Microsoft’s acquisition of Nuance tells us quite a bit about its AI technique

Microsoft’s latest purchasing spree reached a brand new climax this week with the announcement of the $19.7-billion acquisition of Nuance, an organization that gives speech recognition and conversational AI companies. Nuance is finest identified for its deep studying voice transcription service, which may be very common within the healthcare sector.

The 2 corporations had already been working carefully earlier than the acquisition. Nuance had constructed a number of of its merchandise on prime of Microsoft’s Azure cloud. And Microsoft had been utilizing Nuance’s Dragon service in its Cloud for Healthcare answer, launched final yr within the midst of the pandemic.

The acquisition is Microsoft’s largest because the $26-billion buy of LinkedIn. And it tells quite a bit about Microsoft’s AI technique.

AI in healthcare

A lot of the focus within the announcement was on AI in healthcare, which is smart as a result of Nuance is a number one supplier of AI companies within the sector.

“Nuance supplies the AI layer on the healthcare level of supply and is a pioneer within the real-world utility of enterprise AI,” mentioned Microsoft CEO Satya Nadella. “AI is expertise’s most essential precedence, and healthcare is its most pressing utility.”

One factor I like about Nuance is its laser focus, which is consistent with the present limits and capabilities of deep studying algorithms. Deep studying won’t be superb at common downside fixing or causal inference, however it may be extraordinarily environment friendly at slim duties. Nuance has chosen one utility (voice transcription) and has narrowed down its focus to at least one area (medical settings). This has enabled the corporate to coach its machine studying fashions on tons of information in that particular area and be sure that its AI options have peak efficiency and reliability.

Nuance has a sequence of AI merchandise tailor-made for medical settings, together with a digital assistant for digital well being information, a multi-party dialog transcription service, and a deep studying language mannequin that converts medical conversations into structured notes for integration into well being information.

Documentation is without doubt one of the major ache factors of clinics and one of many lowest hanging fruits for AI in healthcare. Nuance’s AI expertise helps save time and enhance the affected person expertise. In response to the acquisition announcement, Nuance’s AI options are presently utilized by greater than 55 p.c of physicians and 75 p.c of radiologists within the Us and utilized in 77 p.c of U.S. hospitals. The corporate has additionally seen a 37-percent year-over-year progress within the income of its cloud service, although it’s most likely because of the shifts attributable to the covid-19 pandemic.

“The acquisition will double Microsoft’s complete addressable market (TAM) within the healthcare supplier house, bringing the corporate’s TAM in healthcare to just about $500 billion,” in keeping with Microsoft’s announcement.

Microsoft’s place in healthcare

Nuance’s attain within the healthcare market means that Microsoft will recoup its $19.7-billion funding in a comparatively brief time period. However having the ability to handle this market shouldn’t be a easy feat.

Different huge tech corporations resembling Apple and Google have already got healthcare initiatives which might be a lot older than Microsoft’s. However Microsoft is particularly well-positioned to benefit from this new acquisition due to its enterprise mannequin.


Google and Apple are shopper corporations. Microsoft, then again, will get most of its income from enterprise prospects. Its Workplace suite and its collaboration instruments had been already being utilized in many hospitals even earlier than it introduced its healthcare answer. That’s why it was already in a great place to penetrate the market.

And if you happen to look over on the Cloud for Healthcare web page, the corporate has performed an awesome job of integrating its well being answer into instruments that many healthcare staff had been already used to working with, resembling Outlook, Groups, Workplace, and messaging apps. The actual benefit is the infrastructure Microsoft has constructed, the combination of all these companies with medical functions, and terrific information engineering that makes it attainable to deploy machine studying fashions and information analytics instruments that span throughout varied information sources.

That is the right infrastructure on prime of which Microsoft can construct an AI manufacturing facility, the place it creates machine studying fashions that present methods to enhance present merchandise and construct new ones. The acquisition will allow Microsoft to speed up its progress by leveraging Nuance’s attain within the healthcare sector. Now, each Nuance buyer will even be a Microsoft buyer.

Past healthcare

Earlier than the acquisition, Microsoft was already utilizing Nuance’s Dragon AI expertise in its healthcare answer, transcribing digital visits, taking notes, and integrating info into sufferers’ well being information. Now, with the acquisition of Nuance, Microsoft will even have full entry to its expertise and can be capable to take its new AI transcription energy past healthcare.

“Past healthcare, Nuance supplies AI experience and buyer engagement options throughout Interactive Voice Response (IVR), digital assistants, and digital and biometric options to corporations around the globe throughout all industries,” in keeping with Microsoft’s weblog.

It will likely be attention-grabbing to see how Nuance’s expertise will likely be built-in into different Microsoft enterprise merchandise.

One factor that can be price watching is how Microsoft will be capable to mix Nuance’s AI with different applied sciences it’s experimenting with. As an example, Microsoft already has an unique license to OpenAI’s GPT-3 language mannequin. Nuance’s transcription expertise and GPT-3 would possibly turn into a robust mixture for the enterprise.

microsoft ai strategy

Microsoft’s AI technique

Microsoft won’t be capable to predict which firm will likely be profitable in 5 years’ time, particularly in a area as unstable as AI. However it’s banking on the one fixed that’s at all times wanted within the area: compute energy. Microsoft makes use of its big Azure platform to develop ties with corporations, usually offering them with sponsored entry to its cloud-based machine studying instruments. It additionally makes lots of its investments in Azure credit, ensuring that corporations it invests in will likely be locked into its platform. This places Microsoft able to each assist these corporations develop and to be taught from them. And the funding pays off when the corporate’s expertise and enterprise mannequin mature.

Earlier this yr, I wrote about Microsoft’s funding within the self-driving automotive startup Cruise, which additionally made Microsoft Azure the popular cloud of Cruise and its proprietor Basic Motors. I famous on the time that Microsoft’s success is in sustaining a protected distance from growing sectors. As an alternative of constructing one huge acquisition, Microsoft casts a large internet by making smaller investments in a number of corporations.

This offers it an excellent foothold into many progressive sectors. As these sectors mature, Microsoft progressively enters partnerships with the extra profitable startups. And when the time is correct, it would purchase the corporate that can give it one of the best leverage out there.

We will see this actual cycle in Microsoft’s relation with Nuance because it advanced from being its cloud supplier to its companion to its proprietor. And this evolution tells quite a bit about Microsoft’s AI technique, which I feel may be very good given how briskly issues can change within the AI trade. The enterprise AI sector has come a good distance towards creating functions that may remedy real-world issues. However we nonetheless haven’t found out many issues. And as new applied sciences and firms proceed to develop, Microsoft will likely be watching and selecting winners.

This text was initially revealed by Ben Dickson on TechTalks, a publication that examines traits in expertise, how they have an effect on the way in which we dwell and do enterprise, and the issues they remedy. However we additionally talk about the evil aspect of expertise, the darker implications of latest tech, and what we have to look out for. You may learn the unique article right here.

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