When Microsoft CEO Satya Nadella spoke to buyers Monday about his firm’s plan to amass speech-recognition specialist Nuance for $16 billion, he emphasised the significance of artificial intelligence in well being care.

Nuance’s software program listens to doctor-patient conversations and transcribes speech into organized digitized medical notes. This helps clarify the hefty price ticket, at the same time as voice recognition has develop into commoditized and now comes packaged with each smartphone and laptop computer. But Microsoft may additionally see a lot broader potential for Nuance’s expertise.

Gregg Pessin, an analyst with Gartner, says the deal provides Microsoft “an entry point into the health care industry, and a huge customer base already running this stuff.”

Siri and Alexa could perceive your grocery record, however Pessin says Nuance has spent effort and time creating expertise that grasps the specialised language of medication; that gained’t be simple for different corporations to copy, he says. “That process of getting the system, the AI engine, to understand the medical jargon that’s important and difficult—I think that’s the real gem.” Pessin says Nuance could possibly develop parallel methods for different industries with their very own jargon, comparable to regulation.

Nuance’s voice transcription expertise is utilized by greater than 300,000 clinicians and 10,000 well being care organizations worldwide, in response to the corporate’s most up-to-date financial report, for the yr ending September 2020.

Those relationships supply Microsoft a approach into a market that guarantees to be price billions of {dollars} yearly. A report from IDC printed in August 2020 estimates that worldwide spending on AI will greater than double from $50.1 billion in 2020 to over $110 billion by 2024, and it named well being care as one of many largest sectors. Microsoft stated in a assertion that the acquisition would double the worth of the well being care promote it accesses to $500 billion.

Health care is extensively seen as a key industry for applied AI. Numerous analysis research present the potential for AI algorithms to identify disease in images or mine medical records for insights into remedy paths. And whereas challenges stay, like getting doctors to trust the technology or stopping bias that creeps in when the info used to coach medical algorithms is insufficiently numerous, an growing quantity of AI is prone to be deployed in well being care in coming years.

Voice recognition and pure language understanding have improved considerably in recent times, due to advances in AI. The expertise has been round for many years, however new machine-learning strategies have made it simpler to coach machines to acknowledge speech reliably. Nuance, which traces its origins to a agency based in 1992, faces rising competitors from corporations like Google and Amazon, however it additionally has expertise honing the expertise and promoting into area of interest markets.

“The health care business is huge, and it probably is the main reason that Microsoft is buying Nuance,” says Ian Jacobs, an analyst at Forrester. “But the price reflects the overall value that Nuance brings, all the things it does.”

Besides well being care software program, Nuance makes a platform for constructing chatbots, voice-based authentication expertise, and instruments for monitoring name heart conversations. Jacobs says the $16 billion price ticket displays the broader potential of those applied sciences in addition to the rising significance of AI for well being care.

Jacobs says the deal may additionally mirror an expectation that extra well being care will likely be delivered over the web. “Telehealth has become more accepted—it’s not going away,” Jacobs says. He believes that Microsoft could also be betting that extra refined types of AI will finally be capable to triage sufferers earlier than they see a physician, or supply medical professionals recommendation in actual time. “Think about the ability to augment the ability of the clinician,” he says.

Dan Miller, lead analyst at Opus Research, agrees that Nuance gives extra than simply a method to attain docs, and he says it suits with Microsoft’s technique of promoting AI and cloud software program into particular industries. “There is a lot of upside,” he says. “Is the price right? That just comes down to execution and Microsoft management making it fit with the stuff they are doing.”

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