Microsoft Bulks Up Mobile, Search

Tellme purchase will help in battle with Google and Yahoo.

With its impending purchase of voice-search platform provider Tellme Networks, Microsoft took a key step in its broad-ranging effort to use voice technology as an interface for accessing information and services.

The move, announced March 14, could foreshadow similar purchases as the Redmond, Wash., company pushes its software-plus-services concept.

"We see voice and speech recognition as a way to improve interaction with productivity software," said Jeff Raikes, president of the Microsoft Business Division. "At VoiceCon, we said we expect that in three years, 100 million people will be able to click to call within their applications. We think speech recognition will be part of that."

It also will thrust Microsoft into the area of hosted speech services, whether for consumer-facing or internal enterprise IVR (Interactive Voice Response) systems. Analysts said the move makes sense for Microsoft as it bulks up its offerings in search and mobile technology and competes with Google and Yahoo.

"This is all about how Microsoft can gain a leg up in mobile services that would complement the work theyre currently doing with Windows Mobile," said Michael Gartenberg, an analyst with JupiterResearch. "While Windows Mobile devices are growing in both market share and mind share, [Microsoft CEO] Steve Ballmer has made it no secret that he wants Microsoft to be a strong player in mobile search, as well as local services. This acquisition will likely give them the ability to start integrating sophisticated voice features into their mobile offerings."

"[Microsoft is] making a number of moves in the voice space, but they suffer from credibility issues in some areas—especially when it comes to always-on dial tone. Tellme has that credibility," said Gartner analyst Steve Cramoysan.

The acquisition could give Microsoft a boost against Google in the realm of voice search, especially for mobile phones, Cramoysan said. Google, meanwhile, announced a patent on voice search last year but has been quiet about it ever since.

"Mobile search is the frontier, and Tellme puts Microsoft at the forefront, enabling a potential end run around Google," said Roger Kay, an analyst with Endpoint Technologies.

Microsoft would not reveal the price it agreed to pay for Tellme, a privately held company with more than 320 employees and such blue chip customers as FedEx, United Parcel Service of America, American Airlines and Merrill Lynch.

Microsoft officials said they intend to broadly exploit Tellmes speech recognition platform, which provides hosted services to its customers for voice-based search. Specifically, Microsoft is evaluating such developments as hosted voice-enabled customer services offerings that work with existing Microsoft Unified Communications products, adding voice user interfaces to existing Microsoft products and the integration of mobile-phone-based search services with Microsoft Live Search.

Microsoft also will target its ISVs and other partners to build new speech-based products or services on top of Tellmes standards-based platform. What that will mean for developers working with Microsofts existing speech server platform is not yet clear.

"We want to use the Tellme technology to enhance and extend what our developers can do," Raikes said. "There will no doubt be things we want to rationalize. They have tremendous strength in hosted solutions, but now most things tend to be on-premises. In the next few months, we want to help ISVs understand how the combination of technologies will help them. Well be able to come out with a road map that will allow developers to build on what theyve done."

Tellme claims that some 40 million people per month access services based on its platform. Services range from 411 directory assistance to information search on 1-800-555-TELL.

"We process 2 billion calls a year on our platform and get paid for every one of those calls," said Mike McCue, co-founder and CEO of Tellme, in Mountain View, Calif.