Apple Negotiating Deal With Nuance for Speech Recognition in iOS 5?

TechCrunch reports that Apple is rumored to be negotiating some sort of deal with Nuance Communications, the speech recognition company behind the Dragon NaturallySpeaking engine that powers a number of popular applications for Mac OS X, iOS, and other platforms.

Apple has been negotiating a deal with Nuance in recent months, we've heard from multiple sources. What does that mean? Well, it could mean an acquisition, but that is looking fairly unlikely at this point, we hear. More likely, it means a partnership that will be vital to both companies and could shape the future of iOS.

The report notes that Nuance's technology is already used to drive personal assistant software from Siri, a company purchased by Apple last year. Apple has also been said to be preparing to bring a substantial integration of Siri's artificial intelligence and voice control capabilities into iOS 5 presumably set for release later this year.

The other option is for Apple to build the technology themselves. And some recent job postings suggest they may be thinking about that. But to get to where Nuance is today it would take a long, long time. Perhaps more importantly, it's well known in the industry that Nuance holds key patents for their technology and is very aggressive in protecting them. Even Apple would have a hard time dancing around this if they did go it alone.

According to the new report, it is unlikely that Apple is seeking a direct acquisition of Nuance, given the company's $6 billion market capitalization and reports that the company is known for driving a hard bargain, including in negotiations with Apple to keep Siri's services alive after the acquisition, negotiations that have reportedly yet to lead to an agreement.

While an acquisition is still a possibility, a more likely scenario seems to be an expansive licensing deal that would provide Apple with the technology it needs at a substantially lower cost than an acquisition while also giving Apple time to build out its own in-house expertise to potentially replace Nuance at some point down the road.