Update: Nuance’s Swype Buy Could See The Text Input System Go Large

The other day, when a plane I was on landed in Newark, I noticed the elderly woman sitting next to me pull out a Droid Bionic and start answering a series of emails and texts using Swype predictive messaging, which lets a user sweep a finger across the keyboard to write words. Looking at how fast she was going — and I admit was surprised to see how adept this older woman was with the device — I thought to myself that Swype could be one of those killer bits of technology that will really advance how people use smartphones, and (perhaps more importantly longer term) the demographics of who uses them.

Well, it turns out that Swype wasn’t just catching my eye. Today it has emerged that the company has been bought by Nuance, the voice technology company, for a $102 million.

The news was first reported by Uncrunched, the new blog home for Michael Arrington since his departure from Tech Crunch. We have reached out to both companies for confirmation of the deal and will update this post as we learn more.

Update: Nuance filed an 8K with the SEC in which it detailed the price it has paid, $102.5 million. $77.5 million will be paid when the deal closes; $25 million will be payable 18 months after as a “contingent consideration,” which Nuance describes as “subject to certain adjustments and conditions, including the requirement that certain key executives not terminate their employment with Nuance or have their employment terminated for certain reasons.”

Nuance is probably best known for its voice recognition technology. It makes the popular Dragon suite of products for PCs and Macs, as well as iPhone and Blackberry devices, as well as a number of other voice products for specific enterprise verticals. Through its Dragon SDK it has also extended its presence on to other platforms like Android.

It is also thought that Nuance was working with Apple (NSDQ: AAPL) on its new voice technology that has been incorporated into the newest iPhone, the 4S, although Nuance has never confirmed this directly. Back in November last year, there was a lot of speculation that Apple was actually interested in buying the company, after Apple co-founder Steve Wozniak gave an interview where he effectively said Apple had already bought the company. (Nothing ever panned out there, and Woz eventually said he got his facts in a muddle.)

But Nuance is also quite strong in other areas of technology that effectively make devices like mobile phones a bit easier to use. One of the biggest is the T9 predictive messaging service, used on a number of phones for text messaging with the phone numberpad’s corresponding alphabet. Nuance bought this bit of technology from AOL (NYSE: AOL) back in 2007.

But as useful as as ubiquitous as T9 is, it is also a bit of a dinosaur technology, in that its functionality is getting less relevant with the growth of touchscreen devices, both among smartphones and feature phones. A purchase of Swype gives Nuance the opportunity to sell in this product to all the manufacturers with whom it already has a relationship established through the licensing of T9, and therefore get further inroads into touchscreen devices.

As Uncrunched points out, both Swype and T9 happened to be founded by the same person, Cliff Kushler, so in another sense this buy is bringing back some continuity to his creations. According to the 8K filed by Nuance, Kushler, along with CEO Mike McSherry and COO Aaron Sheedy will stay on with the company as part of the contingent consideration for the deal.

Swype today works on Symbian devices from Nokia (NYSE: NOK), as well as a number of Android-based smartphones — including that Motorola (NYSE: MMI) Droid I saw the woman using on the plane. Interestingly, those platforms are not currently supported by Nuance for its Dragon software — so that could potentially mean more inroads for Nuance on those platforms as well. And given Nuance’s close relationship with Apple, perhaps iPhone and iPad users out there will get Swype for themselves, too.

Nuance has been on something of an acquisition spree. Just at the end of September, it also announced that it had closed its acquisition of the Italy-based, enterprise voice services concern Loquendo, which it purchased from Telecom Italia for an undisclosed sum.