On Monday, the ink dried on Microsoft's
But don't expect Microsoft to leverage Nuance's technologies to develop a smarter Cortana. Instead, both Nuance and Microsoft will work together to develop "clinical documentation that writes itself," helping Microsoft expand its footprint in the healthcare space.
Microsoft has been making forays into the health industry for a while. Last year, it announced its new Microsoft Cloud for Healthcare, a series of healthcare-focused cloud solutions.
The merger comes at the tail end of a two-year partnership between both companies. During this time, Nuance ported much of its infrastructure and products onto Microsoft's cloud servers. The two firms worked together to develop software capable of transcribing discussions between doctors and patients. In the not too distant future, these records could be paired with A.I. to help facilitate better patient outcomes.
"A.I. is technology's most important priority, and healthcare is its most urgent application," said Microsoft CEO Satya Nadella in a statement. "Together with our partner ecosystem, we will put advanced A.I. solutions into the hands of professionals everywhere to drive better decision making and create more meaningful connections."
Before it's pivot toward the medical space, Nuance had been the industry leader in the field of voice recognition. However, the companies technology fell out of favor with the emergence of more effective "deep learning" voice recognition software.
Facing this technological pressure forced Nuance to narrow its focus under its current CEO Mark Benjamin. Today Nuance reigns as a leader in the healthcare industry.
According to Microsoft, 55% of doctors and 77% of hospitals currently use Nuance's speech recognition software and A.I. solutions.
Microsoft will likely leverage Nuance's existing relationships with doctors, hospitals, and electronic health records companies. In particular, Mr. Nadella plans to "double-down" on Nuance's relationships with electronic records providers, Epic
These already established relationships will help Microsoft compete with the likes of Amazon
Nuance's success at capturing and recording complex and intensive medical terminology hints at their technology's broader applications, according to Stifel analyst Brad Reback.
"Being able to solve that problem makes it that much easier to handle other industries' terminology," he told the New York Times. Wedbush analyst Dan Ives called the deal a "strategic no brainer." Saying "it fits like a glove into its healthcare endeavors at a time in which hospitals and doctors are embracing next-generation A.I. capabilities."
"The deal gives Microsoft access to half a million doctors and some of the largest hospitals around the world," he added.
Microsoft expects the Nuance acquisition will double its total addressable market in the healthcare space to $500 billion.
"Microsoft sees lots of opportunities now where healthcare cloud is an opportunity to drive growth," Mark Moerdler, an analyst at Bernstein Research, told the Wall Street Journal. "If they can put some more fuel on the fire, they will."