After running one of the more successful Silicon Valley acquisitions by Microsoft for several years, Tellme Networks founder and GM Mike McCue (pictured here) will be leaving the company at the end of June.

As part of the transition, Zig Serafin, who has been running a lot of the speech technology efforts for the software giant at its Redmond, Wash., HQ, is taking over the voice services subsidiary and all the other related units.

They will be made into a single, yet-unnamed, team with about 400 employees in total.

McCue and Serafin are now meeting with Tellme staff at its Mountain View, Calif., HQ about the changeover.

“It was time to move on, after a long and really successful time at a big company,” said McCue, in an interview with BoomTown two weeks ago. “Voice technology is an area that I think Microsoft is committed to excelling in and the new configuration will help ensure that.”

Serafin (pictured here), a 10-year Microsoft veteran, said as much in another interview yesterday. “This is an opportunity to bring together the group to allow it to innovate across Microsoft,” he said. “We really want to advance this user interface for computing.”

Serafin said he would be spending four days a week in Silicon Valley, as part of that effort, using Tellme as the center of a “whole new speech center of excellence.”

Microsoft (MSFT) has long been aiming at differentiating itself from the popular iPhone from Apple (AAPL), which has revolutionized the mobile market via its innovative touch and movement technology, by drilling down on making speech recognition technology a popular consumer application.

It bought Tellme in 2007 for $800 million as part of that effort. Competitors in the space include Google (GOOG) and Nuance.

For example, Tellme recently announced “one-button” voice access for Windows-enabled mobile phones, as well as some new technologies to improve call automation for customer service centers.

McCue has been a pioneer in the use of speech in the mobile arena, founding Tellme in 1999. Previous to Tellme, he was VP of technology at Netscape, the once-dominant browser company.

McCue said he will be taking some time off after he leaves Tellme and then plans on working on another start-up and advising companies.

Below is a picture from a 1999 board meeting at Tellme, when it was private. It includes McCue, as well as former Netscape execs Peter Currie and Mike Homer (click on image to make it larger).

And, below that, are two video interviews I did with McCue in March of last year.

One is a tour of the Tellme HQ and another is a longer chat with McCue–whom I once called the “Patty Hearst of Silicon Valley” for being so dang sunny in an Associated Press story about what life was like after a takeover by the software giant, in the midst of Microsoft’s failed attempt to buy Yahoo (YHOO).

In it, I noted that he displayed “the cheeriness of someone with acute Stockholm syndrome and $800 million in Microsoft money.”

Tellme HQ Tour:

McCue Talks About Mobile Devices:

Tellme, the voice services subsidiary of Microsoft, is announcing a “one-button” voice access for Windows-enabled mobile phones, as well as some new technologies to improve call automation for customer service centers.

Aiming at smartphone users who might prefer to use voice over the Apple (AAPL) iPhone’s popular touch, tap and swoosh features, Microsoft (MSFT) is trying to differentiate its mobile offerings.

“Unlike other voice-based services, Tellme is the first to allow people to press one button, say what they want and get it, whether that is to send a text, make a call or search for information,” said the company in a press release, which noted the service would be available in the fall on WIndows mobile phones.

Here is a video of Tellme GM Mike McCue, showing off the new one-button service:

And, here are the full press releases:

MICROSOFT’S TELLME ANNOUNCES ‘ONE BUTTON’ VOICE ACCESS TO MOBILE COMMUNICATIONS AND INFORMATION

More than 75% of Smartphone Users Prefer Voice and Would Buy Phones With Tellme; Free to Carriers and Handset Manufacturers for Windows Mobile 6.5 Phones

APRIL 29, 2009–Mountain View, CA–Today Tellme®, a subsidiary of Microsoft Corp. and pioneer of voice services, announced the first mobile voice service to combine content and communications, simplifying how people interact with their phones every day. Unlike other voice-based services, Tellme is the first to allow people to press one button, say what they want and get it, whether that is to send a text, make a call or search for information. Tellme has designed a unique version of this experience specifically for Windows phones due out this fall.

The new service puts many of the most popular phone functions behind a single button. Windows phone users just press the side button of their phone to:

- Send a text by saying “text” to open a text box, then speak the text message and send to call anyone in their contact list

- Initiate a call simply by saying “call” and then the name of anyone in their contact list

- Search the Web with Microsoft Live Search by speaking your request, such as “weather in San Francisco, California”, “Pizza in Kansas City” or “mother’s day gift ideas”

“Because it’s so intuitive, we believe there is a real opportunity for voice to materialize as the leading user interface for the phone,” said Dariusz Paczuski, senior director of consumer services at Tellme. “By bringing voice access to calling, texting and searching together we reduce ‘menu surfing’ on phones and make the convenience of voice more tangible for everyday needs.”

In a head to head comparison, it’s clear why people prefer voice over touch. For example, it requires four touches and more than 20 keystrokes to find a business with the Apple iPhone, while it only takes one button push and one verbal command to find the same business with Tellme. Tellme’s research shows similar results for other tasks, such as making calls, sending text messages and searching for content like traffic, movies, news and sports.

“For example, Sprint has integrated our voice access to the Live Search application on Sprint Instinct phones and subscribers love it,” continued Paczuski. “In fact, we’ve seen impressive adoption of voice with 3 of every 4 search queries being initiated by voice.”

Finally, in a recent study conducted by Sanderson Studios, more than 70 percent of respondents said that voice is superior to keypad or touch-based methods to perform some of the most popular mobile tasks. This includes looking up a business listing or location (78 percent), sending a text message (72 percent), placing a call (79 percent), getting information such as movies, weather, traffic or sports (77 percent) and getting directions (81 percent).

For the past decade, Tellme has been pioneering voice services for businesses and consumers, answering billions of calls every year and helping millions of people get the information they need simply by speaking a request. Now the convenience of voice is coming to Windows phones, bringing people closer to the things they want by providing easier access to more of the phone’s functionality. With Tellme, people using the latest Windows phones will be able to simply say what they want, such as “call mom” or “text Jim” or “pizza,” and results display on the screen.

Tellme will be available for free on Windows Mobile 6.5 phones in the Fall 2009 when the phones hit store shelves. Initially available in the Windows Marketplace for Mobile store, Tellme will also make the service available for free to mobile operators and carriers to embed ‘on-device’ for a voice experience right out of the box.

MICROSOFT AND TELLME DELIVER BENEFITS OF VOICE IN THE CLOUD TO CONTACT CENTER CUSTOMER SERVICE

Speech Innovations Improve Call Automation, VoIP Infrastructure Shrinks Telecom Costs

APRIL 29, 2009–Mountain View, CA –Tellme®, a subsidiary of Microsoft Corp., today announced three core speech and network innovations that advance its platform for cloud-based voice services. The new technologies significantly reduce costs for enterprise customer service while enabling a faster, smarter caller experience. These advancements include the roll-out of a VoIP carrier service that reduces customer transport costs, advanced speech services that improve automation of customer service calls, and a new ‘voice font’ technology that delivers a more natural text-to-speech experience.

The new speech services area a result of collaboration between Tellme and Microsoft’s Speech Components Group. These jointly designed technologies will be leveraged to advance natural user interfaces across Microsoft products to benefit billions of customers worldwide. Because Tellme operates as an on-demand service, the new capabilities are immediately available to enterprises across Tellme’s platform. In addition, Tellme is now using these technologies to power its mobile services, including the Windows Mobile 6.5 application announced today.

“Providing quality customer service is a top priority for E*TRADE. Tellme’s flexible platform has helped us unify our customer service experience across multiple channels and deliver improved performance year over year,” said Hartley Caldwell, Senior Vice President, Software Engineering at E*TRADE FINANCIAL Corporation.

“Our goal is to provide enterprises with technology that improves their customers’ experience but also affords them the ultimate financial flexibility when deploying voice services. From initial deployments we’re seeing impressive cost savings and results that we’re sure our customers will be excited about,” said Jamie Bertasi, senior director of Business Solutions at Tellme.

Saving Money on Operating Costs

Handling customer phone inquiries represents a multi-million dollar expense for many Fortune 1000 companies, with telecom being one of the largest technology costs. Now with carrier VoIP service, enterprises can extend their VoIP strategy to customer service calls and eliminate transfer fees, lowering the average per-minute cost 60% per call and reducing transfer fees by 100%.

Additionally, Tellme enterprise customers have another option to save significant money on telecom beyond the expensive maintenance of toll-free numbers: local number service. With the rising, widespread use of mobile phones, nation-wide caller plans lessen the need for consumers to use toll-free numbers. With the benefit of toll-free numbers diminishing, having an alternative local number can save costs without affecting the consumer experience. Now, Tellme’s VoIP service makes it possible for enterprises to use less expensive local numbers for their customer service.

Getting the Right Answer More Often, Increasing Automation

One of the biggest frustrations of speech services is that they don’t always understand the caller. Increasing the odds of getting it right makes the overall customer experience better, improving their confidence in using the system, and lowering the total cost per call to the enterprise.

Partnering with Microsoft’s speech team, Tellme provided tuning data from its billions and billions of calls and design expertise to develop new acoustic models, phonetic dictionaries and grammar products that increase the accuracy of every response. The teams built an “online adaptation” capability where the system can adapt to a caller’s acoustic patterns within the first three seconds of speaking. These new platform features make it possible to get the right answer to the caller more often.

Results in early deployments are impressive. With an average of $3 per customer service call handled by a live agent, a phone service handling 200,000 calls per day would save nearly $6 million per year for every 1% improvement in call automation. Trials of the new services with customer applications that handle millions of calls every week indicate an up to 2% increase in automated task completion, which translates to millions of dollars in savings every year.

Creating a Faster and More Natural Experience

Both the way customers request information and the way they hear the answer have been improved with two new technologies: expanded multi-slot recognition and a new ‘voice font’ called Zira.

Multi-slot technology makes it possible for callers to ask for information in a full sentence or phrase, such as “I wanna buy five thousand shares of Coca Cola” and the system listens for the relevant words, in this case “buy,” “five thousand shares” and “Coca-cola.” Then, if any information is missing or not understood the system can ask just for the specific word clarification without re-prompting for the entire answer, making the call faster and increasing the customer’s satisfaction.

In addition, Tellme, leveraging the Microsoft Text-to-Speech (TTS) engine, has developed a new custom TTS service with its ‘voice font’ called Zira. Zira has been created with a patented technique designed for consistency in voice quality and delivery that provides a more conversational experience. The Zira voice talent was coached by audio engineers to record popular phrases and words used in customer service requests. The Zira technology benchmarks close to actual human pronunciations–delivering the industry’s highest quality TTS service and reducing the expense of custom audio recordings for enterprise IVR.

Earlier this week, I jokingly said Tellme Founder Mike McCue displayed “the cheeriness of someone with acute Stockholm syndrome and $800 million in Microsoft money,” after he was quoted in an Associated Press story about what life was like after a takeover by the Redmond, Wash.-based software giant.

“We are pretty much doing everything we were doing before–just a lot more of it,” said McCue about Microsoft (MSFT) ownership of Tellme, a message squarely aimed at Yahoo (YHOO) CEO and Founder Jerry Yang, who has thus far refused Microsoft’s unsolicited advances.

That prompted the jovial McCue–whom I have know since he was a major tech exec at Netscape, the best known Silicon Valley victim of Microsoft’s aggression–to send me an email inviting me down to Tellme’s HQ in Mountain View, Calif. “I’m pretty sure our captors will allow you to film,” he added.

Well, Patty Hearst of Silicon Valley, you don’t have to ask me twice with an offer like that!

Thus, I headed to Tellme yesterday to make a video at the company, which specializes in voice-controlled technologies and directory-assistance services. When it was sold to Microsoft a little less than a year ago, Tellme was its largest acquisition in Silicon Valley until the recent Yahoo offer that is currently valued at about $40 billion.

Since then, McCue has remained on as Tellme’s general manager and the company still operates as an independent subsidiary in the same funky offices by the CalTrain tracks that I visited eight years ago. It now has 330 employees there.

Here is my video of my visit to its offices and the always sharp McCue talking about living la vida Microsoft at Tellme and about the Yahoo bid (and here is another post and video in which he talks about trends in the voice-automated services business):

Here’s the interview, which we did at a lovely Thai restaurant on Castro Street in Mountain View as the trains sped noisily by, where we discuss a wide range of issues about the sector and about Tellme:

Since BoomTown did an obsessive countdown after Yahoo CEO Jerry Yang last year unwisely promised a 100-day, top-to-bottom look at the company, with “no sacred cows” spared (as it turned out, they all were), I decided that–after the month-mark had passed since Microsoft (MSFT) made its unsolicited bid for Yahoo (YHOO)–it was time for a count-up!

Thus, Day 32 (we’re counting from Friday, Feb. 1, when the offer was made public)!

And, frankly, with the added Leap Day this year to add to Yahoo’s agony, this battle is getting about as exciting as Yang’s 100-day slog–with nothing really page-turning on the horizon since Yahoo’s board kicked Microsoft’s $31-per-share offer to the curb several weeks ago.

Now, of course, Microsoft is returning the favor by loudly prepping a proxy fight and trotting out Silicon Valley companies like TellMe to report that a Microsoft takeover is just hunky-dory.

“We are pretty much doing everything we were doing before–just a lot more of it,” said TellMe head Mike McCue to the Associated Press, with the cheeriness of someone with acute Stockholm syndrome and $800 million in Microsoft money.

And if happy, shiny, Windows-cash-gorged tech people don’t impress, according to several sources close to Microsoft, perhaps a little fear factor will work better.

Said these sources, there will be “three to four big-name CEOs” on its list of new board members that Microsoft must nominate in the next two weeks for its slate of directors to replace Yahoo’s current board.

BoomTown recently reported that the software giant was sniffing around for prospects in Silicon Valley.

But, sorry to say, I still cannot figure out what CEOs these are, despite a lot of effort to find out.

So, I started trying to figure it out myself, focusing on tech and Web execs, who are the obvious choices.

Nonetheless, after going over a long list of possible execs, none of the ones I considered seems likely to turn on Yahoo.

Intel? No, CEO Paul Otellini is on the board of Google.

eBay? No, that’s too big a move for the new CEO John Donahoe.

Sun? No, after Scott McNealy’s funny diatribes against Microsoft for so long, CEO Jonathan Schwartz simply cannot.

Dell? No, CEO and Founder Michael Dell has his hands full.

Amazon? CEO and Founder Jeff Bezos is sassy and lives up near Microsoft, but it would be a real slap at another Web icon like Yang.

WPP Group’s Sir Martin Sorrell? Well, to include an ad biggie would be a good move and Sorrell likes to make pointed remarks about Google, but not that sharp.

Frankly, other than non-tech companies, of which there are probably many choices who owe Microsoft in some way, I am officially out of guesses.

Well, of course, except for one Web 2.0 CEO, who has a big name and is in great–and I mean, great–debt to Microsoft.

In fact, $240 million worth of IOUs. In other words, Facebook CEO and Founder Mark Zuckerberg.

It would be ironic (Yahoo tried to buy Facebook a little more than a year ago), it would be poetic (only in Silicon Valley does the young eat its old) and it would be really fun to watch the fireworks (Facebook is no friend of Google’s).

Most of all, Zuckerberg on the board of Microsoft’s Yahoo would be Steve Ballmer’s ultimate SuperPoke at Yahoo.

Please see this disclosure related to me and Google.