Friday, October 26, 2018

The Importance of Mobile on the Future of Scanning

It seems we have somewhat forgotten about the potential impact of mobile document scanning and capture. Back in 2011, when only 35% of Americans identified themselves as owning a smart phone, Harvey Spencer Associates projected that by 2015, there would be $1.5 billion worth of software sold related to mobile capture, up from $200 million in 2011.



Since then, while smart phone usage has more than doubled, HSA's projected revenue growth for mobile capture software has not been realized. The study identified several potential use cases including field service, transportation, scan-to-the-cloud, home healthcare, assessment/survey/audit, onboarding and mobile check deposit. Of these, while we've seen some traction in markets like transportation and onboarding, the real killer app has been check scanning, which Mitek has made a $60 million-a-year business out of. 

There have certainly been a lot of efforts at developing document scanning apps for mobile devices. A quick search in the Google Play store reveals hundreds--most of them offering some basic functionality, like PDF creation, for free. The challenge has been monetizing this technology.

At the recent ABBYY Tech Summit, VP of Marketing Bruce Orcutt acknowledged that it's very hard to make money off mobile capture as a standalone app, but stressed that mobile is vital to the future of the company, as complementary technology to its capture platform. "Mobile is the preferred channel of end users," he said, meaning that people want to use their smartphones to capture documents. As phones' cameras and processing power continues to improve, this preference will only become more prevalent. 

Mobile is even more vital in less developed markets outside the U.S. During the recent Harvey Spencer Associates Capture I had dinner with Claudio Chaves, Jr., the CTO of IcAPT, an ISV jointly based in Brazil and Orlando, that has developed a cloud-based capture service. Chaves also has extensive experience working with service bureaus in Brazil. 

He explained that in Brazil, legal requirements call for mortgage documents to be printed on paper, which creates a good business for capturing them. However, he noted that one of challenges is that the images are often poor quality because people use their phones to capture them

According to my infoSource data, there were approximately 26,500 document scanners sold in Brazil last year compared to 875,000 sold in the U.S. That's 33 times as many scanners being sold in the U.S. than Brazil, which has a population of 209 million, which is more than 60% of the U.S. population of 325 million. Obviously, Brazil is underserved when it comes to document scanner sales.
But not when it comes to mobile phones. In 2017, it was estimated that there were almost 200 million smartphones in use in Brazil, giving it a penetration rate of close to 100%, considerably higher than the U.S. smartphone penetration rate of 77% (at the beginning of 2018). Like many countries with emerging economies, Brazil seems to be somewhat skipping the desktop era (at least for scanners) and moving right to the mobile era.
I don't think Brazil is unique in this transition. The question is how do we best address it? I think the continued development of better mobile capture technology is the primary way. ABBYY, for example, has shown us some very cool video streaming technology that enables users to capture multiple images of a document and utilize ABBYY's algorithms to determine the best one. I recently saw a commercial for Google's new Pixel 3 phone that offers similar functionality for photographs.
Sure, I know that everyone in the hardware market likes to say that scanning one or two pages might be fine with a mobile device, but I think the market is moving beyond that. I think the market would like to do batch scanning with mobile devices. There is of course the option of using mobile devices to drive scanners, but it doesn't seem like there has been much uptake in that area yet. No, the preference seems to be utilize the smartphone camera. And with memory increasing and the cameras improving, we think this demand will only increase in the future.
What does this mean for the future of scanners? Well, we have already started to see a decline in sales of personal (<$400) scanners in the Americas, according to our infoSource data, while sales of higher end workgroup, departmental, and low-volume production scanners grow or at least remain steady.



Of course, this could be attributed somewhat to former personal leader Neat exiting the market for scanners to focus on software, but part of the reason Neat stopped selling scanners is that they launched a mobile app that they expect people to utilize as on on-ramp. 

It will be interesting to watch how this plays out over the next few years. Will better scanning apps enable users to better capture multi-page documents with their phone? Will the evolution of TWAIN direct and similar "driverless" scanning technologies enable users to take full advantage of document scanners and MFPs for scanning with smartphones? How will the introduction of more AI, NLP, and machine learning into capture and BPM apps affect the market for scanning?

All of this is on the table. Let's just remember that mobile will have a major impact on the scanning and capture markets going forward.










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