Executive View: A Conversation with CIC’s Jeffrey Dao

While a few high-flying pen computing companies seem to garner the focus of media attention, Communication Intelligence Corporation (CIC), the Redwood Shores California-based maker of PenDOS and the Handwriter Recognition System, steadily continues on its course of developing and licensing high-quality software and peripherals.

I recently had the opportunity to speak with Jeffrey Dao, CIC’s Director of Applications Engineering and Product Management. Dao used the time to outline the history of CIC, describe the company’s product line, and discuss the exciting new opportunities they are pursuing in China and the Pacific Rim.

Dao joined CIC in 1987 and has been involved in leading the market introduction for several of CIC’s key products including the Handwriter Recognition System, MacHandwriter, and the PenDOS operating environment. Coming from the University of California at Berkeley, Dao first joined the company as an application engineer, which gives him significant insight into the key technologies involved in mobile pen computers.

The Genesis of CIC

CIC started in 1981 as a spinoff of SRI, which is one of the largest non-profit research organizations in the United States. While much of the work is research-oriented, Dao explained that “sometimes things get created there that have tremendous commercial potential. The mouse was one of them—it was invented at SRI and then sold off to Xerox. And the rest is history.”

“With that, SRI’s directors looked at what other technology they had in their possession that could have as profound an impact on how people use their computers as the mouse did. And what they identified was pattern recognition.” At a startup, CIC inherited this pattern and handwriting recognition technology, the signature verification system, and much of the original research group. In return, SRI continues to own a small percentage of the publicly traded CIC.

Of course, back in the early 80’s, pen computing was more a dream than a product idea, leading CIC to attack another promising area—Computer Aided Design (CAD). As Dao described it, much of the PC horsepower at the time was supplied by Intel’s 80286 processor, which didn’t leave much left over for handwriting recognition.

Recognition a la Early 80’s

CIC’s solution was to place an 8 MHz Motorola 68000 processor along with the recognition software in ROM, on a separate AT board. By writing drivers to support the common desktop digitizers, they were able to create an effective pen solution.

Clearly in line with the current crop of pen-based solutions, Dao expressed the appeal of the system by saying: “The audience that latched on to the product the strongest were architects. The reason why is because it allowed them to hold on to some of their original skills and tools. Architects think of their tools as the pen and pencil, not a keyboard or mouse.”

Entering Pen Computing

CIC entered the pen-based mobile computing market in a rather historic way. As Dao tells it: “We were sitting there working away when we got a call from a researcher at NCR Germany. He had this crazy idea of creating a portable computer with a pen interface, and that’s how that relationship started.” The pen computer turned out to be the NCR 3125 which, at one time, was one of the most popular early tablet computers available. At that point, CIC knew that the day of software-only solutions had arrived.

CIC’s current set of products have greatly expanded since the early CAD days, however, they all leverage the company’s core competencies in recognition, including:

• the PenDOS environment
• the Handwriter Recognition System for English, U.K. English, French, German, Italian, Spanish, and Japanese, supporting PenPoint, Windows for Pen, PenMac, PenDOS, and OS/2 for Pens
• tablet peripherals for PC and Macintosh desktop computers
• MacHandwriter for Japan
• Handwriter Dynamic Signature Verification

Dao explained that CIC derives most of its revenue from licensing software to a host of OEM manufacturers, predominantly in the portable computing market.

However, CIC continues to look for the broadest possible market for its technologies and products. This includes both ends of the pen computing spectrum: mobile PDAs and desktop input peripherals. Dao feels that there is a largely untapped market for pen computing on the desktop. “We are taking a more direct hand in trying to bring pen computing to the masses. We think that the desktop can still derive a lot of benefits from the pen.”

To back this up, CIC recently launched the two desktop products: Handwriter for Windows and MacHandwriter, incorporating a lightweight opaque digitizer manufactured by CalComp.

Better Digital Assistants

At the other end of the spectrum, Dao is excited about the potential of the personal digital and communications assistants. When asked whether CIC was actively exploring the PDA market, Dao replied with an enthusiastic “Yes!”

However, Dao quickly became more pensive when he started to describe some of the challenges involved in bringing advanced recognition to current PDAs. In describing the Apple Newton, he stated that “the Newton is not without its challenges—right now the Newton has no formalized recognition APIs.”

He continued by saying that “in terms of the way the operating system is structured, they didn’t provide as many of the hooks that you might argue they should have in their own best interest. Apple has in some ways tied their hands in terms of tapping into foreign markets.”

Dao reminded me that PenDOS, PenPoint, and Windows for Pen all have architectures that enable third party recognizers to be added. In the case of the Newton, Dao feels that adding this type of flexibility may require quite a bit of effort on Apple’s part.

Though CIC is very interested in the Newton market, Dao explained that “we can only get so far if we don’t own the operating system and there are no hooks for us. But we stand ready, and some of Apple’s manufacturing partners have already asked for our recognizer.”

Dao emphasized the significance and importance for Apple to act quickly in remedying this situation. “It’s important for them to create a general API, because today they may think they have the best recognizer, but what about tomorrow? And what about a version of the Newton for China? Is Apple ready to step up to bat, and is Paragraph able to develop robust recognizers for all these markets?”

“American companies need to look towards foreign markets more than ever to expand their business because that’s where the lowest hanging fruit is.”

Even with all this, Dao pointed out that “Newton is definitely on our charts for 1994.” However, CIC is keeping their eye on the other emerging PDA technologies. According to Dao, “It’s safe to say that things like WinPAD and Magic CAP are very much within our charter, and we believe they are very important platforms within the PDA marketplace. We also think there is a place for PenDOS in some of these consumer-oriented products—not just by itself, but with applications designed specifically for those devices.” He added that “We have numerous OEMs that are working with us on that right now.”

The Biggest Market of All?

In addition to exploring new platforms and operating systems, CIC is also actively pursuing new geographic and cultural markets. Dao explained that he feels that Asia is an incredibly important market in which CIC is continuing to expand.

Dao described that “many of our OEM customers, including NEC, IBM, and Acer, do a tremendous amount of business in the Pacific Rim.” While CIC has had a strong presence in Japan for several years with their MacHandwriter product, Dao focused things by saying that they “look more specifically towards China than anywhere else as a new opportunity.”

It seems perplexing to be confronted with such a large and diverse market, however, CIC appears to have identified a strong opportunity. “We see the best strategy right now being with the [Chinese] government. The biggest company in the United States is still the Federal government and it’s the same thing in China.”

Aiding Emerging Markets

Dao stressed the advantages that an emerging market economy, by some calculations already the third largest in the world, can gain by incorporating information technology into their administrative processes—the most important being revenue collection.

But even the Chinese government can be overwhelming and therefore, Dao described their immediate strategy as being “focused around what we think is one of the most important provinces—Jiangsu.”

Dao categorized Jiangsu as “one of the most progressive and economically aggressive provinces.” Jiangsu is home to many of China’s finest universities, along with the leading financial and industrial city of Shanghai.

In May 1993, CIC announced a joint venture with the Nantong Electronics Development Investment Company in the People’s Republic of China. This enables CIC to market pen-based systems incorporating their user interface and recognition technology. As Dao states, “the opportunity there is immense.”

Recognition Still the Key

It may seem unfair to ask a recognition company about the importance of its main product, however Dao was clear in stating CIC’s belief in its technology. “If you had no recognition, a lot of the device’s appeal is gone.”

At the same time, Dao doesn’t necessarily believe that true cursive recognition is required in every application. “In some fundamental markets, cursive writing is highly overrated.” However, Dao is well aware of the challenge his company faces. “Most people are unwilling to adapt themselves to the technology they use.”