Why is Microsoft's new acquisition of AI so important



Microsoft’s current purchasing spree reached a new climax this week with the announcement of its $19.7 billion acquisition of Nuance, a organisation that affords speech awareness and conversational AI services. Nuance is exceptional regarded for its deep getting to know voice transcription service, which is very famous in the fitness care sector.


The two groups had already been working collectively intently earlier than the acquisition. Nuance had constructed quite a few of its merchandise on pinnacle of Microsoft’s Azure cloud. And Microsoft had been the usage of Nuance’s Dragon provider in its Cloud for Healthcare solution, which launched final 12 months in the midst of the pandemic.


The acquisition is Microsoft’s largest because the $26 billion buy of LinkedIn. And it tells a lot about Microsoft’s AI strategy.


AI in fitness care

Most of the focal point in the announcement was once on AI in fitness care, which makes feel due to the fact Nuance is a leading issuer of AI offerings in the sector.


“Nuance presents the AI layer at the health care factor of transport and is a pioneer in the real-world software of employer AI,” Microsoft CEO Satya Nadella said. “AI is technology’s most necessary priority, and fitness care is its most pressing application.”


One element I like about Nuance is its laser focus, which is in line with the cutting-edge limits and abilities of deep getting to know algorithms. Deep gaining knowledge of would possibly now not be very exact at familiar problem-solving or causal inference, however it can be extraordinarily environment friendly at slender tasks. Nuance has chosen one utility (voice transcription) and has narrowed down its center of attention to one area (clinical settings). This has enabled the business enterprise to instruct its computing device studying fashions on heaps of statistics in that particular discipline and make certain that its AI options have height overall performance and reliability.


Nuance has a sequence of AI merchandise tailor-made for scientific settings, consisting of a digital assistant for digital fitness records, a multi-party dialog transcription service, and a deep mastering language mannequin that converts scientific conversations into structured notes for integration into fitness records.


Documentation is one of the fundamental ache factors for clinics and one of the lowest-hanging fruits for AI in fitness care. Nuance’s AI technological know-how is assisting store time and enhance the affected person experience. According to the acquisition announcement, Nuance’s AI options are presently used by using greater than 55% of docs and 75% of radiologists in the U.S. and used in 77% of U.S. hospitals. The enterprise has additionally viewed a 37% year-over-year increase in the income of its cloud service, although that is in all likelihood due to the shifts prompted through the COVID-19 pandemic.


“The acquisition will double Microsoft’s whole addressable market (TAM) in the fitness care company space, bringing the company’s TAM in fitness care to almost $500 billion,” in accordance to Microsoft’s announcement.


Microsoft’s role in fitness care

Nuance’s attain in the fitness care market suggests Microsoft will recoup its $19.7 billion funding in a exceptionally brief term. But being in a position to tackle this market is now not a easy feat.


Other huge tech companies, such as Apple and Google, already have fitness care initiatives that are a good deal older than Microsoft’s. But Microsoft is specifically well-positioned to take gain of this new acquisition due to the fact of its enterprise model.


Google and Apple are client companies. Microsoft, on the different hand, receives most of its income from business enterprise customers. Its Office suite and its collaboration equipment have been already being used in many hospitals even earlier than it introduced its fitness care solution. That’s why it used to be already in a right spot to penetrate the market.


And if you seem over at the Cloud for Healthcare page, the corporation has performed a super job of integrating its fitness answer into equipment that many fitness care people have been already used to working with, such as Outlook, Teams, Office, and messaging apps. The actual gain is the infrastructure Microsoft has built, the integration of all these services with scientific applications, and super information engineering that makes it feasible to install laptop gaining knowledge of fashions and information analytics equipment that span a range of information sources.


This is the ideal infrastructure on pinnacle of which Microsoft can construct an AI factory, the place it creates laptop studying fashions that supply approaches to enhance current products and construct new ones. The acquisition will allow Microsoft to speed up its boom by way of leveraging Nuance’s attain in the fitness care sector. Now each and every Nuance consumer will additionally be a Microsoft customer.


Beyond fitness care

Before the acquisition, Microsoft was once already the use of Nuance’s Dragon AI science in its fitness care solution, transcribing digital visits, taking notes, and integrating facts into patients’ fitness records. Now, with the acquisition of Nuance, Microsoft will additionally have full get entry to to its science and will be in a position to take its new AI transcription energy past fitness care.


“Beyond fitness care, Nuance offers AI know-how and consumer engagement options throughout Interactive Voice Response (IVR), digital assistants, and digital and biometric options to agencies round the world throughout all industries,” Microsoft says in its blog.


It will be fascinating to see how Nuance’s technological know-how will be built-in into other Microsoft organization products.


One issue that is additionally really worth looking at is how Microsoft will be capable to mix Nuance’s AI with different applied sciences it’s experimenting with. For instance, Microsoft already has an special license to OpenAI’s GPT-3 language model. Nuance’s transcription technological know-how and GPT-3 may end up a effective mixture for the enterprise.


Microsoft’s AI strategy

Microsoft would possibly no longer be in a position to predict which enterprise will be profitable in 5 years’ time, mainly in a discipline as risky as AI. But it’s banking on the one consistent that is continually wished in the field: compute power. Microsoft makes use of its big Azure platform to increase ties with companies, frequently offering them with backed get entry to to its cloud-based laptop studying tools. It additionally makes many of its investments in Azure credits, making sure organizations it invests in will be locked into its platform. This places Microsoft in a role to each assist these groups develop and analyze from them. And the funding will pay off when the company’s technological know-how and commercial enterprise mannequin mature.


Earlier this year, I wrote about Microsoft’s funding in the self-driving vehicle startup Cruise, which additionally made Microsoft Azure the desired cloud of Cruise and its owner General Motors. I referred to at the time that Microsoft’s success is in retaining a protected distance from creating sectors. Instead of making one large acquisition, Microsoft casts a huge internet via making smaller investments in various companies.


This offers it a appropriate foothold into many revolutionary sectors. As these sectors mature, Microsoft is steadily coming into partnerships with the extra profitable startups. And when the time is right, it will collect the agency that offers it the nice leverage in the market.


We can see this specific cycle with Nuance as Microsoft advanced from being Nuance’s cloud company to its companion to its owner. And this evolution tells us a lot about Microsoft’s AI strategy, which I suppose is very smart, given how quick matters can exchange in the AI industry. The corporation AI zone has come a lengthy way towards developing purposes that can resolve real-world problems. But we nonetheless haven’t figured out many things. And as new applied sciences and corporations proceed to develop, Microsoft will be gazing and selecting winners. 

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