Livescribe’s Jim Marggraff Pushes a Pen-Based Computing Revival

When she started at the University of California at Berkeley, grad student Christen Penny tried to transcribe her professors’ lectures faithfully by hand. Within two weeks she recognized she was falling behind because she couldn’t take notes fast enough. So when a fellow student recommended a boxy black pen with a recorder inside, she bought one. The $150 device, called the Echo Smartpen, records speech and links it digitally to notes on paper.

Invented by Jim Marggraff, who created a bestselling interactive children’s book called the Leap Pad a decade ago, the Echo builds on the device’s electronic pen, transforming it into a product for adults. “The Smartpen is a new form of communication,” says Marggraff, who launched Livescribe, in Oakland, Calif., in 2005 to make the pens. Having shipped nearly 1 million, mostly to professionals who trade in information, the 53-year-old is now pushing to introduce the Echo Smartpen as a teaching tool in grade schools as well as universities.

By broadening the market, Marggraff is trying to rewrite the fate of pen-based computing -- this time with a happier ending. Others, often before their time, failed to draw consumers away from the mouse. In the 1980s, GO Corp. pioneered pen-based computing, and attracted major investment but generated very little consumer interest. Apple (AAPL) tried, and failed, to make its Newton pen and computer combo work in the mid-1990s. Palm had more success but failed to update the PDA Plus stylus model fast enough to survive. Marggraff is taking the technology in a different direction in the hope that he can sidestep the same pitfalls.

Recorder and Camera

Unlike traditional digital recorders, the Echo isn’t linked to a computer tablet; instead it enhances physical note taking. As users write, two devices go to work: A tiny camera tucked into the pen’s nose photographs the notes, and a recorder near the top of the device records voices within range of a large auditorium. Because the photos -- about 75 are recorded per second -- are paired with the audio recording, users can focus on what’s being said, jotting down just a few words or symbols to help recall concepts later.

Penny, for example, might draw a star for something that will appear on a test; when studying, she can press the tip of the pen to the star to play back the recording of her professor’s words at the time she drew it. When she plugs her Echo pen into her computer, software uploads her notes linked to the audio recording of what she heard as she wrote them. “I think that sounds very simple,” Penny says, “but it’s huge, because now I can pay more attention to what the professors are actually saying.”

Marggraff says Echo’s sales should top $100 million this year, mostly from students like Penny and professionals such as lawyers and journalists who trade in information. He notes the company isn’t competing with iPads and other tablets -- it’s exploiting their biggest weakness. Writing on glass is awkward and difficult, so he hopes to lure consumers back to paper by being able to record their handwriting electronically for everyday items, such as grocery lists and reminders. With more than $100 million from venture capital investors, Marggraff says he’s got enough cushion to build mainstream appeal.

Rival Apps

Not everyone is convinced. Ross Rubin, director of industry analysis at the NPD Group, says several iPad apps can compete with the digital pen. One of them, called Audiotorium, even offers synched audio with every written word. Rubin admits that writing on glass remains clunky but says “the technology will improve, and when it does it’ll feel natural to write on the surface of a tablet.”

The cost of owning one of the Echo pens can add up over time because of supplies and accessories. For the Echo to work, users have to write on special paper printed with tiny dots. They can print the paper and bind their own speckled notebooks, but many buy them from Livescribe, along with replacement ink, pen caps, earphones, and penholders. All the accessories are available on Livescribe’s own site, as well as such others as Amazon (AMZN), Best Buy (BBY), and Staples (SPLS). Together, they can cost an additional $100.

“The market for [the Echo] could be worth hundreds of millions,” says Rutgers business school professor Richard Mammone, a serial entrepreneur and pioneer in interactive e-learning. He predicts the pen will continue to sell fairly well in the States but says most profits will come from emerging markets, provided Marggraff can find a way to lower the retail price to $100 per pen. “Especially in remote places where people may not have access to iPhones and iPads, rural India, places like that.”

To contact the reporter on this story: Alexandra Dean at adean13@bloomberg.net

To contact the editor responsible for this story: Nick Leiber at nleiber@bloomberg.net

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Livescribe

Bloomberg

Livescribe chief executive Jim Marggraff holds a Leap Frog Leap Pad, a precursor to the Echo Smartpen.

Livescribe chief executive Jim Marggraff holds a Leap Frog Leap Pad, a precursor to the Echo Smartpen. Source: Bloomberg

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Sept. 22 (Bloomberg) -- Jim Marggraff, chief executive officer and founder of Livescribe Inc., talks about the company's Echo Smartpen on Bloomberg Televison's "Bloomberg West". (Source: Bloomberg)

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Livescribe

Bloomberg

Livescribe chief executive Jim Marggraff writes with an Echo Smartpen at his Oakland, Calif. headquarters.

Livescribe chief executive Jim Marggraff writes with an Echo Smartpen at his Oakland, Calif. headquarters. Source: Bloomberg