Some of you older AT&T Wireless customers may remember the ATTWS #121 service. Some of you may have never heard of it. If you've never heard of it, don't be surprised, most of AT&T's own employees weren't aware of it. I once had an ATTWS customer service rep tell me I was stupid and didn't know what I was talking about when I noted that this AT&T service was part of the Tell Me network (part of the reason I'm not an AT&T customer today).

Anyway, Tell Me is a pretty cool voice recognition information network which has traditionally been a privately held company in the Bay Area. Microsoft announced today that they have purchased Tell Me. The original article is available here ---> Microsoft to buy voice recognition company Tellme - Yahoo! News

Microsoft to buy voice recognition company Tellme

By Daisuke Wakabayashi
Wed Mar 14, 6:04 PM ET

SEATTLE (Reuters) - Microsoft Corp. (Nasdaq:MSFT - news) said on Wednesday it will buy privately held Tellme Networks Inc., a speech technology company, to bolster its communications push and enhance searches over mobile phones.

Financial terms of the deal were not disclosed. Microsoft expects to complete the purchase in the second quarter.

Sources familiar with the situation told Reuters on Tuesday the two companies were in talks for a deal that could value Tellme at more than $800 million, making it Microsoft's biggest acquisition since 2002.

Tellme, based in Mountain View, California with 320 employees, allows people to use speech to find information on local businesses, driving directions, sports scores, stock quotes, weather and news from the Internet.

Microsoft, the world's largest software maker, sees mobile phone searches as a relatively untapped market where it can compete more favorably with Google Inc. (Nasdaq:GOOG - news), the dominant leader in computer-based searches.

"Mobile search is going to be a huge market," said Morningstar analyst Toan Tran. "Search on mobile phones is still up for grabs and Microsoft is a big believer in voice being an interface for mobile phones."

Microsoft also aims to combine Tellme's experience in offering voice services like automated directory services with its large customer base as part of its push to offer Web-based phone systems.

Tellme, founded in 1999 by former Netscape executive Mike McCue, provides automated phone services to companies including Merrill Lynch and Federal Express and serves over 40 million people every month.

Microsoft's Office Communications server already allows workers to access and make changes to calendars within the Outlook e-mail system through voice commands or call someone with a click of a mouse.

Tellme's voice services could take those capabilities to the next step and change how people interact with the telephone, Microsoft said.

"We think telephone numbers are an artifact of technological innovation," said Jeff Raikes, president of Microsoft's business division in a conference call.

Tellme already generates a profit, McCue said on a conference call with reporters. Raikes said the two companies investigated partnerships for a while, but talks for an acquisition intensified around December.

Credit Suisse analyst Jayson Maynard, who estimates that Microsoft paid more than $1 billion for the acquisition, said in a note to clients that the company is cash-flow positive and has annual revenue of more than $100 million.

Tellme is privately owned by its employees and investors that include venture capital firms Benchmark Capital and Kleiner Perkins Caufield & Byers.

ROAD AHEAD

Microsoft co-founder Bill Gates in his 1995 book "The Road Ahead" predicted that humans would one day talk to their computers rather than have to type and Tellme fits with his vision of expanding input to more natural ways than typing.

The company also has worked on handwriting and touch technology for tablet notebook PCs.

Tellme said its paid directory assistance service is currently the most common way for people to search for information from their mobile phones. Tellme handles about half of directory assistance calls in the U.S.

The business model for mobile search is evolving from a pay-to-call model of directory assistance to one subsidized by advertising similar to how companies like Google and Yahoo Inc. (Nasdaq:YHOO - news) make money off Web searches, Tellme's McCue said.

Shares of Microsoft closed up 68 cents, or 2.54 percent, at $27.40 on Nasdaq.

› See More: Microsoft Buys Tell Me (AT&T's #121 service)