It is a strategy which we have been hearing a lot about over the last couple of months, and the inclusion of Semantic Machines adds further ammunition to the Microsoft AI garrison.

This acquisition is a perfect example of where CEO Satya Nadella wants to take the Microsoft business. When Nadella inherited the Microsoft throne, the business was in a trough, relying on a decaying legacy business while carelessly investing to chase segments which had already boomed. The Nadella strategy was to get out in front of the crowd with a heavy emphasis on cloud computing in the early days, and now a more acute focus on artificial intelligence. Semantic Machines builds on this vision.

“We are excited to announce today that we have acquired Semantic Machines Inc., a Berkeley, California-based company that has developed a revolutionary new approach to building conversational AI,” said David Ku, CTO of Microsoft AI & Research. “Their work uses the power of machine learning to enable users to discover, access and interact with information and services in a much more natural way, and with significantly less effort.”

The idea of conversational AI is a simple one. Take AI interactions from limited and specific questions to conversation based outcomes. With more of a focus on conversational AI, offerings like Cortana, the Azure Bot Service and Microsoft Cognitive Services will be able to become more intuitive, taking actions based on context and more nuanced enquiries. It becomes a much more natural interaction and will ultimately drive the normalization of the technology.

This is where the Semantic Machines acquisition could prove to be a valuable one, as it builds on the Microsoft mission statement. The objective of Semantic Machines is to develop a ‘new, language-independent technology platform that goes beyond understanding commands to understanding conversations’. While this does sound like a blue-sky ambition, the task is separated into several areas including extracting semantic intent from interactions, deep-learning models to enhance the concept of context, speech recognition, speech synthesis and reinforcement learning.

The conversational AI strategy does look like it is becoming a useful one for the Microsoft team, especially in the telco space, where operators are trying to reverse years of negative customer service experience. While it is not reasonable to assume 100% of customers would welcome virtual customer service agents, progress with conversational AI will make the virtual agents more intuitive, broadening acceptance, while also making them more useful.

TIM is one telco which has grasped onto the Microsoft AI experience for its customer services, and we suspect it won’t be the last. For industries which have traditionally struggled in the customer services space, the telcos being top of this list, Microsoft’s conversational AI department is certainly one to keep an eye on.