Microsoft takes a major step into the US healthcare market

Tech giant Microsoft this week acquired Massachusetts-based Nuance Communications for $16bn, which is reportedly up to 13 times Nuance’s fiscal revenue in 2020.

That Microsoft is prepared to pay such a sum owes much to the COVID pandemic exposing a need for the healthcare industry to become more efficient with its collection and distribution of patient data.

As a leader in speech recognition technology, Nuance could be a good fit for Microsoft, according to industry experts approached by the Wall Street Journal.

Why it matters

Tech companies, such as Microsoft and Alphabet’s Google, are increasingly looking to develop new markets and revenue opportunities by collecting and analysing patient data.

Services could include cloud-computing platforms and health activity-tracking apps, as healthcare shapes up to be the next battleground for the major tech companies.

With its purchase of Nuance, analysts say Microsoft will be well-placed to sell healthcare customers its more lucrative products and services, such as cloud-computing.

This appears to be Microsoft’s strategy because VP Gregory Moore will oversee the integration of Nuance into Microsoft. He previously headed up Google Cloud’s efforts to get into the healthcare market.

Microsoft also has an opportunity to integrate Nuance’s language-processing capabilities into products like Teams, its collaboration tool that is a key part of its Office 365 productivity software.

Key quotes

“This coming together is about empowering healthcare. It’s now very clear that healthcare organisations that accelerate their digital investments can improve patient outcomes and reduce cost at scale” – Satya Nadella, CEO of Microsoft.

“The pandemic response by the healthcare industry has proven the value of technology to healthcare delivery. All the digital giants are paying attention” – Gregg Pessin, senior research director at Gartner.

Sourced from Wall Street Journal