Home › Blogs › JohnH's commentaries

What's a Nuance now?

Fri, 02/23/2007 - 19:14 — JohnH

Does the acquisition of BeVocal strengthen or dilute the Nuance brand? It all comes down to this: is speech a solution or an enabling technology?

The technical answer doesn't matter; all that counts is how buyers perceive it. From the Nuance perspective, the objective seems pretty clear to me. When you hear "speech" they want you to think "Nuance." Nuance = speech recognition, speech synthesis, speech verification, embedded speech, dictated speech, speech applications, speech platforms, and now hosted speech. They can deliver speech to you in any shape, color, or language. Like Ford at River Rouge, (look it up) Nuance has become quite the vertically integrated speech provider. There's a difference, though. Ford was a car company, and they weren't competing in the iron ore, smelting services, steel, glass, and auto parts markets. Ford just wanted to sell cars- the complete solution. Could you imagine GM buying Ford Steel? Competition is even tougher today than when Henry was selling just cars. Imagine trying to convince a customer you've got the best speech engines, the best IVR platform, the best multimodal platform, the best application development, AND the best hosting services. That would be hard for a customer to swallow, given that each of those categories has vendors who have a laser focus on being the best of breed in the category. You can't be a dessert topping AND a floor wax. BeVocal could argue its case for being a great hosting company, but if they get assimilated under the Nuance brand their message will get diluted.

Simple rule of marketing: a brand can stand for only one thing. This only works if Nuance is perceived as the best "speech" entrant in each category. Conceptually that works, but if customers believe speech is an enabling technology instead of a solution, it will fall flat. Customers will buy the best platform, not the best speech platform; the best hosting service, not the best speech hosting. If they want great speech, they can still get it from a great hosting company that offers Nuance speech engines. What's a Nuance? It will be hard for customers to think of Nuance as a speech platform hosting services application technology engine mobile search dictation company. Maybe just a speech solution company, if they happen to be in the market for speech solutions and don't mind sub-optimizing their non-speech solutions.

This is also a curious move because it seems to me the world is moving away from vertically integrated solution stacks and towards standards-based best-of-breed solutions. We see a move toward specialists at each layer with integrators who provide solutions based on those best-of-breed specialists. Nuance looks more like Ford, except that Nuance is selling the iron ore, the smelting services, the steel, and the cars. Maybe Nuance really just wants to sell cars...er...complete speech solutions. If that's the case, I suppose it's not unreasonable to think at some point we'll hear "Sorry, from now on you can only get our speech engine if it's integrated to one of our platforms."

Average rating
 
 
 
 
 
(2 votes)

Site Tags:

Comments

Tue, 02/27/2007 - 20:10 — Dan Miller

The Brand is Nuance Mobile

John: I can agree with most of what you're saying. But I think that Nuance management is making rational decisions by packaging technologies to fit high-growth markets. The acquisition of BeVocal makes sense in the context of taking on Tellme and others in the battle for speech-enabled mobile search (SEMS), starting with enhanced DA. It acknowledges the obvious that, like iron ore, smelting, steel, glass and all that, speech processing resources and attendant application frameworks are commodities. They don't want to sell commodities. They want to sell premium solutions, specifically in the form of services for mobile subscribers. It's been thus for a couple of years now under the brand "Nuance Mobile"
Sat, 03/03/2007 - 22:11 — Avery

It's not about the brand...

It's understood that Nuance wants to move deeper into higher value services - but my concern isn't about what Nuance wants to become, but how it chooses to get there (and who is cast aside in the process).

To enter the SEMS market, Nuance could have worked on building applications, modules and technologies that could be sold into its carrier channels to help become the core of speech enabled search (and speech enabled mobile search) industry wide. Nuance could have easily positioned itself as the "Intel Inside" of the SEMS world.

Instead, Nuance decided to purchase a service provider under the guise of acquiring a showcase for its technologies. However, the fact remains that this move was hostile towards the service provider community and smacks reminiscent of the initial release of NVP.

I'm not the only person who views this move as arrogant. The buzz around SpeechTek (at least those who I talked to) was was a combination of concern and outrage, combined with a sense of helplessness. Service providers and platform vendors took a risk promoting the Nuance and ScanSoft (SpeechWorks) brands over the past five years. But as long as there was competition between the two firms, the risk was mitigated as the end customers and service providers would ultimately have a choice.

One merger later and the choice was gone. The market became over 90% "New Nuance" with a smattering of IBM, Telisma and Loquendo. At this point, the only thing that kept the balance between Nuance and its channel partners was a common understanding (and promise) that Nuance wouldn't move back into the platform market.

Acquiring BeVocal is a DIRECT entrance back into the platform market - as BeVocal is a platform as well as a service provider. Let's call it as it is - BeVocal is Network NVP, regardless of how it is branded.

I personally would advise any carrier or service provider to take notice of Nuance's recent moves. Caveat Emptor!

Mon, 03/05/2007 - 03:00 — daniel

Nuance is Planting a Flag in a Changing Communications Market

I agree with John in that Nuance is positioning itself as the 'one-stop shop' for speech recognition technology and applications across networks, devices and PCs. However, I do not think that it is actively going to promote its NVP platform or a hybrid version of the NVP +BeVocal platform. Rather the vendor will become even more aggressive in its professional services / applications strategies. So application partners should proceed with caution. Nuance still lives in a symbiotic relationship with its platform partners and I find it very hard to believe that it has enough brand equity in the enterprise space to compete against partners such as Genesys, Avaya, Nortel, Intervoice, Cisco and Envox.

According to Nuance, the vendor acquired BeVocal to complement its strategy in the wireless carrier space, and in doing so, Nuance has firmly planted a flag in the communications market. This is important because the communications market is one of the early adopters and the largest market for speech recognition solutions. I don't see this acquisition as a way for Nuance to enter the hosted services market but rather it reflects something larger from a strategic standpoint. The $140m (5x-7x annual revs for BeVocal) clearly shows that Nuance was ready to pay a premium to pursue its interests in the communications market not just the wireless carrier market.

If you take a step back and look at this from a higher elevation the communications market is changing with each passing year. For example, cable and traditional telco providers now compete to provide phone, internet, tv - soon Google and Yahoo will enter this space more aggressively. What does all this mean? While Nuance has communicated its intent to focus on the wireless carrier space and mobility Nuance's strategy may shift as the business models for the wireless carriers shift. Remember in the US market saturation points for mobile phones have been reached. More focus will be placed on content services - this is where Nuance is betting on mobile search. From another perspective, wireless carriers are making more aggressive plays into the enterprise market. Once technologies such as unified communications and mobile fixed convergence begin gaining more market traction the dividing lines between service providers and enterprises will disappear.

Mon, 03/05/2007 - 05:11 — Avery

But at what cost?

Again, I have no specific issue or concern with Nuance wanting to enter the mobile market. Worldwide, this is a high growth segment. In fact, a small group of us were talking about how it makes sense that Nuance must have its corporate eye on the voice portal business in India - one of the few territories that successfully has monetized voice portal services.

Now, let's look at a worldwide strategy. Had Nuance gone directly into the Indian market, partnering with Tata or one of the other possible entrants in a greenfield territory to start propping up a managed service provider, I don't think there would have been any concern. It's a market where direct sales has underperformed and setting up hosted services would have made sense.

Similarly, going into Europe with a hosted pan-European platform based on IMS which could support all of the wireless carriers would have also made sense. Due to fragmentation in the market there, driving deep into mobile services would make sense.

However, in the US, all of the major wireless carriers are already partnered with existing Nuance partners (Volt, TellMe, Comverse, etc.). Taking on BeVocal isn't as innocuous as many are making it appear. Making a stand in the US market, where Nuance already controls the mobile search market through its partners, and choosing a go-around path instead of supporting the partners that brought Nuance its initial positive positioning still is a concern.

Again, releasing a new suite of services for wireless service providers in the US? Brilliant. Building an Indian or European managed service platform? Also a good plan. But purchasing a US platform where segment growth will be at its partners' expense? I guess time will have to tell.

Mon, 03/05/2007 - 23:14 — JohnH

Will the real Nuance please stand up?

A quick recap of the suggestions in the comments so far: Nuance = Mobile Search Nuance = More aggressive in professional services Nuance = entry into hosting Nuance = staking a claim in communciations market. I'm thinking we aren't the only ones confused about where the Nuance brand is going. Therefore I shall evoke Hibel's simple rule of branding: If customers aren't sure what a brand means, that's not good for the brand. BTW, take another look at the press release. Nuance paid 5x-7x FORWARD revenue, which is probably closer to 10X-15X trailing revenue. That's a pretty hefty premium to pay for something that's diluting the brand. If the target category is mobile search, I think it's a mistake to enter under the Nuance brand.