The report today of Intel’s impending entry into the digital signage software space provides an opportunity to ponder a few questions. While details are lacking on Intel’s exact strategy, there is enough to go on to wonder what they might be thinking out in Santa Clara. Intel is a chipmaker, and they are very, very good at it. However, the inability of their digital signage team to understand that marketplace or to learn from history is telling.
Their 2010 acquisition of CognoVision is a classic example of missing the big picture. On the surface, the CognoVision deal made sense. Anonymous Video Analytics (AVA) was a hot topic, and CognoVision’s product required high end (read: high margin) chips to function. Finally, they must have thought, a reason for network operators to spend more for players! But at a deeper level, they failed to understand that the clear trends in the marketplace were toward lower cost players and Linux-based systems. CognoVision, renamed AIMSuite and bundled with some non-innovative management tools, was a Windows-only offering at the outset. Intel bet against both trends, and by the time Linux support came along, the horse had left the barn. There was also a misread on AVA in general. The technology requires a camera, which presents two challenges. First, retrofitting existing sites with cameras would require a truck roll and more equipment expenditure, and even then could only be done by operators running media players powerful enough to support AIMSuite. The census of that target market could probably be taken by a one-armed, math challenged intern. Second, the camera itself raised issues of privacy, especially in the most mature of the ad-supported venues, medical offices. Network operators were reticent to take on the expense and risk of AVA. One wonders if they paid for consulting advice on that deal. Regardless, Intel did pay a price for loving a buzzword and not investing in what might actually drive high-end chip sales: video walls. Undaunted, many cocktails were poured, roadshows were conducted, and dollars were flushed chasing a strategy doomed from the outset, as nimbler competitors grabbed deals that became available.
On the flip side, and right around the time that the CognoVision deal was going down, Intel jointly announced the Open Pluggable Specification (OPS) with Microsoft and NEC. The concept, as summarized by Intel itself on its web site:
The open pluggable specification (OPS) helps standardize the design and development of digital signage devices and pluggable media players. Intel created OPS to address digital signage market fragmentation and simplify device installation, usage, maintenance and upgrades.
This was a good idea, but somehow it got lost in the shuffle. The original announcement was a tangled mess as three corporate giants managed to lose the pureness and potential of a standard by trying to wrap it around the wrong marketing messages. OPS remains a good idea, but like AIMSuite, has languished. Had Intel applied its influence and marketing dollars to promote OPS as a standard, perhaps they could have changed the way media players are made, sold and deployed, quite possibly to their own advantage. Sadly, that did not happen.
Now, our corporate Sisyphus prepares to push another boulder up the digital signage mountain. The question on everyone’s mind is simple: Why?
To fill a void in the general marketplace? That line of reasoning probably won’t work. If Intel is bringing something to market based upon their unconfirmed IP deal with Ryarc, then we cannot expect it to be innovative, new or differentiated. There are hundreds of digital signage platforms and CMS applications in the marketplace. Some sit in specialized niches, most do not. If Intel is going after the mainstream part of the market, they are going to find it to be tough sledding. If there is anything the market is NOT clamoring for, it is more CMS options.
To sell more Intel devices? A simple fact: there is no digital signage software application that could move the revenue dial at Intel in a meaningful way. Therefore, the only role of an Intel application offering would be to move tens of thousands of Intel processors and boards that might otherwise not have been sold. It is hard to imagine any incremental processor sales occurring as a result of Intel providing software. Even if they learn from history and focus upon the video wall market, which is growing, processor-intensive, fragmented and underserved, only innovation and price will drive incremental deals that might have otherwise been missed. On the slim chance that they do innovate, you can bet it won’t come cheaply. Given the confluence of Intel-friendly factors within the video wall market, I would applaud this approach, but even then they will likely miss out on deals where the video walls and traditional signage need to be operated from the same back end. Their recent trade show dalliances with YCD Multimedia should have taught them that. And if it didn’t, one wonders why they didn’t just buy YCD.
Because it is 6 AM somewhere? Nobody doubts the power of Intel or its ability to invest in strategic business efforts. But it sure feels like 2010 all over again. Once again, they appear to be ignoring a critical trend toward lower cost players. This time, the trend threatens to cost them market share. The emergence of ARM-based media players is not a passing fancy. While many of the devices hurriedly hyped and reviewed without critical analysis are not commercial grade or ready for sophisticated applications, ARM players are going to evolve and become a mainstay as older networks re-invest and new ones come online. Intel does not have an answer at competitive price points, even against higher-end ARM offerings. Waving the flag for a “me too” CMS is the wrong response, and will not shift demand to a higher cost player. The mass market is simply going to sniff at another CMS from a hardware provider. A quick cup of coffee with their peers at Cisco, NEC or LG might provide some historical context. Each made a similar mistake based on different, well-intentioned miscalculations.
As Intel approaches the digital signage software space, signs indicate that they are thumbing their nose at history, ignoring trends that impact their core business and very likely misallocating marketing dollars. Should they surprise us and focus on innovating for high-end, niche use cases such as video walls, they may have something that can drive processor sales and fill a void. PaddyPower would probably make book on that at 40-1, and Intel’s latest foray is more likely to keep event managers busy and software partners running for ARM than they are at creating value for Intel shareholders. Maybe I’m wrong, or maybe Bill Murray will be in their booth next year at DSE. In any event, a hearty welcome to the world of long sales cycles to Intel.