Microsoft to buy Tellme to enhance voice services

Microsoft will purchase Tellme Networks in an effort to bolster speech-recognition and voice services and software.

Microsoft plans to purchase Tellme Networks in an effort to bolster its voice services portfolio and add speech recognition to a broad range of its software and online services, the company said Wednesday.

Jeff Raikes, president of Microsoft's Business Division, said in a conference call Wednesday that adding voice to many of its products is a natural extension of Microsoft's long-standing interest in adding natural human interfaces -- such as touch and speech recognition -- to computing environments.

"We really see speech as a universal capability to open up the potential of computing," he said. "We see it as an important interface, an important [user] experience."

Tellme Networks is a private company that provides a VoiceXML-based voice-recognition platform for voice-powered directory assistance for third parties, and it also has its own mobile search services.

The terms of the deal, expected to close in the second quarter of this year, were not disclosed. Tellme's 320 employees will continue to work from the company's headquarters in Mountain View, California, as part of the Microsoft Business Division.

Microsoft said it will use Tellme's platform across several of its product lines, including unified communications, speech recognition, mobile services, search and software such as the Windows OS and Office productivity and collaboration suite. The company said that some new products that could potentially result form the deal are voice-enabled customer service software and the addition of speech recognition with its Windows Live Search engine to provide a mobile search platform.

Raikes would not give specifics on what new offerings will come out of the integration of Tellme and Microsoft's products. However, he noted that there is potential across nearly all of Microsoft's product offerings for speech recognition to play a key role.

Adding a voice interface to Windows and Office so business users can use voice commands to perform tasks are one area Microsoft plans to explore, he said.

"Voice communications need to get integrated in the context of how people do their work," Raikes said. "We see Tellme and their strength as part of enhancing that overall direction."

Enhancing mobile search through speech recognition is another area the company will explore, he said.

"One of the critical things with search on the phone and especially in your car, you should be able to use voice as an interface," Raikes said. "People don't want to have to type things to get what they want."

Microsoft already provides software that enables technologies such as Ford Motor Co.'s Sync, which lets automobile drivers have hands-free Internet connectivity and give voice commands to play music and answer and make phone calls. The company likely will expand upon such offerings.

Mobile search, too, is another place Microsoft can add Tellme's speech-recognition software, Raikes said.

"Today Tellme already does more mobile search support than Google and Yahoo combined," he said. "We're looking forward to great conversations about what we can do in the mobile search area."

Mike McCue, CEO and co-founder of Tellme, also described a unique way Microsoft can combine his company's technology with a voice platform to provide what he calls a new "enterprise dial tone."

"You can pick up a VOIP phone and you'll hear a question: 'Who do you want to call?,' " he said. "[You can say] 'Call Jeff on his mobile phone.' ...This is what we're excited about."

McCue would not disclose Tellme's revenue, but said that the company is profitable and its services and platform are used by about 40 million people every month.

He added that although Tellme already works with global companies, he is looking forward to expanding its customer base outside of North America once Tellme is a part of Microsoft.

Microsoft has long promoted its own speech-recognition products and endeavors to add voice enablement to its Windows OS. However, none of its efforts to date have been as successful as the company promised.

The company recently added speech-recognition technology to Exchange Server 2007, and plans to integrate its Speech Server with an update to its Live Communications Server unified communications software, which will be out soon. These efforts and the addition of Tellme to its portfolio could bode well for its speech strategy in the future.

"I think there is an interesting overlap between the hosted Tellme platform and the Microsoft Speech Server and the work Microsoft has been doing in the unified communications group," says Mike Gotta, an analyst with the Burton Group.

However, Gotta said that any integration of the hosted Tellme platform and the on-premise speech technology from Microsoft will require a package of interfaces and APIs (application programming interfaces) so developers can build applications that work across the technology.

Gotta also said Tellme might be able to provide some insight into scalability, a feature that Speech Server has been lacking.

(John Fontana from Network World contributed to this article.)

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