Microsoft Acquires Colloquis to Enhance User Interactions Online

October 24, 2006 0

Microsoft announced a deal to buy Colloquis, a privately held firm specializing in virtual service agents programmed to answers questions online.

Microsoft Corp. lately announced that it has acquired privately owned Colloquis Inc., a maker of conversational online business solutions that feature natural language-processing technology. The company’s software lets customers send Instant Messages that retrieve conversational answers through artificial intelligence programs.

The deal will allow Microsoft to offer new services based on Colloquis technology to businesses with online operations, giving it a platform and set of tools for building conversational capabilities into its software.

Live Chat, Microsoft Style
Today’s “anytime, anywhere” world has established a standard of instant and easy access to all forms of information, media and content, said Steve Berkowitz, senior vice president of the online services group at Microsoft.

Microsoft said it would use the technology to host a Windows Live Service Agent business for clients and put the Colloquis software to work in its own divisions, beginning with the Xbox video game group.

The acquisition gives Microsoft tools and platform it needs to build conversational capabilities into its software, Berkowtiz added. Microsoft is clearly preparing to get more aggressive in a CRM market that IDC predicts will reach US$11.4 billion by 2008.

Initially, Microsoft will offer a managed service called Windows Live Service Agents based on the existing Colloquis Automated Service Agent offering, which has been implemented by companies such as Cingular Wireless, Comcast Corp., Cox Communications Inc., Panasonic Corp. of North America, Time Warner Cable Inc. and Vonage Holdings Corp., has a successful track record with its natural language technology.

Leveraging Success
Microsoft completed the purchase, and the same day it renamed the Colloquis technology to Windows Live Service Agents and began selling it as a hosted service under the Windows Live brand.

Windows Live Service Agents provides businesses with a hosted Web-based customer service application that interacts with end users in conversational language, combining the ease of traditional online support with the valuable insight of natural language logic.

"This acquisition will give Microsoft a greater repertoire of tools and technologies that enhance the customer experience online and it will do it in a variety of ways," Yankee Group analyst Sheryl Kingstone told CRM Buyer. "Most importantly, it will help Microsoft provide more dynamic information so that the customers find the answers they are looking for."

The telecom sector is trying to move towards a better customer experience online partly because of the economics of customer self-service, Kingston noted. "We have not made customer self-service work and we really have to make it work for the customer and for companies."

This software will also be integrated into Microsoft’s call-center agent software, Customer Care Framework (CCF), said Clinton Cickey, group product manager for Microsoft. That software currently requires interaction with a customer-service agent, but eventually it will let companies do online chat with customers without a human, he said.

Microsoft is focused on providing solutions such as CCF that will allow our customers to create a positive customer service experience regardless of the channel, be it phone, e-mail or the Web, said Maria Martinez, corporate vice president for the Communications Sector at Microsoft. "With the addition of Windows Live Service Agents to our portfolio, businesses can simplify access to information, streamline issue resolution, minimize support costs and improve customer satisfaction."

Cickey characterized the deal as an extension of Microsoft’s hosted services strategy, which the company introduced last November under the Windows Live brand. Microsoft has been busy building a portfolio of Web-based and hosted services to compete with companies such as Google and Yahoo for its share of Web-based advertising revenue and other financial opportunities driven by the popularity of the Internet.

Indeed, most attempts at end-to-end customer self-service have failed. Natural language technologies offer a more flexible approach that could change all that. Microsoft has the programming power to experiment with new offerings.

“Colloquis provides Microsoft with the tools and platform to build conversational capabilities into a wide array of applications that enable businesses to facilitate a simple and rewarding online experience for their end users.”

Xbox: The Guinea Pig
Microsoft first plans to experiment with its Xbox system, making this the first group within Microsoft to use Windows Live Service Agents.

Colloquis technology will be a strong contributor in enabling Xbox customers to rapidly find helpful information related to their support needs. The conversational tone and ease of use of the product will offer customers another approach with which to address commonly asked questions, providing quick resolution to customer issues.

The Colloquis product’s technical flexibility makes it an excellent fit with other self-service options that Xbox plans to release in the fall, Microsoft said. Video game users may be more inclined to try the new technologies by virtue of their tech-savvy nature, the company said.

In addition, Microsoft plans to take advantage of Colloquis Internet bot technology in an application called Windows Live Agents, a conversational application that users can interact with via Windows Live Messenger. These "agents" are used to entertain, encourage engagement with products or services, provide a new advertising opportunity for brand advertisers, and drive search and information retrieval.

The software recognizes questions or statements sent via instant messaging and then responds as though one were "chatting with a customer service agent," according to Microsoft, which is based in Redmond, Washington.

The Colloquis team fully believes in the tremendous potential of natural language software in everything from improving customer service to helping brands connect better with their constituents, said Stephen Klein, chief executive officer at Colloquis. "Microsoft has the resources to not only unlock that potential, but to leverage its expansive customer base to create truly innovative real-world uses. We are excited to see what the future holds."

Founded in 1975, Microsoft is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

A Microsoft spokeswoman declined to reveal the financial terms of the purchase but said the 36 people employed by Colloquis would continue to work in the acquired company’s offices in Sunnyvale, California, and New York City.

Microsoft eventually will use speech-recognition technology to extend what it has acquired from Colloquis to enhance how businesses do automated customer service, said Michael O’Hara, a Microsoft general manager.

“We want to drive it beyond text to look at speech and other things that have to do with the understanding of conversational language through technology,” O’Hara said.