This morning I found an interesting piece written by Fred J. Aun in Evan Schuman’s Storefront Backtalk retail technology newsletter. Mr. Aun provides a recap of findings in an ABI Research report on Digital Signage written by analyst Zippy Aima. Ms. Aima, formerly of Frost & Sullivan, has her roots in storage, DRM, digital asset management and security. Certainly not a stranger to digital media. The talking points that formed the basis for Aun’s review and Ms. Aima’s table of contents both are worthy of further discussion.
In the article, Aun leads with ABI’s assertion that retailer adoption of digital signage technology is being boosted by “reduction in prices for data storage and electronic goods in general”, and would ramp even faster if not for “data security concerns”. One can not argue that prices of electronics tend to decline over time, and indeed they have, especially on the big ticket digital displays critical to digital signage deployment. The concept of declining prices as a driver of adoption is hardly new (guilty!), but as the market has evolved, it seems clear that effectiveness of digital signage has become the biggest driver. I have to take issue with her case for storage costs being a driver of adoption however. Data storage is such a small component of the cost of operating a digital signage infrastructure that declines in costs of big disk (e.g. server level RAID arrays, NAS or even cloud storage) or small disk (media player hard drives) are not noticeable. The cost of data transport is far more relevant to adoption than data storage costs.
Aima goes on to forecast a 33% increase in the U.S. digital signage industry for 2009, although she appropriately hedges a bit based on the timing of the report (4Q 2008) and the subsequent implosion of the economy. Oddly enough, our own evidence here is that demand is amazingly strong despite the gloomy economy, so props to Ms. Aima on taking that stand.
An interesting tidbit follows in which Aima postulates that the abundance of technology vendors may actually be working against adoption, as it tends to confuse potential buyers. It is hard to argue the concept that the market is over-vendored. The economic cycle may do more to thin the herd than the long-predicted consolidation. I would make the case, however, that the source of confusion is really a lack of semantic resolution and general clarity regarding the various models of digital signage and how it is deployed. Hopefully, through the work of analysts like Ms. Aima, Nikki Baird, Janet Sherlock and others, a common understanding of the structure of the marketplace and the various technology models will emerge.
The next topic of discussion, security concerns, seems to have more to do with entering Ms. Aima’s personal comfort zone than any reality we have encountered in the marketplace. She points out that “connectivity is IP-based so networks become prone to being hacked when delivering content”. She asserts that encryption is essential. While we agree that security is always vital, our experience in the marketplace, especially with retail and health care venues, reveals that the security concerns do not center on the media players being hacked and bizarre or inappropriate messages being displayed. The security challenges arise when the digital signage network piggybacks on any element of the venue’s LAN/WAN backbone. The primary fear is that somehow the media players or other digital signage devices could be compromised to gain access to private data, especially credit card information at retailers, and patient records in medical venues. PCI compliance is an incredibly large issue for retailers today, as readers of Storefront Backtalk would attest. HIPAA regulations loom over all medical environments. So encryption is not necessarily the panacea; proper device management and network design may be more important to help assuage fears of the real estate owners.
Examination of the Table of Contents for Aima’s 69-page report reveals what appears to be a thorough examination of market drivers, potential restraints and trends, some of which are noted above. She includes a list of 16 “key players” towards the end of the report, and here she may have revealed a bit of naiveté with respect to the landscape. (Objectivity disclaimer: Aima did not include RDM on her list.) Of the sixteen “key players”, I count no less than eight that simply do not qualify for the adjective “key”, never mind the noun “player”. I see one that has already exited the space. I do not see the major turnkey providers who made their bones in retail, PRN and CBS Outernet, I do not see a couple of other worthy competitors who have claimed fairly major victories at significant venues, or one who’s largest retail install provides an instructive case study in failure. I do not see RDM. Since a research report is generally purchased, the contents of it are often regarded as beyond reproach. By deigning to identify a list of vendors, the writer implies that this is the relevant field for buyers to consider. Clear oversight of several important players in the space, as well as succumbing to hype, self-promotion or search engine results to include others dampens the impact of what appears to be some very good work. Give me a call, Zippy. We can discuss.
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