Microsoft Takes Step Toward Voice-Activated E-Commerce

Microsoft Corp. (Nasdaq: MSFT) announced today that it has acquired Entropic, Inc., a provider of software and toolkits for speech recognition, in an effort to integrate speech interaction technology into the Windows platform.

The acquisition comes at a time when the voice services technology market is about to expand dramatically. A report released today predicts that 30 million small and medium enterprises worldwide will spend $8.1 billion (US$) for IP voice services by 2003.

“This is a very attractive market that has been relatively ignored by vendors,” said Michael Killen, chairman of Killen & Associates, which authored the study.

Major E-Commerce Impact

Voice-activated technology will play an increasingly important role in e-commerce as mobile broadband grows and access to the Internet becomes common in cars and in other wireless devices. The merging of voice technology and telephony is critical to the development of Internet devices without keyboards.

GM will introduce voice-activated Internet access as a feature in its cars next year, and many appliance manufacturers such as Electrolux have planned major voice-activated online devices.

The purchase of Entropic will enable Microsoft to integrate voice and telephony applications into Microsoft’s existing products, which are already entrenched in the market. “The Entropic team will help us broaden our API effort to include server-based telephony scenarios and begin integrating that knowledge into existing Microsoft products,” said Doug Henrich, manager of the Speech Product Group at Microsoft.

Moving To Mainstream Applications

Before the acquisition, Entropic was already preparing a campaign for second-round financing to take its technology to market. “The Microsoft acquisition will enable us to execute our strategy, allow our technology to reach a larger market and do so more quickly than would have been possible has we remained a stand-alone company,” said Paul Kinke, president and CEO of Entropic.

Entropic’s team will help Microsoft enhance its speech application programming interface (SAPI), a reliable, open set of speech APIs for both speech engine and application developers. This process will create a backbone of technology that will make speech-recognition applications easier to develop for a wide range of consumer applications and products.

Entropic has staff in Washington, DC and Cambridge, UK. Washington staff members will relocate to Microsoft headquarters in Redmond, Washington, or to the Cambridge office. Entropic’s Cambridge office will expand.

Microsoft already operates a Microsoft Research facility at Cambridge, so the Entropic acquisition expands the company’s involvement at that location.