PTN Repost from October: Neat, after period of organizational changes, seeks broader market

Tom Paine

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The Neat Company and HP announced in late September that HP was bundling Neat's Smart Organization System, the cloud-based scanning and information extraction and storage tool, with HP's Officejet 8040 printer. The partnership is a first for Neat, which has sold its products separately through retail and online channels in the past. Neat is not contributing any hardware, but only its cloud software service.

The HP Officejet 8040 with Neat e-All-in-One Printer is available in the United States for a starting price of $399 in retail stores and online. That includes a three-year subscription to the NeatCloud service.

The recently announced intent to split HP into two companies is not expected to have any impact on the product, which will fall under HP's proposed Printers and PC business.

Whether the bundling of its products with others will be a major boost for Neat remains unclear, but the HP arrangement continues a shift away from hardware towards software which has been occurring for some time, although Neat Vice President-Product Management Chris Barbier stressed in an interview with Philly Tech News that it is still very much in the hardware business and the HP offering doesn't replace any existing Neat product.

Neat has gone through many changes over the past two years, since reporting revenue of $110 million in 2012. Almost the entire senior management team has turned over, and Ron Kaiser, a board member since 2012 who has served with other Edison Partners (Neat's principle investor) ventures, replaced Jim Foster as interim CEO late last year, though Foster is still on Neat's board (correction: Foster is no longer on the board, though the company tells me the relationship is amicable). A Neat spokesperson tells me a new permanent CEO will be named soon.

Comments on Glassdoor (admittedly not always a reliable indicator) do suggest with some consistency that 2013 was a rough year organizationally and financially, although no update on the financial picture was offered by the company. But it did provide this response to my inquiry:

"Last year Neat accelerated the company’s efforts toward its cloud strategy – opening up an entirely new chapter in the company story. The release of NeatConnect (already one of the Nations’ leading Wi-Fi scanners) and the advancement of NeatCloud and Neat’s mobile application took precedence over our traditional hardware and desktop software. Integrating our cloud capabilities into other manufacturers’ hardware is another example of our evolved approach. That evolution has been reflected in the changing interests and skill sets of the Neat team over time.”

Neat's total customer base, I confirmed, has roughly doubled from the 1 million that it indicated it was at when I spoke with them about two years ago.

Bsrbier said Neat is placing more emphasis on the SME (small and medium enterprises) segment in addition to the SOHO (small office, home office) segment, but is not going after the large enterprise segment. The HP announcement seems targeted more at the SOHO market, though. I see some indications that Neat might be over its rough spot (though no confirmation), and its WiFi-enabled NeatConnect product introduced late last year was well received. Barbier indicated Neat may expand its applications to encompass other accounting and customer relations management tasks.

Edison could be looking towards a future exit strategy for Neat, though I'm not sure if Neat is a strong enough or broad enough standalone play for an IPO right now. Perhaps a sale to a larger company could occur, but a combination of companies with complementary technologies serving the SOHO & SME markets might be intriguing. In the mean time, it might try more joint product partnerships.

Update November 5: Neat names Jeff Dickerson Chief Executive Officer.

Update November 11: Neat Announces Seamless Integrations with Intuit’s QuickBooks Online