And buying new companies won't make Nuance's existing products better - that requires sustained and coordinated internal innovation.
While Ricci says that more than 600 of the company's 2,500 employees work in R&D, a former Nuance engineer says that "there just wasn't corporate-level support for internal innovation. The focus on growth through acquisition has the unfortunate consequence of shutting down the internal stuff." This engineer, who still works in speech recognition, says he knows of others who have left because of similar frustrations.
Nuance could also use an infusion of marketing mojo. Employees talk about a national TV commercial that ran last year to promote a partnership between Microsoft and Ford called "Sync." It will bring mobile-phone integration and voice control to several new Ford vehicles. In the ad, people speak commands to things that don't have voice recognition software: a man in a bathrobe orders his blinds to close before accidentally exposing himself to the neighborhood. A narrator intones, "Not everything responds to your voice like Sync.") But the ads didn't mention that Nuance provided the key technology.
The company also supplies the speech-recognition software for Google's free 411 service, 1-800-GOOG-411, "and we can't talk about that, either," Ricci says.
Both deals bring in revenue for Nuance. "We'd rather do the commerce" than get the credit for it, Ricci explains.
Ricci's personality is much more professorial than Barnum-esque, but his company needs to rethink its marketing and promotion strategy. Even he acknowledges the need for "more investment in brand-building and high-tech public relations."
Nuance executives say the company could surpass $1 billion in revenues this year for the first time, thanks in large part to the companies it acquired in 2007. (Nuance is the rare Massachusetts company making purchases rather than being purchased.)
Nuance is adding 80,000 square feet to its headquarters building. But while the company has excelled at Hoovering up smaller companies, it hasn't demonstrated great discipline in turning itself into a profit-generating machine: Nuance has been in the red for each of the last five fiscal years.
Interestingly, Mahoney once worked for PictureTel Corp., one of the pioneers of corporate video-conferencing. Like speech recognition, video-conferencing has been touted for decades as a technology that is almost about to get good enough for us to welcome it into our lives.
"I have déjà vu moments all the time - there's a lot of similarity between the two things," Mahoney says. At the Consumer Electronics Show earlier this month, he saw a video-conferencing vendor conducting the same demo Mahoney says he used to do in the late 1990s at PictureTel: two distant offices are linked together, at which point the employees begin asking one another, "How's the weather there?"
We still don't videoconference as easily or frequently as we pick up the phone or dash off an e-mail. Nuance will have to concentrate on internal innovation and better marketing if it hopes to eventually be regarded as the company that rid speech recognition of its frustration factor and made it truly useful to all of us in the mainstream.
Innovation Economy is a weekly column focusing on entrepreneurship, technology, and venture capital in New England. Scott Kirsner can be reached at kirsner@pobox.com. |
