This article is from the public number: Guotai Junan Securities Research (ID: s) a> , author: Qijia Hong, original title “ Small businesses are not worth talking about technical thresholds? Speaking from the rise and fall of speech recognition giant Nuance | Monarch Computer “, the title picture comes from: worm creative
On October 4, 2011, Apple’s auditorium, Siri was officially released.
As the world’s first intelligent voice assistant, Siri quickly ignited the enthusiasm of the market once it was launched.
The first Siri-equipped iPhone 4S sold 4 million units in the first weekend after its launch, and drove the sales of Apple phones in the fourth quarter of 2011 more than doubled from the previous quarter to reach 37 million units.
Siri’s first launch boosts iPhone sales
Data source: Bloomberg, Guotai Junan Securities Research
Siri’s behind-the-scenes hero, and the provider of its voice core technology, is Nuance, once the world’s voice overlord.
Nuance recognition engine technology has been used in more than 80% of the world’s speech recognition. Nuance technology giants such as Apple, Amazon, Samsung, Nokia have used Nuance’s speech technology solutions. At its peak, Nuance’s technology supports 50 languages in the world and has nearly 2 billion users.
Why did you say it? Because two years after Siri’s release, Nuance not only failed to make a lot of money, but also turned its profit from loss to profit, and has since lost momentum.
What happened here? Guotai Junan Computer Team Revisited the Ups and Downs of Global Voice Giant NuanceHistory, and draw conclusions from it-
For the small technology companies looking around by giants, the technical threshold is a pseudo-proposition, and the real threshold lies in choosing a scene-friendly track.
One, the voice overlord Nuance floating up and down
Nuance was born at the Stanford International Institute.
In the mid-1990s, Nuance set up a company separately from the SRI Speech Technology and Research Laboratory, mainly providing technical consulting services.
In 1996, the company began to deploy the first version of the voice interaction platform. By the time the company was listed on the NASDAQ Stock Exchange, the company had released a series of voice interaction software products. (such as Nuance7, Nuance Verifier) and supporting developer tools (such as Speech Objects) .
As of June 2000, 203 companies worldwide have directly or indirectly used Nuance’s products, including Fidelity International, American Airlines, British Lloyds TSB Group, etc., involving finance, aviation, retail, telecommunications, etc. And many other industries, as well as voice portals such as BeVocal, General Magic, GoSolo Technologies, and more.
As a technology exporter, Nuance uses its own voice software platform and developer tools to help customers embed voice interaction functions into their applications. The products are used in many application scenarios including stock quote trading, travel planning, shopping, transportation navigation, etc. Get landing.
After entering the 21st century, Nuance has successively acquired more than 40 companies, covering the fields of speech, input methods, and medical care.
Nuance acquired a large number of companies after entering the 21st century, and gradually established its dominant position in the voice field.
Data source: Nuance announcement, Bloomberg, Guotai Junan Securities Research
During a series of acquisitions, the company has accumulated an absolute number of leading patents in the industry and gradually established its dominance in the field of voice technology.
After that, the company successfully cut into mobile phone and other terminal markets, and won the favor of giants such as Apple. By 2012, Nuance’s market share in the global smart voice market was close to 70%.
In 2012, the company accounted for 62% of the global intelligent voice market
Data source: Institute of Electronic Science and Technology Information, Guotai Junan Securities Research
Benefiting from unparalleled technological advantages, the company’s revenue grew at a compound growth rate of 27% from 2006 to 2012, and its stock price soared.
Company revenue increased by 27% in 2006-2012
Data source: Bloomberg, Guotai Junan Securities Research
But no one would think that becoming Siri’s technology provider is the last highlight of Nuance.
In the years following Siri’s debut, the global smart voice market has grown rapidly.
According to the data of IBISWorld, from 2013 to 2015, the global intelligent voice market scale has a compound growth rate of 23.7%, and the annual growth rate has exceeded 20% for three consecutive years; the global intelligent voice company number has a compound growth rate of 24.7%, and the intelligent voice market is booming .
2013-2015 global smart voice market grows rapidly
Note: Different statistical agencies have large differences in the statistics of the intelligent voice market size, but the trends are similar. To ensure that the data is comparable between different years, we use IBISWorld Data, data source: IBISWorld, Guotai Junan Securities Research
However, in sharp contrast to the booming development of the intelligent voice market, Nuance’s performance has fallen rapidly.
The company’s mobile segment related to the mobile phone business (this segment also includes businesses such as automobiles and operators) Revenue decline is most obvious, in 2013 ~ 2015, the revenue growth rate of this segment was -9.3% /-15.2% /-7.2%, revenue fell for 3 consecutive years.
Since 2013, the revenue growth of some of the company’s core business segments has fallen sharply
Data source: Bloomberg, Guotai Junan Securities Research
From a profit perspective, Nuance turned from profit to loss in 2013. Since then, Nuance has been in a loss or small profit for many years. The net profit of the mobile business segment fell 37.3% / 44.1% from 2013 to 2014, which is an important reason for Nuance’s decline.
The company has been in a state of loss or profit for many years since 2013
Data source: Bloomberg, Guotai Junan Securities Research
The company’s share in the intelligent voice market continues to decline
Note: Different statistics agencies have large differences in the statistics of the intelligent voice market size, but the trends are similar. To ensure that the data is comparable between different years, we use here IBISWorld data, data source: IBISWorld, Guotai Junan Securities Research
Due to the decline in financial performance and market share, the company’s stock price underperformed the index significantly.
From January 1, 2012 to the present, the Nasdaq is up 240%, while Nuance shares are down 18% over the same period.
After 2012, the company’s stock price underperformed the Nasdaq index
Data source: wind, Guotai Junan Securities Research
Second, the technical threshold is a false proposition
Is there a threshold for speech recognition? Of course it is, and it is still very high.
Nuance is not the only focus on speech recognition, but also Apple, Amazon, and Google.
Especially, “Mobile phones, TVs, cars are just carriers, and the future of artificial intelligence is in the voice.” After the consensus has been reached in the technology circle, the giants have begun to stare.
In 2012, Google launched its smart voice assistant, Google Now, which can provide information such as sports scores, calendar reminders, and weather forecasts.
In 2014, Microsoft launched Cortana, its first personal intelligent assistant.
In the same year, Amazon launched the smart speaker Echo, which was different from the previous mobile phone as an additional feature. The intelligent voice assistant became the core function of the product.
With the popularity of Siri, IT giants have increased their smart voice
Data source: the official website of each company, Guotai Junan Securities Research
The giants entered the market and it took only three moves to quickly make Nuance’s technical barriers almost disappear.
1. Mass acquisition of smart voice companies
In the same way that Nuance used in its early years, the IT giant relied on its strong comprehensive strength to acquire a large number of intelligent voice companies, rapidly increasing its technology and patent accumulation in this field, and gradually narrowing the gap with the company.
IT giants acquire a large number of smart voice companies
dataSource: the company’s official website, google, Guotai Junan Securities Research
2. More R & D investment
From the perspective of R & D funding, since 2010, Nuance R & D expenses have never exceeded 5% of Google or Microsoft.
Nuance’s investable R & D costs are somewhat stretched in the face of tens of billions of IT giants and increasing R & D investment.
Nuance’s R & D expenses are much smaller than Google and Microsoft
Note: The fiscal year data of each company is used, of which Google’s fiscal year 2019 has not ended. Data source: Annual reports of various companies, Guotai Junan Securities Research
In terms of the number of R & D personnel, Nuance has the highest R & D team at 10.8% of Google and 5.4% of Microsoft, and this proportion is still gradually decreasing.
When IT giants add smart voice, sufficient R & D personnel reserves provide important support for bridging the technology gap with Nuance.
Nuance R & D staffFar less than Google, Microsoft
Note: The company’s fiscal year data is used, and Google will not disclose it from fiscal year 2017. Source of data: company annual reports, Guotai Junan Securities Research
3. IT giants dig corners wildly, making the company’s development even worse
As early as 2004, in order to avoid Nuance’s patent obstacles, Google co-founded Mike Cohen to lead the team to develop speech recognition technology.
As IT giants add smart voice, the digging of Nuance is getting crazy.
Apple, a Nuance partner, established its voice technology R & D team in Boston, and from 2011-2013 Gunnar Evermann, former chief mobile technology architect of Nuance, Don McAllaster, former chief scientist, and Larry, former vice president of research Gillick incurred His Majesty.
IT giant has dug into Nuance
Data source: Nuance, linkedin, Guotai Junan Securities Research
Compared with the vigorous pursuit of IT giants, the company’s technological advantages gradually collapsed.
Nuance’s annual report shows that the number of patents in the company’s applications has decreased from about 1900 in FY2010 to about 450 in FY2019. The number of patents owned by the company also saw a downward inflection point in 2017.
If the number of patents is taken as an important indicator of the company’s technological advantages, there is no doubt that the company’s technological advantages in the field of intelligent speech areT giant’s vigorous pursuit and gradually disintegrated.
Nuance patents are decreasing year by year
Data source: company annual report, Guotai Junan Securities Research
Three alarm bells
Nuance is a wake-up call, and it proves that even if you occupy the track too early, there is still the possibility of being overturned.
To many start-up technology companies today, the entry of IT giants is an important threat. So, how can we resist the attack of the giants and avoid the end result?
This must be analyzed from the dimensions of the willingness and difficulty of the giants to enter.
1. Willingness to enter
Different circuits have different appeal to the giants.
General-purpose tracks often mean greater data entry and market space, and the probability of giants entering the game is higher; scene-oriented track market space is often limited, and the probability of giants entering the game is relatively low.
Take smart voice as an example. Regardless of domestic and foreign, the giants’ exploration of intelligent voice has focused on general-purpose C-end products such as smart voice assistants, smart homes, and wearable devices, without vigorously developing C-end products under specific audiences / scenarios such as voice recorders and translators. And not vigorouslyDevelop B-end products.
Similar to the United States, domestic IT giants ’exploration of intelligent voice is mainly focused on general-purpose C-end products and ecological construction.
Data source: Analysys, Guotai Junan Securities Research
This gives HKUST News a number of products with “high scene attribute” + “voice technology occupy the core position of the product” to highlight the possibility of encirclement .
The C-end product with clear scenes of HKUST News
Data source: Tmall official flagship store, Guotai Junan Securities Research
2. Difficulty of entry
There is no doubt that the R & D resources that giants can mobilize are significantly larger than those of ordinary technology companies.
Specifically falling into the data dimension, the control of general-purpose portals will continue to bring huge amounts of data to the giants, and for specific industries with a high degree of scenarioization, (B-side business, education data, judicial data, etc.) , if it can take the lead in realizing card slot, it will be difficult for giants to surpass the data accumulation.
From a business model perspective, small technology companies may position themselves as solution providers rather than basic technology providers.
Big advantages have big advantages, small ones have flexibility.
How small technology companies place their technological thresholds on highly-scenariod tracks and gradually build up their data advantage in the subdivided field will determine when they face the giant “intrusion” The key to life and death.
This article from the public No.: GTJAS securities research (ID: gtjaresearch) , author: Qijia Hong < / span>