On August 15, 2011 Nuance Communications announced an agreement to acquire Loquendo, a wholly-owned subsidiary of Telecom Italia, for €53m.

 

The acquisition will further solidify Nuance’s dominant market share in speech recognition and text-to-speech technologies and will give the vendor a stronger presence in Europe and Latin America. On the flipside, enterprises and partners will have fewer alternatives in the market when it comes to advanced speech recognition (ASR) and text-to-speech (TTS) engines, [which] will prevent any significant downward pricing pressure for speech recognition as competition will be limited.

 

Nuance’s acquisition of Loquendo comes as no surprise. Nuance has employed an aggressive acquisition strategy over the past several years, and Telecom Italia is shedding assets which it deems to be outside of its core competency as a carrier.

 

While Nuance will gain many assets (including an IVR platform and voice biometrics technology)…, there are two assets, above all else, which Ovum believes will directly benefit Nuance. These are a stronger presence in Latin America and Europe, and better ASR and TTS technologies for Latin based-languages (e.g. Spanish, Italian, and Portuguese).

 

For years, Nuance has had limited success in European countries (outside of the UK and Ireland) as it faced stiff competition from incumbents that had stronger proficiency in Latin languages. Loquendo and Telisma (now part of OnMobile) were either a cheaper/better alternative to Nuance or the only commercially viable ASR and TTS offering in that country. However, the markets for ASR and TTS in Spain, Italy, France, Portugal, and countries in LATAM are small when compared with opportunities in the English-speaking countries (US, Canada, UK, Ireland, Australia, and New Zealand) where Nuance has focused most of its resources in recent years.

 

With the acquisition of Loquendo, Nuance will expand its market presence in Latin America and Europe by inheriting a client base, local presence, channels, and a portfolio of ASR and TTS engines that Nuance did not previously support or support as well as that of Loquendo.