Looking at the numbers, Nuance Communications Inc. (NASDAQ:NUAN) shows a return on equity of 6.7, which is solid. With a market cap of $7.2 billion and 316.27 million outstanding shares, it’s also popular, but definitely falling under the “hype umbrella” with a three-year beta of 1.36.
The competition
But, what about the alligators nipping at the company’s heels? There are some big ones, and some well-funded small ones with “piranha power.” One hole in the offering by Nuance lies in the Android market; Dragon Go is all that can be used here as an app, and it really can’t compare to Siri. Enter Ask Ziggy, a Rocklin, California-based startup dedicated to making a personal assistant for Windows and Android mobile devices. A press release went out in late 2012 announcing the closure of $5 million of strategic investment dollars from a “well-known” multinational corporation. I’d lay money on it being Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), or Google Inc (NASDAQ:GOOG).
Amazon
Amazon.com, Inc. (NASDAQ:AMZN) has the most to gain by adding its own speech recognition capabilities to Kindle and Kindle Fire. Watch this company carefully, as it quietly purchased startup, Yap, in 2011. This move may propel Amazon.com, Inc. (NASDAQ:AMZN) into the mobile game in another way, making Kindle devices more than just readers, and competitive to the growing plethora of mobile devices on the market today. It would take a couple of years to perfect the Yap technology for the Amazon.com, Inc. (NASDAQ:AMZN) readership and marketplace. If this happens, the Nuance and iPhone market segments could be given a run for their money. But, in my humble (or not so humble) opinion, the market is expanding faster than the players, which means there is room for everyone, and Nuance will continue to be a good buy even if this happens.
In more recent news, Amazon.com, Inc. (NASDAQ:AMZN) has just purchased text-to-speech company, Ivona, in January 2013 (which is what has fueled the self-reading options for Kindle), and UK-based speech recognition software company, EVA, in April 2013. Clearly something is up, and rumors that an Amazon.com, Inc. (NASDAQ:AMZN) smartphone is coming are rampant. I think Amazon is another way for investors to get a piece of the speech recognition action, and if the rumors are true, an Amazon smartphone with Kindle Fire technology will give the iPhone a run for its money.
Google Inc (NASDAQ:GOOG) has solid voice recognition software as well, and may be another good investment vehicle for those interested in speech recognition technology. Early in 2013, Google Inc (NASDAQ:GOOG) announced voice-activated search capabilities for Chrome. Now, instead of typing in a search term, all you have to do is speak it. This may very well transform the search experience as we know it today. This also helps position the Android platform more competitively against Apple, now that Chrome is an answer to Siri.
Microsoft Corporation (NASDAQ:MSFT) is, in my opinion, the earliest entrant to speech recognition technology, but the weakest choice for an investment vehicle today. Windows 7 came standard with speech recognition technology, but little press time was given to this fact. Why? Probably because the technology needs lots more work. If it worked well, Nuance’s Dragon series of PC software wouldn’t have a market. Also, the PC is now on its way out, a fact that Microsoft Corporation (NASDAQ:MSFT) seems a bit slow to grasp.
The article Are Speech Recognition Companies A Good Investment? Ask Siri originally appeared on Fool.com and is written by Brenda Johnson.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
