The long-rumored deal, which is estimated to be worth over $800m, is expected to close in the second quarter.
All of Tellme’s 320 employees located at the company’s Mountain View, California-based headquarters are expected to join the Microsoft Business Division.
Tellme’s software provides voice-enabled search services for mobile phone users looking for general consumer information on local businesses, sports scores, driving directions, flight itineraries, stock quotes, weather, and so on.
The system works by users inputting voice search commands in a mobile phone, then see results, such as maps, directions, quotes, on the phone’s display.
Tellme boasts that its technology handles 2 billion calls per year, each of which it charges for. Major customers include American Airlines and Domino’s Pizza.
The company has partnerships in place with almost all the leading cell-phone carriers in the US.
Microsoft said the technology will help strengthen its speech recognition prowess, an area the Redmond, Washington-based company said it had only scratched the surface of what is possible so far.
Speech is universal, simple and holds incredible promise as a key interface for computing, said Microsoft CEO Steve Ballmer in a statement.
Microsoft will market Tellme’s voice recognition services to its software users and call center customers. Many of Microsoft’s products incorporate a voice-enablement capability today.
While Microsoft still lags behind vendors like Google Inc and Yahoo Inc in the web search market, it hopes that Tellme’s technology will give it a leg up in the mobile search market, which is still evolving.
Today, Tellme does more mobile search support than Google and Yahoo combined, said Jeff Raikes, president of the Microsoft Business Division.
Microsoft believes that speech recognition is complementary to its touch and handwriting recognition technologies. Microsoft’s new Vista operating system also has a built-in voice capability.
The company expects to integrate Tellme’s technology into a unified communications platform it is planning that combines email, phone and instant messaging and mobile search.
Tellme was founded in 1999 by former Microsoft executive Hadi Partovi and got early funding from another former Microsoft executive Brad Silverberg. The company has raised over $238m in venture capital funding to date.
