Apparently unable to sell the entire CoolSign business unit for their asking price, Planar announced today that they have sold the “CoolSign digital signage business for the gaming industry” to Bally Technologies, Inc. Under the terms of the deal, Planar will retain “ownership of the CoolSign business for all fields of use other than the gaming industry”. Bally will integrate the CoolSign solution with their iVIEW Display Manager™, according to the press release, and extend that offering, leveraging CoolSign’s previous deals in the space. No financial details were released, but one would assume it raised some needed cash up front for Planar, and perhaps a taste of future deals.
The deal is fairly creative, in that Planar essentially sold a vertical market, rather than the whole business. Both companies should be given credit for figuring out a win-win here. What one has to wonder is what is on the horizon for the core of the CoolSign business and their staff. Planar has sent clear signals that they want out, and while the team won’t be changing business cards for the fourth time, there has to be a sense of “what’s next?”.
There appear to be two takeaways from this deal. First, the expected synergy between display manufacturers and digital signage software companies has not materialized. Clarity took the first shot, hoping that captive DS software would enhance their high end display offering. Before the jury returned a public verdict on that, Planar bought Clarity and gave it a whirl. Based upon conversations I have had with people who should know, the culture and management of a display company do not mesh well with those of a software company. Plus, getting the sales forces to work together is easier said than done: the cycles are simply different. Second, the basic business concept of focus seems to be in play in this agreement. Bally didn’t want the whole CoolSign business; they wanted the piece of it that could enhance their very targeted product set, and they found a way to pull that off. Bally took what they needed, and left the rest for Planar to manage. While it is far too early to declare the Bally strategy a success, they appear to have made a nice strategic acquisition, and I’d bet the downside is fairly limited. There are still the issues of integration and marketing to be tackled, but the singular focus will make the task easier. Planar is left with the remaining markets, and a business unit that may be less salable than before. So now they need to figure it out.
Without any doubt, in an environment like we are all in today, rifle shots are going to trump shotgun blasts. The partial sale of CoolSign may be a harbinger of tighter focus on vertical markets in an industry that has all too often gone toward the AFM (anything for money) sales and marketing strategy. Targeted development of product feature sets, vertical market strategies and market messaging will likely drive differentiation and defendable niches for successful DS solution providers going forward. It would be a welcome step in the maturation of our industry.