Will the iPhone 6 Lose Siri's Greatest Asset?

Nuance Communications, which makes the voice recognition aspect of Siri, has reportedly been talking to Samsung regarding a possible buyout. What could that mean for Apple?

Jun 18, 2014 at 9:23AM

Siri Nuance
The Wall Street Journal is reporting that the company behind Apple's voice recognition for Siri may be for sale. 

Earlier this week The Wall Street Journal reported that Nuance Communications (NASDAQ:NUAN) -- the company behind the voice recognition software for Apple's (NASDAQ:AAPL) virtual assistant -- may be in talks with Samsung (NASDAQOTH:SSNLF) about a buyout. While no deal has reportedly been made, this potential acquisition would have several implications for Apple.

Ipad Siri

Siri relies on Nuance Communications' technology. Source: Apple.

Multiple outcomes
Let's assume for a moment a deal is reached in which Samsung becomes the sole owner of Nuance. The Wall Street Journal report, combined with the fact that Nuance already provides voice recognition software for Samsung's mobile devices, TVs, and now wearables, make this a plausible scenario. If that happened, Apple could lose the ability to use Nuance's voice recognition services for Siri, which would leave the iMaker either searching for new company to fill the void or forced to bring the tech in-house.

Even if that scenario played out, it's not likely the upcoming iPhone 6 would lose Nuance's technology just yet. Right now, it appears Nuance is only having conversations with potential buyers, which means any existing contracts -- such as voice recognition for the iPhone 6 -- would remain intact.

We can then extend this idea a bit further. If it's safe to assume the iPhone 6 will keep the same Siri listening software, even if a Samsung buyout occurs soon, then it's also possible that Apple has an existing long-term contract in place. Since neither Apple nor Nuance have shared such information, we obviously don't know, but Apple has been using Nuance since the iPhone 4s and it's plausible the two companies have signed a multiyear or multidevice contract.

Lastly, and just as likely, there might be no deal and things could continue exactly as they are right now.

So what does all this mean?

Foolish final thoughts
Talk of a possible Samsung acquisition of Nuance brings up longtime questions regarding why Apple never snatched up Nuance. Apple typically likes to pick up small companies and then utilize their tech and talent for itself. And while Nuance would have been a rather large purchase for Apple, this purchase would have fit well with Apple's modus operandi. With the company so integrated into Apple's mobile devices, it's a bit surprising that never happened.

Obviously, even if Samsung or another company picks up Nuance, Siri isn't going anywhere. For investors, the thing to watch would be how Apple's voice recognition strategy would play out if an acquisition does occur. Since Apple doesn't own Nuance I'm sure the company has already planned for such a scenario. But Samsung bringing the tech completely under its roof could give it an advantage over Apple, considering that Android's voice commands are already an integral part of the mobile OS, and in many ways trump Apple's own virtual assistant. Ultimately, I wouldn't be too worried about these rumors, but it would be wise for Apple investors to keep tabs on any new developments. 

Invest in the tech inside the latest gadgets
Apple and Samsung may get all the media attention for their devices, but small companies making the most advanced tech inside those gadgets can be some of the best investments. The Motley Fool is highlighting one such company already making big waves in wearable tech -- and it's only just begun. To learn how you can get started investing in wearable tech, and to find out more about this one company, just click here now.

Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Apple and Nuance Communications. The Motley Fool owns shares of Apple and Nuance Communications. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information