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Nuance pays $102.5 million for Swype

By Hiawatha Bray
Globe Staff / October 8, 2011

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Nuance Communications Inc. of Burlington, maker of speech recognition software like Dragon Naturally Speaking, has spent $102.5 million to acquire Swype Inc.

Swype, which was a venture-backed private company, makes software to allow users of touchscreen devices to type words on a keyboard by dragging a finger from letter to letter, rather than tapping the screen. The company is based in Seattle.

According to a filing with the US Securities and Exchange Commission, Nuance has paid $77.5 million to Swype shareholders, with an additional $25 million to be paid in 18 months, on condition that Swype’s key executives continue with the company. Swype will be operated as a wholly-owned subsidiary of Nuance.

A Nuance spokesman declined to comment about the acquisition.

Sheryl Kingstone, director of research at the Yankee Group in Boston, said that Nuance is developing a suite of products to make it easier to interact with portable devices. The real thrust here is the whole mobile revolution,” said Kingstone. “It’s all about meeting customer demand and improving the customer experience on the mobile phone.”

Nuance’s speech recognition software is found on millions of cellphones such as Apple Inc.’s iPhones and BlackBerry devices from Canada’s Research In Motion Ltd. The software lets users enter commands or send text messages by speaking instead of typing. Nuance also makes software that converts text to speech, so a smartphone can read incoming messages aloud.

In 2007, the company acquired Tegic Communications, the developer of T9, smartphone software that makes it far easier and quicker to enter text from a standard phone keypad. One version of T9 works in much the same way as Skype, letting the user drag a finger across a touchscreen’s virtual keyboard to enter words. Swype founder and chief technology officer Cliff Kushler co-founded Tegic and helped develop T9.

Hiawatha Bray can be reached at bray@globe.com.