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Microsoft makes its biggest splurge since LinkedIn (and it's all about healthcare)

Tuesday, April 13, 2021 by Robinhood Snacks |
_Cloudy with a chance of $16B healthcare cloud_

Cloudy with a chance of $16B healthcare cloud

Did you say, cheesy fiction?... Close: acquisition. Microsoft is buying voice recognition company Nuance Communications for a loud $16B. If investors approve, it'll be Microsoft's biggest corporate shopping splurge since LinkedIn in 2016 (price tag: $26B). Nuance shares popped 16% yesterday. The 30-year-old company sells AI speech recognition tools for doctors' offices, customer service calls, and voicemails. And get this...

  • 77% of US hospitals and over half of US physicians use Nuance's solutions. Its tools listen to and intelligently transcribe your doctor‑patient convos.
  • Siri 1.0: Nuance was a Big Tech acquisition target for years. Its software formed the basis of Siri before Apple intro'd an in-house version.

(Doctor's) Office 365... Microsoft looked at industries ripe for technological innovation... and decided it's bullish on healthcare. That's why it'll use Nuance's tech in its cloud solutions for healthcare providers. The doctor-savvy AI tech level up its game in a fast-growing field: Nuance's healthcare cloud sales jumped 29% last year. And it'll double Microsoft’s total addressable market in the healthcare provider space to ~$500B.

THE TAKEAWAY

Max out the core competency... Microsoft is an enterprise software beast. But when it launched its old consumer voice assistant Cortana, it was competing with Apple's Siri, Amazon Alexa, and Google's Home assistant. When Cortana fell behind, Microsoft pivoted: instead of competing for consumers like us, it focused on businesses. With Nuance, it's investing in strengthening its key competency: enterprise. That boosts its competitive edge.