Show BUSINESS S and the theby STOCK MARKET MARKET by BABSON'S REPORTS INC Copyright 1971 t I EMERGENCY OF OPTICAL READERS J Optical readers allow direct entry of typed or printed data into data processing processing process process- ing systems without any human inter inter- The technique is faster and more more accurate about one error in i characters than many methods of placing placing ing information into processing data form However keypunching is still the principal method by which information 1 is transferred IBM the computer in industry industry in- in leader has been reluctant to abandon aban don this slower and more cumbersome method because its keypunch devices those already marketed have been fully depreciated and represent an In important important im source of revenue for the company com com- pany Nevertheless competition from emerging independent firms is pressuring pressuring pressuring pressur pressur- ing IBM and other large computer producers producers pro pro- to accelerate moves to gain acceptance ac of optical readers known in the trade as optical scanners or and-or optical character recognition equipment OCR f Advantages of OCR Industry is deluged by the called so-called paper explosion Information processing process ing has of oC course made giant strides I via the computer and its accessory input and output devices However the method method me me- thod of feeding the data into the computer is the bottleneck to optimum efficiency Ke Keypunch punch equipment still processes some 80 percent of all conventional data fed to the computer Its dragging pace the large number of clerical workers needed and the potential for error in this method arc Ire some of the reasons reasons for trying to phase out this operation OCR machines read the source data at hundreds to thousands of times the speed of keyboard or keypunch devices Optical systems permit a direct input without the need for expensive verification cation Market Potential Last year the estimated value of annual annual an nual shipments of OCR equipment was around to million Pr Projections for Cor 1975 range from million to million The Research Department of Babson's Reports believes a median figure close dose to million seems more probable In 1970 OCR devices devires processed process process- ed 10 percent of the input data and this is expected to double by 1975 The manufacturers comprise two distinct groups small groups small independent companies and and the major computer producers for whom OCR Is just another segment of their business To date the Federal Government has been blen the principal market because of the high costs cosh of multifunction OCR equipment equipment equip equip- ment to 15 million plus This volume high-volume market has been dominated by the big computer manufacturers The small independent companies however have vo developed simpler machines for low low- and volume medium-volume application that are not tied to the giant computers are substantially lower in price and offer a abroad abroad broad range of applications Participants in the Future There is no chance over the near term s f Patient Im ashamed of oC myself doc doe tor Im I'm so timid and hesitant Psychiatrist You mustn't let that worry you To some extent hesitation and indecisiveness imply a subtlety of intellect Certainty is the prerogative of im imbeciles Patient Are you sure doctor Psychiatrist Im absolutely certain that OCR or any other type of data entry equipment will displace the keypunch system long dominated by IBM But other computer companies the pure OCR independents such as IS Recognition Equipment Optical Scanning Corporation Corporation Corpor Corpor- Scan Data Scan Optics and Information International and International and competing ing fag technologies such as key to tape devices and on-line on data entry terminals will terminals will continue to scramble for fora a larger foothold in the information processing processing pio pro pro- market The OCR industry has been fraught with disappointments for example Farrington the pioneer and a I large factor in in- inthe the field has sold its OCR operations IBM and Control Data along with other computer firms supply some 60 GO to 65 percent of the market and andare andare andare are therefore fierce competitors for the lions lion's share The Research Department of Babson's Dabson's Reports is of the opinion that any profits in this special field could be five to ten years off Thus investors should confine their interest to the large computer companies companies com com- developing or already dy having OCR operations at least until the independent OCR concerns concerns' are more firmly established establish establish- ed cd |