Nuance Acquires ShapeWriter, Ramps Up Pressure on Seattle Startup Swype

Memo to mobile-interface companies: Nuance is on the prowl.

The speech-recognition and imaging software giant (NASDAQ: NUAN), based in Burlington, MA, has acquired ShapeWriter, a Silicon Valley-based spinout from the IBM Almaden Research Center, for an undisclosed sum. Nuance has not spoken publicly about the acquisition, but a message on the ShapeWriter website as of yesterday reads, “ShapeWriter, Inc. is now part of Nuance. The ShapeWriter continuous touch application has joined Nuance’s portfolio of patented text input solutions recognized as the industry’s leading predictive text technology.” E-mail messages sent to Nuance’s media representatives this morning were returned, but the company hasn’t commented on the deal yet.

The deal is interesting on a few fronts. First of all, the technology in question—which lets you type on a touchscreen keyboard by sliding your finger to connect letters, instead of tapping them individually—is starting to take off. The key is that the software is predictive, so you can be sloppy and it will still get the words right most of the time. The big makers of mobile phones and operating systems are clamoring to offer consumers better ways of inputting text on touchscreens, so this technology seems to fit the bill. But given how similar the offerings look (at first glance) from tech companies like Nuance, ShapeWriter, Dasur, SlideIT, and Swype, I sense some patent battles and consolidation coming on.

Which brings us to interesting point No. 2. Seattle-based Swype is an early leader in the field, and a direct competitor to ShapeWriter and Nuance. Swype has venture backing from Samsung Ventures, Nokia Growth Partners, and Docomo Capital, and has been inking deals left and right with original equipment manufacturers and wireless carriers to put Swype’s software on mobile devices. Knowing the guys at Swype, they are probably following the Nuance news with great interest, but won’t comment on it. (Though they have been getting lots of national media interest lately.)

Swype was founded in 2002 by Cliff Kushler and Randy Marsden, and is now led by CEO Mike McSherry. Kushler is the co-inventor of T9, the predictive texting technology that is used in some 4 billion devices worldwide. Guess who owns T9? That’s right, Nuance.

Over the past few years, Nuance has pursued an aggressive strategy of acquisitions in computer interfaces and speech. [Full disclosure: My brother-in-law is a former employee of Nuance who now works at Vlingo, a Cambridge, MA-based company that competes with Nuance in speech recognition—GH.] Nuance has also developed plenty of its own technologies. Back in March, the company introduced T9 Trace, its version of predictive, slide-y, touchscreen text-input software. Presumably, ShapeWriter adds a new dimension to the technology, but we’ll see where all of this goes.

I haven’t even mentioned Apple yet, but clearly Steve Jobs and Co. are watching this stuff closely. According to the New York Times, Swype doesn’t have a deal with Jobs just yet, but “is tinkering with software for the iPhone and the iPad and hopes to show it to Apple soon.”

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and Editor of Xconomy Boston. E-mail him at gthuang [at] xconomy.com. Follow @gthuang

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