Microsoft Corporation (MSFT) announced this morning the acquisition of Wand Labs, a messaging startup that specializes in natural language processing.
The Wand deal is yet another cog in Microsoft CEO Satya Nadella’s “conversation as a platform” strategy, bolstered by Cortana and MSFT’s $26.2 billion buyout of LinkedIn Corp (LNKD), which will likely find some synergy with Wand going forward.
David Ku, the corporate vice president of Microsoft’s information platform group, broke the news on Microsoft’s blog:
“Wand Labs’ technology and talent will strengthen our position in the emerging era of conversational intelligence, where we bring together the power of human language with advanced machine intelligence — connecting people to knowledge, information, services and other people in more relevant and natural ways. It builds on and extends the power of the Bing, Microsoft Azure, Office 365 and Windows platforms to empower developers everywhere.”
The deal didn’t exactly come out of left field.
Nadella previously boasted chatbots as soon having “as profound an impact as previous shifts we’ve had,” such as the web browser and the touchscreen. Indeed, Facebook Inc (FB), Amazon.com, Inc. (AMZN), Alphabet Inc (GOOG, GOOGL) and Apple Inc. (AAPL), among others, are forging ahead in the chatbot market, which is expected to see “exponential growth” from 2016 to 2023.
Facebook is clearly leading the market now, but this is where the LinkedIn purchase could make things interesting.
With LinkedIn, MSFT has a platform with 400 million-plus users, and “conversational commerce” could prove a natural extension of LinkedIn’s services, leveraging LNKD’s Marketing Solutions segment (which grew 29% in its most recent quarter) and Premium Subscriptions (up 22%). Wand’s natural language and AI expertise combined with LinkedIn’s platform could deliver one of the more seamless experiences in the chatbot market.
But this isn’t the first deep dive Microsoft has taken into conversational commerce. Tay — Microsoft’s Twitter Inc (TWTR) chatbot — quickly went rogue and had to have its plug pulled prematurely.
The revenue impact of chatbots is not expected to be realized immediately, as companies look toward customer engagement before sponsored posts and sales. But down the road, MSFT has bought itself a seat at the table.
As of this writing, John Kilhefner did not hold a position in any of the aforementioned securities.