A TechCrunch post from late yesterday suggests that Apple and voice recognition company Nuance have been negotiating a deal for months following Apple’s acquisition of Siri. Siri, which Apple acquired last April, developed an iPhone app that was marketed as a “virtual personal assistant” and would listen to audible questions from a user (such as “where can I find parking around here”), and would respond with an answer.

In a previous report, TechCrunch said that they believed the acquisition of Siri would lead to iOS 5 having “assistance technology [that] is said to be deeply integrated into the OS for all the different services offered.” However, Apple has had to renegotiate deals with all the partners of Siri since it acquired them and apparently the one hold out is Nuance. According to TechCrunch’s sources, the negotiations between Apple could be as big as an acquisition or just a partnership.

Apparently an acquisition is unlikely at this stage, likely for a number of reasons mainly surrounding the cost; Nuance is a public company valued at over $6 billion, furthermore much of that value is because of various licensing deals that would likely be stopped if Apple bought Nuance. The other alternative is that Apple partners Nuance and licenses the voice recognition technology; and at this stage it is the more likely option according to TechCrunch’s sources. The hold up is apparently because of Nuance CEO Paul Ricci being a “really hard bargainer”, going as hard as Steve Jobs would in the negotiations and resulting in a standoff between the two companies.

Apple does have alternatives to dealing with Nuance, it could build its own service but this would be fraught with legal issues (Nuance holds many patents) and would take time (that Apple may not want to spend) or it could go with Google, but given the current smartphone battle this seems unlikely. Consequently it seems unlikely that Apple has any good alternative here, particularly given how well the Nuance voice recognition technology works.

With with WWDC rapidly approaching, and iOS 5 fairly likely to make some kind of appearance, one would presume that Apple would be at this stage rushing to finalise a deal with Nuance, particularly if it is a major cornerstone of the iOS 5 experience. One final point made by MG Siegler in the article is that;

And the truth is that Nuance needs Apple too. Not only are they also threatened by Google, but Nuance technology is simply not very meaningful without apps that utilize it like Siri. And many of those apps are appearing guess where: iOS.

[Via TechCrunch]