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Microsoft is acquiring a Texas-based AI startup as it prepares for the next wave of the cloud wars (MSFT)


Microsoft CEO Satya Nadella smiles during the 'Question and Answer' portion of the 2016 Microsoft Annual Shareholders Meeting at the Meydenbauer Center November 30, 2016, 2016 in Bellevue, Washington.

  • Microsoft announced Wednesday it would acquire an Austin-based software product design and development studio called XOXCO.
  • XOXCO is known for Howdy, a bot for the popular Slack work chat app that helps schedule meetings, as well as Botkit, which provides development tools for the GitHub code-sharing service.
  • Microsoft has acquired several other AI startups this year, including Semantic Machines, Bonsai, and Lobe.
  • Microsoft also announced updates to its AI platform, including a new technology called Cognitive Services Containers. 

Microsoft announced Wednesday that it would acquire XOXCO, the software company behind a friendly chatbot called Howdy, that helps users of the popular Slack work chat app schedule meetings. 

XOXCO, a nine-year-old Austin based company, also created Botkit, which provides development tools for the software development platform GitHub—which was, incidentally, offically acquired by Microsoft just last month. Also of note is that Slack is the primary rival to Microsoft Teams, the tech titan's own chat app. 

"We have shared goals to foster a community of startups and innovators, share best practices and continue to amplify our focus on conversational AI, as well as to develop tools for empowering people to create experiences that do more with speech and language," Lili Cheng, corporate VP of conversational AI at Microsoft, said in a statement.

Today, Microsoft plans to use XOXCO's technology to improve the Microsoft Bot Framework, which currently supports over 360,000 developers. This framework helps people build bots for Facebook Messenger and other platforms that assist with customer service and other simple tasks. 

Microsoft has also acquired several other AI startups this past year, including Semantic Machines in May, Bonsai in July, and Lobe in September.

Read more: Microsoft has acquired a veteran AI team, including the former chief speech scientist for Siri

Analyst firm Gartner estimates that by 2020, conversational artificial intelligence will be used in over half of large, consumer-centric enterprises.

"Conversational AI is quickly becoming a way in which businesses engage with employees and customers: from creating virtual assistants and redesigning customer interactions to using conversational assistants to help employees communicate and work better together," Cheng said.

Beyond this acquisition, Microsoft also announced on Wednesday other improvements to its AI platform, including Cognitive Service Containers — a new way to make it easier for developers to run AI-based services on internet-connected devices, both in the home and in industrial settings, as part of Microsoft's push to dominate so-called edge computing

The big idea, Microsoft Corporate VP of AI Platform Eric Boyd tells Business Insider, is to make it easy for those connected devices to connect back up to the cloud to get the latest updates to their training model. In other words, Microsoft wants to help developers make devices that get smarter, faster. 

"This is the solution that makes it simple," says Boyd.  

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