Through an aggressive strategy of acquisitions, Nuance (NASDAQ:NUAN) has built a strong platform of voice-technology systems. And investors have taken note. So far this year, NUAN shares are up nearly 12%.
So what’s next? Nuance has struck yet another interesting deal: the $102.5 million purchase of Swype.
Swype developed technology that allows you to slide your finger or stylus across a touchscreen’s keyboard interface to input text. If you haven’t used it before, the process seems a bit strange and even awkward. But it actually can mean typing at more than 40 words per minute — not bad for a touchscreen.
Swype requires incredibly complex algorithms and is based on years of academic research. Its creator is Cliff Kushler, who started Swype in 2002. Kushler is a pioneer in mobile input technology, having created the T9 system for mobile phones that allows for predictive text input. More than 2 billion cell phones use this technology.
Now Swype is getting lots of traction in the marketplace. By the end of the year, Swype is expected to be installed on more than 100 million devices. A big driver has been Google’s (NASDAQ:GOOG) Android smartphones and tablets.
However, the biggest boost is likely to come from Apple (NASDAQ:AAPL), which is moving to alternative input approaches. To this end, the iPhone 4s uses Siri, which allows for voice-activated commands. And there is buzz that this technology uses software from Nuance, which has an extensive patent portfolio in the category.
Voice activation or not, the keyboard should remain a critical part of the mobile experience (try using voice-activation in a noisy room!). Thus, mobile devices should be enhanced with innovations like Swype. Meaning Nuance now is in a greater position to benefit from the latest trends in the mobile world.
Tom Taulli is the author of “All About Short Selling” and “All About Commodities.” You can also find him at Twitter account @ttaulli. He does not own a position in any of the stocks named here.