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Summary:

Microsoft Corp. is said to be talks to acquire Tellme Networks, a voice applications company, according to The Wall Street Journal and C/Net News.com. This news of a pending acquisition was first reported by TechCrunch in February, but at the time, Tellme executives were quick to […]

Microsoft Corp. is said to be talks to acquire Tellme Networks, a voice applications company, according to The Wall Street Journal and C/Net News.com.

This news of a pending acquisition was first reported by TechCrunch in February, but at the time, Tellme executives were quick to quash any speculation and said that they were still an independent company.

The talks continue, but some of our sources say don’t expect an announcement Tuesday. The two outlets speculate that Tellme could fetch up to $800 million, but our source, someone quite familiar with the company say that the price is north of the reported numbers.

Even an $800 million price tag would make it the fourth largest acquisition in the history of Microsoft. Why would Microsoft pay such a hefty price? C/Net speculates that the Tellme technologies could find their way into enterprise applications. Microsoft is betting heavily on the convergence of data and voice.

The real reason will be Microsoft Mobile and non-PC devices where Tellme’s voice interface and back-end server technologies can come in quite handy.

“The leading edge battleground between us and Google in local search really will come on the phone,” Microsoft Chief Executive Steve Ballmer told the WSJ back in May 2006.

That is the money quote. On mobile phones the search business is still up for grabs. Google doesn’t have the kind of control on mobile search as it does on the web. Of course with Windows Mobile growing like crazy – the second-fastest growing mobile phone OS – Tellme’s technology could make Windows Mobile phone infinitely more user friendly, especially when compared to the tediousness of its current UI.

Tellme has raised over $235 million in venture funding, and has 320 employees. An IPO candidate, the company is profitable and counts most large mobile and telecom companies as its customers.

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  1. TellMe is a voice applications company. It does not make anything that can sit on any phone, let alone on a Windows Mobile device. TellMe’s strength is in the range of voice applications they have built using voice recognition technology from others (such as Nuance). So I think you’re way off target in saying that TellMe will help Windows Mobile. TellMe apps and Windows Mobile are orthogonal to each other.

    The TellMe team can bring voice application expertise to Microsoft and can help, as you rightly said, on the voice search side. But there is unlikely to be a voice search equivalent of a Google search in our lifetimes. On the other hand, Microsoft can help TellMe market itself better.

    TellMe can also help enhance some of Microsoft’s enterprise apps, but Microsoft’s enterprise groups seem fragmented and random and are unlikely to take advantage of this expertise.

  2. Further validation for voice hosted providers. TellMe has a great hosted IVR platform. Next voice acquisition will be in the hosted call center space. Considering that there are only few such providers and many large companies without such offerings the frenzy will begin. Companies such as Cisco, Avaya, Concerto, Genesys, Salesforce, SAP and Oracle are now forced to make these type of call center platform acquisitions. Even poor Nortel folks must be scratching their heads wondering how this acquisition will affect their recent joint venture with MSFT.
    Though MSFT acquisition on the surface looks to be very focused on a few large TellMe type customers this is the tip of the iceberg. Yes, MSFT will look to use this technology for seach as well. But, ultimately what is an IVR? An IVR is used for self service and call routing. The huge market opportunity here is the call center market. Hats off to MSFT for beating Google and CSCO to the punch. Who is next?

    *BeVocal (hosted IVR) – acquired by Nuance Feb ’07 for $160M + up to $40M sales targets
    *Telephony@Work (call center)-acquired by Oracle in June ’06. Rumored price $90M-$100M
    *Five9 – hosted call center technology (venture capital backed by Hummer Winblad
    *Cosmocom – hosted call center technology (venture backed by Intel Capital, Marconi, TCV…)
    *Angel.com – owned by MicroStrategy (Nasdaq: MSTR)

  3. Vinod Ponmanadiyil Tuesday, March 13, 2007

    I guess its a best bet for Microsoft because Google has already patented the “Voice Search”.

  4. Reports: TellMe to be bought by Microsoft at Vinod Live! Tuesday, March 13, 2007

    [...] Michael Arrington and Om Malik reported the TellMe sales talks with Microsoft for a whopping $800 [...]

  5. Microsoft To Acquire TellMe, Part II Tuesday, March 13, 2007

    [...] rounds. We gave a glowing review to a recently released TellMe mobile phone application. Update: Om Malik has sources saying the deal may be north of $800 m. Sphere [...]

  6. Microsoft Goes Shopping « Gokul Blog — A conversation on VoIP, IMS, Cisco and Just about Anything Tuesday, March 13, 2007

    [...] networks is one of the major players in the web based voice technology domain and Om believes that this acquisition is to bolster Microsoft’s Window’s mobile phone solution and is [...]

  7. TELLME BEING ACQUIRED BY MICROSOFT… FORMER COMPETITOR, OLD MEMORIES…

    GigaOM is reporting that Tellme will be bought for $800 million or more. Congratulations to their founders and team! Brings back old memories when we competed against Tellme. Tellme raised an incredible $239 million in 2000. Then there was BeVocal and …

  8. Microsoft To Acquire Tellme » SELaplana Tuesday, March 13, 2007

    [...] said that Microsoft is about to acquire Tellme (the company that offers web info-search through the [...]

  9. Microsoft buying Tellme? (redux) — Microsoft News Tracker Tuesday, March 13, 2007

    [...] Microsoft was acquiring mobile phone applications vendor Tellme, but it was promptly denied. Now the rumor is back and the purported price tag is a whopper according to Om Malik: Microsoft Corp. is said to be talks to acquire Tellme Networks, a voice applications company, [...]

  10. There was also Voice Web Solutions who has the only Grammar WYSIWYG Builder (VoiceWebSoultions.net)

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