Microsoft Bets Mobile Search Ambitions on Tellme

Press Release - March 16, 2007

Redmond, Washington-based software giant, Microsoft, announced late Wednesday that it would acquire speech-recognition technology provider, Tellme Networks.

The exact value of the purchase was not disclosed, but some analysts have valued Tellme at over $800 million, making it Microsoft’s biggest acquisition in over four years.

Tellme, based in Mountain View, California, offers a number of consumer-oriented speech recognition services, including one for mobile phones that lets users conduct voice-based searches for local businesses and other information. Tellme also handles approximately 40% of all directory assistance calls placed in the U.S., via contracts with telephone operators.

By purchasing Tellme, Microsoft is likely hoping to make inroads into the mobile search and information market, and gain the upper hand against search rival, Google Inc., on a new and level playing field.

“This is the type of acquisition Microsoft needs to do to compete effectively,” explained JupiterResearch analyst, Michael Gartenberg. “The last thing they want to do is give a company like Google the opportunity to gain more of a hold in mobile search while it’s still in its infancy.”

Microsoft’s acquisition of Tellme is expected to close sometime in the second quarter of this year.