Mr. Softy Finds Its Voice

If talk is cheap, don't tell Microsoft (Nasdaq: MSFT  ) . The company announced yesterday that it's buying voice-recognition provider Tellme for an undisclosed amount. Besides adding improved voice features to offerings like Office and Mobile Windows, the deal could also help Microsoft in its war against Google (Nasdaq: GOOG  ) .

Tellme's voice platform analyzes phone calls to get news, movie showtimes and weather reports. It also provides corporate services, including directory assistance, flight status, billing, and customer service, for clients such as Merrill Lynch (NYSE: MER  ) , AT&T (NYSE: T  ) , Domino's Pizza (NYSE: DPZ  ) , and UnitedHealth Group (NYSE: UNH  ) .

Tellme's key advantage lies in its assembly of the largest speech index for local businesses. A speech index compiles phonetic representations of text -- all the different sounds people might use to say the same words and phrases. "There may be 10,000 different representations for the same request, considering where the user is from, gender, age and so on," said Sharma Dipanshu, the founder of mobile search firm V-Enable, in a Fool interview yesterday.

Buying Tellme lets Microsoft provide voice-enabled search for mobile phones. Want to find the nearest Starbucks while you're out and about? Instead of punching a crazy combination of keys on your mobile phone, Tellme's software lets you say "Find Starbucks" and get a list of nearby locations, each linked to a phone number and map.

Mobile search is still in its early stages, but Google and Yahoo! (Nasdaq: YHOO  ) have already outlined ambitious plans for the space. The 2.2 billion mobile devices in use worldwide make this sector too big to ignore. According to a report from Informa Telecoms & Media, the online advertising market for mobile devices is expected to reach a whopping $11 billion by 2010.

Microsoft was slow to capitalize on web search, but it's not repeating that mistake in the mobile arena. Plenty could still go wrong with its plans for Tellme, but at least Mr. Softy's not playing catch-up here.

Further phonetic Foolishness:

Think you could outline Microsoft's investing pros or cons in 27 seconds or less? See how our Fool community tackled that challenge with this contribution to our new Motley Fool CAPS videos.

Microsoft and UnitedHealth are Motley Fool Inside Value recommendations. Discover more of the market's best bargains with a free 30-day trial subscription.

Fool contributor Tom Taulli, author of The Complete M&A Handbook, does not own shares mentioned in this article. He is currently ranked 3,625 out of 24,208 in CAPS. Starbucks, Yahoo!, and UnitedHealth are Stock Advisor picks, while AT&T was a former selection. The Fool has a disclosure policy.

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