Tuesday, July 15, 2014

Nuance Buys Notable Solutions

Nuance has acquired its primary competitor in the MFP capture space - Notable Solutions, Inc. Burlington, MA-based Nuance, which is currently best known to the world at large as the unnamed developer of the voice recognition technology behind Apple's Siri, has made a move to beef up its Document Imaging Division. Nuance is actually one of the leaders in our market, with $250M in annual Document Imaging Division revenue (although that represents less than 15% of Nuance's overall revenue). The acquisition of Notable Solutions brings about a consolidation of the leaders in the document capture software for MFP space.

Notable Solutions (historically known as NSi) began life in this market as an HP partner, with its AutoStore software primarily utilized in conjunction with HP's Digital Sender, at one time a very popular network scanner. But, after its exclusivity contract expired, Notable Solutions branched out to work with other MFP vendors. Today, Ricoh is its largest partner and Notable's Web site lists integrations with devices from more than a half dozen vendors.

Historically, Nuance's eCopy has been the leader in the market for MFP capture software from a third-party vendor, but in recent years, it seems Notable has been making inroads. "I think the acquisition of Notable Solutions dovetails nicely with Nuance's eCopy business," said Harvey Spencer, of Harvey Spencer Associates, an analyst firm which covers the capture market. "I never really felt the two companies competed. They are not really in the same market.

"eCopy's technology has historically been primarily aimed at the SMB. It's a turnkey system focused on cost controls, scanning and storing, and scanning to e-mail. Notable Solutions has been much more up market. It's more of an enterprise solution, while eCopy is a box solution. This acquisition broadens Nuance's addressable market quite dramatically."

I'm not sure that Nuance's marketing people would agree with Spencer's characterization of eCopy, as even before it was acquired, eCopy was trying to move its product upstream--to ward off infringement by the copier vendors themselves, who continue to include more scanning technology with their devices. That said, Notable Solutions always had a bit of a different vision than eCopy. While eCopy focused on scan-enabling devices, Notable always focused on connecting devices to a server where business processes were executed--typically utilizing items scanned at the copier.

There is no doubt however, that the two companies considered themselves competitive. In late 2013, in fact, Notable acquired Barr Systems to give it a complementary print management offering that enabled it to better compete against Nuance's eCopy-Equitrac combo. Notable also further diversified itself with the introduction of a mobile app that includes not only capture capabilities but also features like e-forms and secure print.

Concluded Spencer, "This acquisition shows that Nuance is investing in its document imaging business. Traditionally many people have looked at imaging as something that Nuance uses to fund other stuff. This acquisition is good news because it shows a commitment to this market."


By the way, it's unclear why Nuance has chosen not to publicly announce this deal, but it is not unprecedented. A year and a half ago, Nuance bought print management ISV Copitrak, a deal it also kept fairly quiet, at least initially. And while Copitrak was complementary to Nuance's previous acquisition of Equitrac, Notable Solutions, which is based in Rockville, MD, is complementary to Nuance's eCopy acquisition, which was completed in 2009.

Indications are that Nuance will be doing a briefing at some point following the announcement of its fiscal Q3 (ended June 30) results. For now, from what we understand, it remains business as usual at Notable Solutions.

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