New Scanning Solutions Target SMB

Hardware vendors aiming for the general office user

Is it a fax machine? Is it a scanner? Is it the top of a digital copier that someone has chopped off? We’ve heard these and any number of similar questions asked about HP’s Digital Sender. The Digital Sender is a network scanner introduced in the late 1990s. Despite criticism that it is slow, hard-to-use, and expensive, the Digital Sender has always sold well when compared to competitively priced, traditional PC-based document scanners. In fact, in 2005, on the strength of Digital Sender sales, HP ranked number one in U.S. market share in the departmental ($2,000-$5,000) scanner segment and tied for the top ranking in that segment in Europe.

It’s our opinion that the success of the Digital Sender contributed significantly to a pair of product launches made last week. The first was by Kodak Document Imaging, which introduced its Scan Station 100, a direct competitor to the Digital Sender. Like the Digital Sender, the Scan Station is a network-ready device that plugs directly into an Ethernet port. When it hits the streets in mid-May, it will carry a price of approximately $3,000—in the same ballpark as the Digital Sender. It is also being targeted at the general office user, much like the Digital Sender, which was originally marketed mainly as a fax replacement.

The second announcement was by HP itself, which released a trio of workgroup document scanners. They represent an upgrade to HP’s initial dedicated document scanner line, the Scanjet 8200s, which were first announced at AIIM 2003 [see DIR 4/25/03]. The new HP scanners are probably more a result of the success of that line than the Digital Sender, but both products undoubtedly have played a role in HP’s decision to invest more heavily in the document imaging market.

HP Upgrades Hardware, Software
The new HP products are the sheet-fed-only Scanjet 7800 that lists for $799, and the flat-bed inclusive Scanjet 8350 and 8390 models, that list for $1,199 and $1,499, respectively. They all feature single-pass duplex scanning—a first for HP scanners. One of the drawbacks of the 8200 series was that, to scan in duplex, the devices had to flip documents and re-pass them over the camera. The process is done automatically, but it is slow and cumbersome.

“Our studies have shown that while users might not have a lot of duplex documents to capture, single-pass duplex capabilities are a big advantage,” said David Haining, product manager for HP’s commercial scanner business. “Even if only one out of a hundred documents has information on the back side, you save tremendous amounts of sorting time if you can scan them all in duplex. Automatic blank-page detection can be used to delete the sides you don’t need.”
Blank-page detection is one of the many image processing features that HP has included in its new Smart Document Scan Software (SDSS), which is packaged with the new document scanners. SDSS is built on an ISIS toolkit—presumably licensed from Pixel Translations. It is an out-of-the-box capture application designed for scanning to network folders or e-mail. It also has a scan-to-SharePoint option.

“We’ve brought some of the features of ISIS technology to the workgroup level,” Haining told DIR. “[SDSS] has many of the same features as Pixel’s QuickScan, but we really focused on ease-of-use. We’ve also included the ability to pre-configure commands for specific document types and to launch these commands by selecting a number on the touch-panel of the device.”

Kofax VRS technology is included with the new scanners and can be turned on or off through SDSS. SDSS also has image-preview capabilities. Batch separation can be done through bar codes, page-count, or blank-page detection. The bar-code information can be exported as an XML file that can be leveraged downstream by other applications. SDSS doesn’t feature any indexing capabilities.

“The pre-configuration feature is designed so administrators can set up profiles for specific types of documents, such as invoices, expense reports, personnel records, etc.,” said Haining. “Configurations can include specific cropping, resolution, and other types of image processing instructions. The configurations also include destinations, such as specific network folders. The configurations can be set up once by the admin and distributed to each device.”

For more complex capture and routing requirements, images can be picked up by other applications from network folders. ISIS and TWAIN drivers are also included with the scanners. Haining added that tighter integration between SDSS and a middleware product such as NSi’s AutoStore is in the works.

NSi already has a partnership with HP for software for Digital Sender applications. NSi’s OneStep application for capturing images and indexing information directly into back-end repositories was included with the 8200 series. OneStep has since been replaced in the NSi line-up by Open Scan, a capture application designed to work with any workgroup scanner [see DIR 10/21/05].

The 7800, which will be available in May, is rated at 25 ppm/50 ipm at 200 dpi in bi-tonal. This makes it among the fastest sub-$1,000 scanners on the market. It slows down slightly in color, but according to Haining, not more than 20%. Like the Canon DR-2050C, which carries a similar list price, the 7800 has a straight-path feeder to read ID cards. While this and the inclusion of SDSS would seem to give the 7800 some advantages over segment leader FCPA’s (Fujitsu Computer Products of America) fi-5110C, the FCPA model includes Adobe Acrobat Standard, as well as infra-red double feed detection.

The 8350 and 8390 models are due to hit the streets in April with list prices seriously below competitive models from Kodak and FCPA. Kodak’s i65, which is rated at 30/60, for example, carries a list price of $2,200, while FCPA’s fi-5220C lists for $1,995. Of course, there is a question of how much traditional document scanner vendors like FCPA, Kodak, and Canon really compete with HP. “Most traditional document scanner vendors are moving downstream into the workgroup space,” commented Haining. “We are moving upstream.” [Evidence of this is the fact that the 7800 represents HP’s first-ever sheet-fed only effort. According to Haining more than 50% of devices sold in 2005 in the workgroup segment were sheet-fed only models.]

Visioneer, which for years competed heavily with HP in the consumer scanners space, is also moving upstream into the workgroup segment. However, while Visioneer is attempting to establish a more traditional imaging-centric value-added reseller channel, Haining didn’t give us the impression HP has firm plans to take a similar route. “Currently we have an influencer program for VARs that don’t want to deal with hardware inventory,” he said. “We offer a $50-75 fee for recommending our hardware. Of course, we are always re-evaluating our channel strategies—especially as we move deeper into a new market like workgroup scanners.”

Despite its non-traditional channel approach, HP managed to rank second in the workgroup segment in 2005, according to Haining. Much of this success can be attributed to HP’s brand name, which is very strong among the general office equipment users HP is targeting. Indicative of this is a story an HP product manager told us in 2003 when the company launched the 8200 series. “We found ourselves unwittingly pulled into the document imaging space when people began asking Pixel Translations for drivers for our Scanjet 7400 series,” she said.

Despite these unassuming roots, HP has enjoyed strong growth in a segment that has grown by at least 80% annually in terms of units sold for the past four years. “Some of that growth can be attributed directly to HP upgrading some lower-end models, so that they are now included in that category,” commented Haining. “But, we’ve also seen tremendous growth in unit sales on top of that.”

We concluded by asking Haining if HP has considered leveraging its large channel of printer VARs to sell document scanners. “Working with HP does give VARs the advantage of being able to offer MFPs, workgroup scanners, and even a networked attached scanner—all from the same vendor,” he said. “That said, the market for network scanners has traditionally differed from that for workgroup scanners. It’s a different use model. Networked scanners are designed more for workgroups or departments that want to share a device they might place in an aisleway.”

A Net New Market For Kodak
This, in a very roundabout way, brings us back to the Kodak Scan Station 100. Kodak is indeed hoping that network scanning represents an entrée into a brand new market—one that does not cannibalize its current document scanner sales. Remember, it was just a little more than a year ago that Kodak announced a new departmental line—the i100 series [see DIR 1/21/05].

“The Scan Station is definitely aimed at a different segment of the market than our traditional document scanners,” said Paul Whittard, Kodak’s worldwide business portfolio manager for distributed products. “While it might appeal to traditional document imaging customers that want a straightforward way of scanning images into their ECM systems from branches and depots, we think the main market is going to be SMBs that just want to scan to the network or scan to email. We are seeing a lot of workgroup scanners currently going into these types of environments where the users are not working with any document management system. Because of its simplicity and price, this is the kind of device that will appeal to them.

“[With the Scan Station] there is no messing around with a PC and the intricacies of various operating systems. We worked with our digital camera people to create a GUI that is very intuitive. We’ve even included an image preview feature on the control panel, so you can tell if your scan was successful. The biggest market for the Scan Station will be the general office user. To address that market, we are going to have to engage new channels, including more broadline distributors and networking-centric VARs.”

So, just how big is the market for network scanners? Well, let’s start with HP Digital Sender sales. According to InfoTrends, departmental sales made up almost one-fifth of total document scanner revenue in 2005. Based on a total market size of a little less than $750 million, this represents approximately a $150 million segment. If we give HP, as the segment leader, credit for 25%, that means the Digital Sender generated $37.5 million in 2005 revenue. [For what it’s worth, departmental segment revenue grew 18% in 2005, after growing only 3% in 2004. This probably had a lot to do with HP releasing an upgraded Digital Sender in late 2004. In addition, in 2004 and 2005, FCPA, Canon, Kodak, and Böwe Bell & Howell all introduced new departmental models—and new models typically drive segment growth.]

In addition to competing with the Digital Sender, the Scan Station could also compete with digital copiers. Whittard noted there are a couple advantages of doing scanning from a dedicated device vs. through an MFP. “First of all, scanning through a dedicated device enables you to print your images [or make copies] on any number of networked printers—depending on the characteristics of the document, or to better manage workload distribution,” said Whittard. “Also, there is no chance the device is going to be tied up by someone doing a print or copying job.”

Yes, indeed, what is the advantage of having your printer and scanner connected in the same device? Isn’t this just a throwback to the days of analog copiers? If Kodak can get the market thinking about things like this, the Scan Station could become a huge hit. After all, we’ve estimated there are approximately a million departmental-level digital copiers sold every year. This compares to around 40,000 departmental scanners. You can see where the real money lies.

So, how is Kodak going to go about convincing users that the Scan Station is superior to current network scanning options? “We’ve taken everything we know about image quality and good document feeding and incorporated it into the Scan Station,” said Whittard. “The Scan Station is easier to use and produces more consistent quality images than any networked scanning device on the market.”

The Scan Station’s feeder and camera technology are similar to that on the company’s i40 workgroup model. This means the Scan Station is rated at 25/50 at 200 dpi in color, bi-tonal, or grayscale. The Scan Station also includes the card scanning technology Kodak introduced into the i40 this past fall [see DIR 10/7/05]. Kodak’s PerfectPage technology is embedded to improve image quality, and I.R.I.S. software is used to output searchable PDFs. “We wanted to use proven technology that was consistent with the rest of our Kodak products,” Whittard told DIR.

In addition, the Scan Station features a 4” x 5” color touch-panel that can be rotated so the machine can be oriented vertically or horizontally. The Scan Station’s software application has pre-configurable controls for scanning to e-mail, a network folder, a printer, and a USB thumbdrive. A default set of capture commands and destinations can be programmed into the device. They can either be locked down or left open to reconfigure on the fly. Different pre-programmed configurations and destinations can be entered into the device by plugging in USB drives that can be configured at a desktop. Items such as personal address books can be included on the USB drive and a PIN number can be used to protect it.
Currently, there is no networked-based administration for the Scan Station, although Whittard said that is high on Kodak’s priority list. “One of the first things we want to do is give users the ability to update certain settings through their networks,” he said. “In future releases, we’d like to make available some sort of toolkit that will enable ISVs to hook into the software and load their own screens.”

Kodak is also in conversations with NSi about developing a middleware application for the Scan Station. “As this product matures we may market different versions of it, with different software packages specifically targeting certain verticals,” said Whittard.

The Scan Station is due to ship in May and was shown at the recent FOSE show in Washington D.C.

Hardware Vendors Getting Smart
In addition to being a reflection of the success of the Digital Sender, HP’s and Kodak’s new releases show us something else—document scanning hardware vendors have seen the light. For years, we couldn’t figure out how revenue from document imaging hardware sales could grow 27% like it did in 2005, but imaging software sales could only grow 10-15%. Well, it seems we have found the answer. It lies in a quote given to us recently by Laurie Shufeldt, VP of strategic business development for Atlanta-based document imaging software provider FileVision.

“We are seeing a lot of SMBs purchasing hardware, without even thinking about the software aspect of an imaging application,” Shufeldt told DIR. “It used to be, you’d walk in and SMBs might be doing a little bit of document scanning with a $79 flatbed. Now, they have a thousand-dollar desktop document scanner and are scanning everything to their network. Of course, this just takes their paper problem and moves it online. We are seeing that a lot.”

As a software vendor, FileVision’s mission is to upgrade these document imaging starter sets to full-fledged solutions. Hardware vendors, however, have no such charter. Their main goal is to move devices. And they finally seem to be waking up to the fact that, in many cases, SMBs are in the practice of putting the cart before the horse when it comes to document management. So, why not make it easy for them to do this?

No, we are not accusing HP and Kodak of being irresponsible with their latest product releases. Rather, we’d like to give them credit for being both opportunistic and ingenious. The opportunism lies in the fact that they are giving end users what they want—an inexpensive scanning-in-a-box solution. The ingeniousness lies in the fact that, even while Kodak and HP have dumbed-down their interfaces to make their hardware more accessible, they are still looking to leverage middleware connections. These connections provide hooks into more advanced document management and workflow systems that users will eventually realize they need. Those of us with experience in document management realize this is where the payback and user satisfaction comes in. So, even though Kodak and HP are giving end users an easy on-ramp into imaging, they are certainly not leading them to a dead end. As a result, the whole market will benefit.

For more information: http://h10010.www1.hp.com/wwpc/us/en/sm/WF02a/15179-64195-215155.html; http://www.kodak.com/go/scanstation; http://www.filevision.net