Businessmodel of Nuance Communications

Customer Segments

Nuance has a mass market business model, with no significant differentiation between customers. The company targets its offering at organizations across industries that need voice recognition solutions for their customer service operations. The most common sectors are financial services, travel and telecommunications, healthcare, utilities, education, and government.

Value Proposition

Nuance offers two primary value propositions: accessibility and brand/status.

The company offers accessibility through its many options. Its speech solutions support approximately 80 different languages. Further, it maintains regional offices in 35 countries.

The company has established a strong brand because of its success. Its speech solutions are used in nearly 1,000 devices, including printers, handsets, and vehicles. It has shipped its products in over 110 million voice-enabled vehicles and five billion mobile phones. It has over 22 million registered users for its desktop solutions. Its customers include the eight biggest handset makers, the 10 largest automotive firms, over 10,000 hospitals (including 150,000 doctors/caregivers), and two-thirds of the Fortune 100. Specific prominent clients include Bank of America, United Airlines, Bell Canada, Delphi, Chrysler, Citroen, Verizon, and Sony. Lastly, Nuance has won awards in every major product family.

Channels

Nuance’s main channels are its direct sales force (operating in over 70 countries), its eCommerce website, and its network of over 2,000 channel partners, which includes distributors, independent software vendors, system integrators, hardware vendors, value-added resellers, and telecommunications carriers.

Customer Relationships

Nuance’s customer relationship is primarily of a personal assistance nature. The company offers phone and e-mail support. It also maintains the “Nuance University Customer & Partner Program”, which provides learning options to clients and partners. These include product and solution training, classroom and webinar-based live classes, and partner certification exams. That said, there is a self-service component in the form of online learning courses and answers to frequently asked questions on the company’s website. There is also a community element in the form of a user forum.

Key Activities

Nuance’s business model entails designing and developing software solutions for its customers.

Key Partners

Nuance utilizes over 2,000 channel partners to sell its products, as mentioned previously. They are given training, sales, and marketing resources to assist with their efforts. Specific partners include Accenture, Canon, Hewlett-Packard, Microsoft, IBM, Sony, Nortel, Lexmark, Cisco, and Xerox.

The company also maintains the following two dedicated partnership programs:

Nuance Healthcare Connections Partner Program – This focuses specifically on sellers of its Healthcare line of products. These firms are chosen through a demanding certification process. Specific partners include New World Creations, Datel Solutions, and RevPro Healthcare Solutions.

Nuance Affiliate Program – This program involves organizations that promote Nuance’s offerings through their platforms (websites, mobile apps, etc.). The firms receive materials such as banner ads, text links, buttons, and feeds. If a lead results in a purchase the partner receives an 18% commission, with higher rates possible for best-selling affiliates.

Key Resources

Nuance’s main resource is its team of over 2,000 developers, engineers, and voice and language scientists. It also relies on a group of over 1,200 services employees to carry out implementations of its solutions. The company operates one of the largest libraries of speech data in the world. Lastly, it places a high priority on intellectual property, with over 4,300 patents and patent applications.

Cost Structure

Nuance has a value-driven structure, aiming to provide a premium proposition through significant personal service and frequent improvements to its offerings. Its biggest cost driver is cost of revenue, a variable expense, particularly that associated with professional services and hosting. Other major drivers are in the areas of sales/marketing and research/development, both fixed costs.

Revenue Streams

Nuance has three revenue streams:

Product and Licensing – Revenues generated from the sales and licenses of Nuance’s technology.

Professional Services and Hosting – Professional services involve revenues generated from the offering of implementation, training, and consulting services for customers. Hosting involves revenues obtained from the delivery of on-demand hosted services such as automated customer care applications, medical transcription, mobile operator services, and mobile search, infotainment, and transcription.

Maintenance and Support – Revenues generated from the offering of technical maintenance and support services.