Strong growth projected for digital signage in 2009

Published: April 7th, 2009

Growth areas are hard to find in this shaky economy. Companies, on the whole, are hunkering down and making do rather than jumping into new areas. Yet according to both analysts and vendors, the digital signage world is a bright spot in an otherwise dreary market.

Analysts at DisplaySearch have, admittedly, lowered their forecast for 2009 – to a “mere” 44 per cent growth! In Q4’08, unit volumes for LCD and plasma displays used for public display applications globally rose 13 per cent, year over year, to generate an annual total of over 1.25 million units.

In Canada, Partner Research says that 2008 unit sales hit almost 30,000, worth $52.9 million, a growth of 37 per cent in units and 25 per cent in revenue over 2007.“We’re still quite bullish on the space,” says Chris Connery, DisplaySearch’s vice-president of PC and large format displays. “Lead times can be really long, so decisions (for projects currently in progress) might have already been made prior to the economic downturn, but it doesn’t mean that an informed reseller can’t get a piece of the pie.”

Vendors think so too. Steve Benvenuto, director of sales business development and worldwide channels, emerging technology group at Cisco Systems (NASDAQ: CSCO), says the company just had its largest quarter ever in digital signage, on a year over year basis.

“We’re seeing good traction in businesses like financial services, education and the public sector,” he says, growth which he believes is driven by technology, positioning – and by the Cisco name.

His colleague John Roberto, Cisco’s manager of business development and worldwide channels, adds that the company has been rapidly developing its offerings, with two major releases in the past year. It has added features such as enterprise TV, which allows digital signage equipment to multi-task, functioning as signs during business hours and as a medium for disseminating training videos to staff after the customers have left for the day.

Partners must invest time and knowledge

The company has launched a reseller program to address this growing market. According to Cisco, the Authorized Digital Media System (DMS) Partner Program is not an ATP or a Specialization but a new way to recognize partners for investing in building a DMS practice by increasing their knowledge and expertise in selling, designing, installing, and supporting comprehensive DMS solutions. It encourages and rewards partners as they enhance their sales knowledge and technical skills without restricting DMS product sales while partners work to develop new opportunities.

For resellers, expectations must be adjusted to compensate for the unique constraints of digital signage customers. LG Canada‘s director of sales, business solutions division, Shawn Snobelen, notes that, as Connery stated, digital signage sales cycles can be extremely long and challenging. “Resellers have to be prepared for investment and patience and lots of changes,” he says. “They have to think on their feet. Projects can be very fluid and dynamic until they close – and there may even be changes after that. That’s what makes it exciting.”

LG’s main focus is on the hospitality market, serving restaurants, bars, casinos, fast food establishments and the like, and its products reflect that focus. It has just introduced a 17:5 LCD display it calls the Stretch Monitor, which is roughly half the height of a traditional display of the same width. It’s aimed at hard-to-fit locations.

LG has also launched the Triple View panel (winner of an Innovation Award at the 2009 Consumer Electronics Show), whose goal is to engage multiple viewers at once. It’s able to show three images at the same time, with the angle of view determining which image a given viewer sees.

Unlike some of its competitors, who provide complete solutions, ViewSonic concentrates on producing hardware, leaving the software and integration pieces necessary for deployment to partners, according to senior product manager Dan Woodward. It has divided the market into four segments according to the number of displays involved: one-to-one (standalone), one to 50 display LAN deployments, WAN deployments, and offsite hosted.

“We broke the market into four universes to help resellers scope-out projects,” he says. “VARs are becoming more comfortable (with digital signage), but there’s still a large set of knowledge to learn. We know there will be a lot of different solutions.”

To help with that learning, the company is hosting Webinars, both on its own and with partners, in which it examines topics ranging from network and product considerations to software and content creation.

Know your market

Those considerations are many and varied, and offer sometimes unexpected challenges. At the low end, Woodward says, people are even using digital photo frames as signs. Overall, however, 42 -inch screens are the sweet spot at the moment, and touch screens are coming into their own. He notes, “This is a sign of another step in the evolution of digital signage – it makes it interactive.”

Interactivity is definitely where it’s at, says Samsung Canada‘s large format display sales manager Peter Bougadis, as is a need for audience measurement. Advertisers want to know if their campaigns are garnering any interest. In this arena, Samsung has partnered with Israel-based TruMedia, whose products detect and report on who is looking at a digital sign, how long they look at it, and what areas of the screen they focused on, to allow companies to better target their ads and prove ROI for the signage.Bougadis is also seeing demand for video walls. Current Samsung offerings can go up to 250 screens, in virtually any configuration. The company recently upped the ante with a thin (7.3mm) bezel display with built-in audience measuring and touch screen technology, which it introduced at this year’s CES.

Content, however, is another kettle of fish. “We haven’t seen too many resellers getting into content generation,” he says. “They let the content experts do that.” After all, he notes, content production is not usually a reseller’s core competency, and you only have about two seconds to capture the viewer’s attention. That’s best left to the content development pros.

Signage-as-a-service the new SaaS?

That doesn’t mean there’s no value-add available for a reseller to offer. Industry analyst Carmi Levy suggests a managed service offering. “For dealers, opportunities abound in offering access to digital signage infrastructure through a service-based model,” he says. “For businesses whose needs may not justify up-front investment in their own hardware, dealers could manage access to shared resources and offer cost-effective, flexible signage on a subscription basis.”

Yet, despite the opportunities and vendor enthusiasm, all is not entirely rosy in this burgeoning market, according to Partner Research. There are challenges for vendors and resellers to overcome. Says analyst Albert Daoust in his Q4 2008 segment update report, three problems have emerged that will keep the digital signage market from taking off as quickly as predicted a year ago. “First,” he says, “the customers are unsure of how effective digital signage will be. Second, they do not know how much the networks will cost. Third, they do not know how to finance the projects.”

Resellers who can address these issues will be well on their way to grabbing a competitive advantage in the digital signage world.

Sidebar

HP’s take on digital signage: recycled paper and large format printing

Not everyone is enthusiastically embracing digital signage. HP (NYSE: HPQ), for example, has so far stayed out of the space despite having a solid line of LCD displays as a foundation.

It does, however, promote its own flavour of “digital” signage: signs produced on large format digital printers.

Broderick Nevison, large format printer sales specialist, graphic solutions business at HP Canada, argues that, with advances in technology, static signage is as green – or greener – than digital display-based signage, and offers other advantages as well.

“Digital signs need electricity,” he points out. “They need power just to be visible. We use electricity to generate the image on the paper, but after that, static signage needs no power.”

In addition, new aqueous-based latex inks can print on recycled media; HP will soon announce 100 per cent recycled paper for large format printers. And static signage can be easily recycled.

And despite the commodity status of standard printers, Nevison says that there are still nice margins to be had in the large format space. Not only can resellers provide the hardware, they can add margin points by offering installation and training, and by selling supplies (which, he adds, are not available at business supply outlets such as Staples).

Resellers can also leverage HP’s current zero per cent financing and trade-in offers to help customers take the plunge.

“We see growth continuing for static signage,” Nevison says. “The switch from analogue to digital printing is a bigger trend than the switch from analogue to digital signage.”