Blog Post

Tellme Price – $800 Million, or More

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

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.

22 Responses to “Tellme Price – $800 Million, or More”

  1. Nice piece, makes sense – but to says “Windows Mobile is growing like crazy” is pretty hyperbolic. The article you cite says that mobile phone makers are consolidating operating systems – but Symbian is gaining dominance, and MS is losing market share:

    “Last year, two-thirds of smart phones sold ran on Symbian’s operating system, an increase of about four percentage points from 2005, according to Canalys, a consultant and market research firm based near London. Microsoft was second last year with a 14 percent market share, slightly less than the year before.”

  2. William

    Bob says:
    …The call center apps are way beyond hosted IVR.

    Not sure where you get your data. Newer technologies companies (such as mentioned above) have built fully blended IVR, Predictive Dialing & ACD onto a multi tenant platform.
    Just take a look at and tell me how they are different from TellMe. is all about “Call Center”. The deal with Domino’s allows for data dips into a database similar to ANI caller ID and screen pop. I would argue that has more to offer than TellMe to 80% of businesses that require IVR and call handling. What I don’t know is if is also using Nuance technology as well. If so, they are screwed and limited! Somebody had posted that TellMe had/was developing a “newer” platform based on using NO Nuance technology.

    I give a huge amount of credit to TellMe for taking a quarter of BILLION dollars and surviving through the Telecom meltdown of 2001-2003 and looking to soon realize what looks to be a 8x multiple acquisition on revenue. IMPRESSIVE!

  3. William says “TellMe [sic] has a great hosted IVR platform. Next voice acquisition will be in the hosted call center space.” Tellme does directory assistance (local search) for carriers, and call center automation for enterprises like Dominos. The call center apps are way beyond hosted IVR.

    The buyer wouldn’t be getting just warmed-over Nuance tech. Tellme has tuned their utterance dictionary to vastly improve on Nuance’s recognition rate, which is key to successful user adoption.

  4. William

    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
    *[email protected] (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…)
    * – owned by MicroStrategy (Nasdaq: MSTR)

  5. 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.