Report: Apple to Leverage Nuance at NC Data Center for iOS 5

Apple is hip deep in negotiations with speech recognition company Nuance — the makers of the Dragon family of products — to use the firm’s technology in iOS 5. TechCrunch reported that Apple and Nuance are negotiating what could lead to either a deep partnership between the two companies or an outright acquisition by Apple, and that Apple is already running Nuance technology on what could be Nuance hardware in its new data center in Maiden, North Carolina.

The point of working with Nuance technology would be for Apple to add powerful speech recognition tools into iOS, possibly coupled with a broader use of the artificial intelligence technology Apple acquired when it bought Siri in 2010. Siri currently exists as a “personal assistant” app for iOS that allows you to ask questions using natural language — powered by Nuance — to get information and answers.

Siri example

A screenshot with Siri, with an example question that Steve Jobs could have asked the iPhone PA.

As TechCrunch’s sources tell it, Apple began negotiating with Nuance immediately after acquiring Siri to continue the relationship, and those talks led to expanded negotiations, as mentioned above.

TechCrunch also ventured that the reason Apple is taking the uncharacteristic move of becoming heavily dependent on a third party company for something as key as voice recognition is that this area of of the computer industry is the software equivalent of voodoo. The very few people who understand it well enough to develop a home-grown solution are already working for either Google or Nuance (though it’s doubtless that Microsoft has its hand in this gene pool, too).

In addition, Nuance has a broad portfolio of patents covering many aspects of speech recognition, and the company has been keen (and aggressive) on asserting its rights in this area. This makes Nuance as a company a necessary partner for Apple.

Of course, Apple could buy Nuance, but (as pointed out by TechCrunch) the company has a market cap of US$6.5 billion, with a half billion of that having been added since rumors of an Apple acquisition began circulating this past weekend. With more than $50 billion in the bank, Apple could buy Nuance six times over and still have enough left in petty cash to buy everyone in the U.S. a venti iced latte from Starbucks, with a tasty snack on the side.

This becomes an accounting nightmare, however, because much of what Apple would be paying for would be Nuance’s business agreements with other companies, deals that most likely would be worthless to Apple, as the company absorbs technologies — it does not buy business deals.

Of course, it might be worth it to Apple to pay the $8-$12 billion such an acquisition could easily cost to keep it out of anyone else’s hands, and to put itself on more equal footing with Google, which has invested significant resources in natural language speech recognition.

We could get some official answers on this subject as early as June’s World Wide Developer Conference, when Apple is expected to unveil iOS 5. TechCrunch said it had multiple confirmations that Nuance’s technology is in use in its fancy new data center, and cited more than one (unnamed) source that Apple and Nuance are in negotiations, so we can always hope.

The last tidbit from this report is that Microsoft reportedly courted Apple to use some of its technology for speech recognition, but that Apple elected to stick with Nuance.