According to Wikipedia, “a digital pen is an input device which captures the handwriting strokes of a user, and digitizes them so that they may be downloaded to a computer and displayed on its monitor. The data can then be interpreted by handwriting software (OCR) and used in different applications or just as graphics. A digital pen is generally larger and has more features than a stylus and works on paper or other surfaces such as whiteboards.”

With more and more powerful e-signing apps being developed for iPad and Android tablets, the questions arise: how long will digital pens be viable? Will digital pens ever really take off, or will they remain a small niche solution in the IT field?

IDC just released new data in its Worldwide Quarterly Mobile Phone Tracker report, predicting the smartphone market to grow by 55 percent to reach 472 million devices in 2011. By 2015, the smartphone market is expected to double its base on a compound annual growth rate of 20 percent. Infographic reports that, in the top five markets in Europe today, 46 million people actively use smartphones to access apps.

There is no doubt, from a customer perspective, that smartphones, iPads and other tablets have sex appeal. That in turn causes the question of why to pay a few hundred USD for “just a pen”, plus paper license on top. If you are an enterprise, and plan to a roll out a digital pen solution to 2,000+ users, you are confronted easily with over $500K price for “just the pens” and have to handle a lot of additional question marks as well:

• You will face higher costs per print because of the unique pattern that needs to be printed on paper used by digital pens
• You have to purchase and carry around two devices (pen and phone) instead of one
• You have to accept that the average accuracy rate of Intelligent Character Recognition (ICR) is less than 80%
• You need to do data verification for many data fields
• Losing charge over time is a problem of all electronic goods, and applies also to digital pens
• Beside technical faults after the warranty period, you have to buy an expensive new pen every time a user loses a pen, or it gets stolen or is damaged by improper handling.

Yes, there is the valid argument for wet signatures. In some countries and spaces, like in Europe or even in the US in the government space, wet ink signatures are required on many forms and contracts. However, there is a tremendous pressure on governments to do away with their wet ink requirements and/or allow signature pads to replace wet ink signatures. Even where the issue with wet signatures still exists, you can overcome it with much cheaper inking pen solutions based on traditional signature pads, avoiding all the ICR issues by filling out the form electronically.

Yes, it is true that paper is still around. Where paper is still a requirement, or preferred, a digital pen can be a great platform, but I would argue that with the advent of traditional signature pads, iPad and Android tablets, paper applications are being replaced at a fast pace.

I’m not saying that digital pens have no place in this world, and no solution is ideal for every customer, but the relative market share for digital pens is shrinking as more and more powerful e-signing apps are launched on the iPad and Android.