Microsoft acquires Nuance – maker of Dragon Speech Rec – for $ 16 billion


Enlarge /. In this 2011 photo, Dr. Michael A. Lee used Dragon Medical speech recognition software to enter his notes after seeing a patient.

Microsoft announced today that it will buy Nuance for $ 56 per share – 23 percent above Nuance’s closing price last Friday. The deal adds up to a cash outlay of $ 16 billion and an overall valuation of Nuance of approximately $ 19.7 billion, including the company’s assumed debt.

Who is Nuance?

In this 2006 photo, Rollie Berg, who has limited hand usage due to multiple sclerosis, uses Dragon NaturallySpeaking 8 to interact directly with his PC.Enlarge /. In this 2006 photo, Rollie Berg, who has limited hand usage due to multiple sclerosis, uses Dragon NaturallySpeaking 8 to interact directly with his PC.

Nuance is a well-known player in the field of natural language recognition. The company’s technology is at the core of Apple’s personal assistant, Siri. Nuance also sells the popular Dragon NaturallySpeaking personal speech recognition software, which is invaluable to many people with a wide variety of physical disabilities.

Dragon NaturallySpeaking, originally released in 1997, was one of the first commercially available products for continuous dictation – software that didn’t allow the user to pause briefly between words. In 2000, Dragon Systems was acquired by ScanSoft, which in 2005 acquired Nuance Communications and renamed itself Nuance.

Earlier versions of the Dragon software used hidden Markov models to figure out the meaning of human language. However, this method had serious limitations compared to modern AI algorithms. In 2009, Stanford researcher Fei-Fei Li created ImageNet – a huge training dataset that sparked a boom in deep learning algorithms used in modern AI core technologies.


After Microsoft researchers Dong Yu and Frank Silk successfully applied deep learning techniques to real-time automatic speech recognition in 2010, Dragon – now Nuance – applied the same techniques to its own speech recognition software.

According to Microsoft and Nuance, 77 percent of hospitals, 75 percent of radiologists, and 55 percent of doctors in the United States use medical-grade versions of Dragon.

Microsoft’s acquisition game

Microsoft and Nuance partnered in 2019 to bring Ambient Clinical Intelligence (ACI) technologies to healthcare providers. ACI technology is designed to reduce doctor burnout and increase efficiency by shifting administrative tasks to computers. (A 2017 study published in the Annals of Family Medicine documented that physicians typically spend two hours of recording for every single hour of actual patient care.)

The acquisition of Nuance gives Microsoft direct access to the company’s entire list of healthcare customers. It also gives Microsoft the ability to bring Nuance technology – which is currently mostly used in the US – to Microsoft’s large international market. Mark Benjamin, CEO of Nuance, who will continue to run Nuance as a Microsoft division after the acquisition, describes this as an opportunity “to scale as we change an industry”.

The move doubles Microsoft’s total addressable healthcare market to nearly $ 500 billion. It also connects what Microsoft CEO Satya Nadella calls the “AI layer at the point of delivery in healthcare” with Microsoft’s massive cloud infrastructure, including Azure, Teams and Dynamics 365.

The acquisition was unanimously approved by the boards of Nuance and Microsoft and is expected to close in late 2021.


Steven Gregory