Nuance Plays Hardball in Voice Recognition

When rumors swirled on May 7 that Apple (AAPL) might acquire Nuance Communications (NUAN), shares of the software company rose 10 percent to $22, within pennies of an all-time high. The assumption was that Steve Jobs gets what Steve Jobs wants.

A safe bet—unless you know Nuance Chief Executive Officer Paul Ricci. In speech-recognition technology, which Nuance dominates, the soft-spoken Ricci is considered every bit as powerful as Jobs. Since leaving Xerox (XRX) to join the company in 2000, Ricci has bought 43 companies to build the largest independent maker of software that lets devices understand you as you dictate a memo to your laptop, say, or tell your smartphone to find the nearest sushi bar. "People had been knocking away at speech recognition since the 1960s," says Bill Janeway, a partner at Warburg Pincus, Nuance's largest shareholder. "Paul turned it into a billion-plus business that makes technology used by hundreds of millions of people."