Last year, we looked at how certain signals were making it clear that the digital signage solution provider space was self-selecting into groups we termed “hunters” and “gatherers”.  The lines of demarcation were really based upon sales strategy and product features.  In the fourteen months that have passed since that observation, we have seen deeper trenches built between the hunters and gatherers, this time based upon price.  It is difficult to cross those trenches from one side to the other, and those caught in the middle will suffer collateral damage from both sides.

Yes, price has always been one of the levers that has influenced decision making in digital signage, as well as perception of the various offerings.  Until recently however, that price continuum did not include “free”, or “just about free” options. My thoughts on freeware and the vuvuzela of digital signage are also well-documented, and this post is not really about either.  Suddenly, though, things are starting to get crowded down at free/almost free end of things, and the impact of it will be interesting to watch.

The freeware business strategy is usually wrapped around some way to generate revenue.  In the case of the incessant trumpets, that would be an enticement to pledge your network’s advertising slots to their ad sales and delivery scheme, backboned by their experience in both. In the case of the other display manufacturers, it would be a competitive response to meet the needs of the lower end of the marketplace, thereby selling more displays.  Other pure software players are out there attempting to operate a “freemium” model, whereby a free product is offered with reasonable features and functions, and enhanced capability is available for a price.  The trick in the freemium model is to find the balance between giving enough function away to attract a following, and finding the right features to hold back for the paid model.  There is a great discussion from Fast Company here, as the CEO of the popular Evernote application provides insight into the freemium model.  Applying it to the digital signage space may prove to be difficult, as the numbers just aren’t there to harvest meaningful percentages of freemium users as suggested in the article. Add to that the purely free options, and you have challenges.

Amidst all of this, Rise Vision announced this week that they were going to a hybrid free-freemium-nearly free model for their resellers.  It is covered in detail in Dave Haynes’ Sixteen:Nine. Rise Vision is straight-up about their desire to target the SMB market by empowering their resellers with a capable framework that can be enhanced and white labeled by the resellers themselves.  It seems like a reasonable plan, and Rise has a good reputation.  To sell it, they are making it free for three years, and then going to a virtually unlimited license for $150 per month.  Pretty compelling. But that won’t pay many salaries, so they are banking on getting hundreds of resellers on board. The real dilemma both for Rise and others dependent upon the reseller channel is the number of offerings that are on the table for resellers to choose from. How does one gain mindshare if there is no budget for marketing and training, while competing with display manufacturers who move lots of big ticket displays through the same channel?  It will be interesting to see how all of this noise at the low end impacts reseller choice and strategies. It may be even more important to see how it impacts customer perceptions. Some combination of good software, good marketing, success stories and (sadly) marketing dollars will likely dictate who prospers.

Despite what appears to be reasonably encouraging news with respect to advertising plans, market conditions seem to indicate that we are on the cusp of consolidation, both among the hunters selling premium products and the gatherers offering variants of free and freemium products.  The digital signage software market has now been effectively bisected by pricing and function, with very little overlap between the two groups or the customers choosing among the entrants.  As the two ends of the market find their own equilibrium, there are still some solution providers somewhere in the middle.  Price is killing them from below and function is providing pressure from above.  Something has to give.  The long, hot summer has begun. There may be more than leaves falling in the autumn.