVP & General Manager of Nuance Communications Mobile Division about Siri's expansion in the cell phone market with Nuance apps like Dragon Go [iTunes] and Dragon Dictation [1; iTunes][2; Android Market].

Mr. Thompson wasn't above casting a bit of mystery.  In our phone conversation he spoke glowingly of how his company's valuable relationship Apple, Inc. (AAPL), which allowed Siri to expand on its fledgling mobile efforts over the past couple years.

But then in the email he became a bit cagey about elaborating further, commenting, "With respect to Apple, they license Nuance’s speech technology for use in some of its products. We can’t provide any specifics beyond that."

Of course such private business arrangements are common fare in the corporate world, but the two aspects of the conversation were an interesting microcosm of Nuance itself, a company that increasingly flirts with the spotlight, yet whose core business is still driven heavily by quiet rebranding of its product.

The company has achieved "tens of millions" of downloads of the Dragon smartphone apps, available on a variety of platforms, so it's been a resounding success in its own right as a third-party app developer.

Dragon Go
Dragon Go is an iTunes App Store best-seller, offering and is similar to Siri in some regards.
[Image Source: iTunes/Apple]

While OS makers like Apple or Google Inc. (GOOG) make scores of first-party applications, it is much more unusual to see a third-party whose primary source of revenue is rebranding/licensing also flirt with its own first-hand app offerings.  Nuance is a bit of an oddity, a company that lives one life as a quiet third-party licenser, yet which has an alter ego as an app developer.  

II. Success as a Third-party Licenser

Yet Mr. Thompson is most enthusiastic about promoting his company's tiered developer program, commenting, "Developers have a broad range of needs, so flexibility is key.  We recently rolled out a three-tiered program in NDEV Mobile – Silver, Gold and Emerald – that gives developers varying levels of support and customization based on their needs.  Details on that program can be found here."
 
Apps are tiered based on downloads, an approach that allows entry level developers to get a start using Nuance's voice recognition for free in their apps, eventually paying royalties as they see increased downloads/revenue from their polished apps.  

The program has a lot of eager developers.  Mr. Thompson describes, "We currently have 6,000 mobile app developers participating in our NDEV Mobile program with the Dragon Mobile SDK.  These developers range from smaller developer shops, to enterprise organizations like Amazon, Meredith, OnStar and many others."

If you consider its joint roles as a third-party SDK developer and app developer, alone, it's rather unique.  But Nuance has a third pillar of mobile business -- selling UI elements to OS makers and device makers which allowing them to use voice control at an OS/OS Skin level.

"OEMs and carriers rely on Nuance's broad voice and touch portfolio to differentiate and add value in a very crowded Android market where you’re all developing on the same base platform.   Our Android solutions are flexible and customizable, enabling OEMs and carriers to innovate in ways that enable them to compete while driving continue brand strength and loyalty," explains Mr. Thompson, "That said, our voice and predictive input portfolio ships on millions of smartphones from every leading smartphone manufacturer."

T-Mobile Genius Button
Nuance's product quiet pops up in surprising places like the T-Mobile Genius button for Android phones.

During our phone interview, we talked a little bit about Windows Phone 7.  Nuance seems relatively excited about this platform.  Nuance confirmed to us that it had a relationship with Finland's Nokia Oyj. (HEL:NOK1V), the world's third largest phone maker and -- since February -- the top backer of Windows Phone.  While it couldn't offer any details, don't be surprised if Nuance voice controls pop up inside the upcoming Mango handsets from Nokia.

III. The Best is Yet to Come

The mobile executive tells us that he feels the best is yet to come when it comes to voice input in the mobile sector.  He characterizes the current state of the market as "in the fourth inning".  

He elaborates, "Innovations like Dragon Go! and Siri are scratching the surface of what’s possible with the combination of voice and language understanding.  You're going to continue to see sophisticated integrations of these technologies on devices, with an even farther reach into what you can access and experience with respect to mobile content, your social graph, and much more.  It’s going to be very exciting.   And it's not just phones – these experiences will manifest in cars and in the digital living room."

While Nuance may seem like an odd collection of disjoint business efforts, if you talk to them long enough you start to see the merits of its approach.  Nuance branded third party app development gives the company a test platform for its mobile technologies and brand visibility.  SDK development and licensing pulls in application revenue.  And OEM/carrier OS/OS skin level licensing allows Nuance to move towards its goal of being installed on every single smartphone -- from Android to Apple, and everything in between. 


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This article is over a month old, voting and posting comments is disabled

Genius Button
By Spuke on 12/1/2011 6:24:46 PM , Rating: 5
Apple's next lawsuit.




RE: Genius Button
By priusone on 12/3/2011 12:22:12 AM , Rating: 3
No! Quiet! Tony might read that and give Apple the heads up!


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