Market Study

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October 21, 2011 by huionn

For a self-funded startup, it is important to target at a niche market. Therefore, before I heavily invest my time into development, I have spent some times to study the market of Document Management System (DMS). Two key concepts are used to evaluate my targeted market:

Fragmentation:  This means the market is shared by a reasonably large number of players, all of whom are functioning profitably.  You typically don’t want to fly kamikaze into a competitor with 90% market share.  For example, the market for desktop operating systems is not fragmented.  In contrast, the market for embedded operating systems is highly fragmented.
Differentiation:  In at least one important way, be different.  Make sure that one particular niche of your market segment has a very good reason to favor your product over the more established competitor.  Make the people in this niche love you.  Until they do, you can ignore the rest of your market segment.


  • For horizontal market, DMS is segmented into small, midsize and large customers – target: small (1-25 users)
    • At the high-end DMS (normally bundled in ECM), the market is dominated by a few vendors (Oracle, EMC Documentum, MS Sharepoint, IBM)
    • Small to mid-size market are very fragmented with no dominating market leader.
  • For vertical market, DMS is segmented into different sectors – target: legal
    • There are a few products targeting at small legal firms – Worldox, NetDocuments, Clio, Sohodox, PaperPort
      Their pricing are similar USD50 – USD1xx per month per users for subscription based; USD 149 per user (one time) for desktop application


In terms of features, those DMS have most of the basic features – store, search, scan.

There are a few key differentiation among those DMS:

  1. lock down system (checkin & checkout)
  2. document workflow
  3. access right control – read, write access
  4. document profiling/indexing
  5. full text searching
  6. audit trail
  7. document versioning
  8. document retention policies and archiving
  9. email integration
  10. OCR

There are mainly 2 product types: hosted web application (aka SaaS) and desktop application (standalone or client-DB).

Hosted web applications can be accessed anywhere and requires no installation. However, its functionalities depend on network connectivity.


  • simple to use, no installation (certain features still need to install browser plugin)
  • can be accessed anywhere with internet connectivity
  • centralized (although some desktop applications also use centralized DB) for collaboration
  • auto backup
  • better collaboration between users


  • less responsive due to network connectivity
  • non-functional with slow or no network connectivity

Desktop applications are generally more responsive than web applications. However its accessibility is limited to the PC/laptop or LAN and VPN.


  • internet connection not required
  • more responsive
  • usually better user interface


  • no backup
  • no mobile access and remote access requires VPN or other remote desktop method




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