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by William Van Winkle |
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| Monitors are like French fries. Get off the fast food circuit and you can find some pretty good fries out there with fancy spices, special sauces, and so on. But most of the time, you just get the ordinary fries that come with the burger, same as everybody else. Add a little salt on the fries, get a little faster refresh rate on the screen. Maybe the contrast or backlighting is a little better on one model versus another, any maybe Wendy’s tends to undercook their taters versus McDonalds, but at arm’s length they all kind of look the same. | |||||||||||
In general, monitors are so commoditized that nobody makes more than a few bucks on them. You bundle them with PCs because you have to. Some opportunities pop up for higher-end displays from the likes of LG and Samsung, and there's a little more margin here, but you're still fighting against the fleets of retailers and e-tailers offering the same thing. So should we all resign ourselves to a life of greasy, low-margin mediocrity in the display space? Not even. As with most commodity categories (and life in general), 80% of what's out there is a waste of time. The challenge is to keep your eyes open for the niches in that remaining 20 percent. We've been doing exactly this, and we have three display niches to recommend if you're looking to differentiate your offerings from the herd while taking a big leap up the margin ladder. Ready? We think you'll find these prospects quite tasty. Think Big With Digital Signage Digital signage is the art and science of putting multimedia content on display in a public venue, usually "narrowcast" over a network of some sort. These days, digital signage has become so pervasive that we often don't recognize it for what it is. For example, every time you watch that 20-minute collection of trailers, "news," and product promotions preceding the movie at theaters equipped with a digital projection system, that's signage. The content is often piped in via satellite.
Airport reader boards are the big example of digital signage everyone cites, but what about flat panels running combo meal images in mall food courts? That's digital signage. Kiosks in drug stores? Signage. That dream vacation loop playing on the plasma screen in the travel agency shop? More signage. Digital signage is everywhere, and its growth rate leaves regular display sales in the dust. According to Doug Albregts, vice president of sales and marketing for NEC Display Solutions of America, digital signage is seeing 35% year-over-year growth versus only 3% to 4% for the overall display market. Industry analysis house DisplaySearch noted a 44% jump in large flat panel displays for commercial use in the fourth quarter of 2005, assisted by a 56% hike in the quarter-over-quarter shipments of plasma public displays. From 2005 to 2010, DisplaySearch expects a 46.3% compound annual growth rate for 26" or larger flat panel public displays worldwide. Behind each of these displays is some sort of signage programming, much of it being piped in from outside the business using the display. Some specialist resellers have been in this field for almost two decades, but most of the industry is only waking up to the potential of signage and narrowcasting now. The good news is that the digital signage industy is still getting off the ground and may not have even hit its true growth phase yet. Most installations have been in large businesses. Resellers can now sweep in and bring signage benefits to SMBs. In the lowest-tech instance, you could install a 24" LCD screen on a storefront wall, cable it back to a PC in a nearby room via any sub-$100 DVI/VGA-to-USB or -coax cable, and have the PC pump out an advertorial PowerPoint presentation or even a looping video some employees threw together in Pinnacle Studio. Think about it. You could profitably install such a setup for under $2,000 (under $1,500 if using a PC already deployed for another low-bandwidth task), and the customer now has a marketing solution vastly more engaging than any normal endcap display could ever hope to be. From this point, creativity kicks in. What if you have that PC power two LCDs on opposite sides of the showroom? What if each display shows a different content stream pertinent to the products near it? What if you show the customer how he can get his signage installation subsidized through co-op marketing funds provided by the manufacturers featured in his signage content? What if he gets so jazzed by this idea that he wants come up with new content every quarter or month and he wants you to handle the creation of it? Beyond that, what if the customer wants to focus on doing his job and instead puts you in charge of hosting and distributing the content you feed to his screens over the Internet? And if you run a highly mobile reseller operation, wouldn't it be advantageous if you could perform this signage management remotely from any location in the world? I can read your mind. You're thinking, "That is the coolest thing I've contemplated since...maybe ever. But I'm not set up to do all that stuff. I don't have the knowledge or appropriate personnel." Too right. The biggest problem with digital signage and the reason so few resellers are involved in it is the relative complexity of implementing a narrowcasting network. Fortunately, help has arrived.
"If you look at the data for the last eight months, a lot of the opportunity for sales in the display market right now is in digital signage," says NEC's Albregts, "especially on large displays and high-end SKUs with a lot of value-added features. But we realized that one of the missing components there was the expertise to talk beyond the display, addressing the other hardware and software components that are part of digital signage beyond the display. Resellers need a partner network to facilitate this and act somewhat as a general contractor. "That's been our challenge over the last two years. We don't want to just sell the panels. We provide services ranging from consulting to hardware to software to third-party products including wireless or kiosk applications. Historically, this has been out of the realm of capability for most resellers. They're getting asked by customers how to do these things, and they're not sure where to turn. We can interact with them and general contract and educate them on the entire signage process all the way out to delivering content to the displays." To the best of our research, NEC Display is the only manufacturer in the industry offering a total end-to-end opportunity for resellers wanting to get into signage. Consider the steps involved in a narrowcasting implementation: the display system, a PC (or several) to drive the displays, custom cabinetry construction, in-wall installation and cabling, content creation, content transmission, content management, logging and reporting, financing, on and on and on. Signage jobs can run anywhere from $1,000 to $1 million or more, and the complete solution often involves one to two dozen contractors. Even the largest, most specialized resellers find it difficult or impossible to keep every aspect of a digital signage job in-house. NEC has taken the unique action of finding the right partners to fulfill all of the steps in the signage process, aggregating them, and helping resellers to win business by focusing this array of diverse professionals on each specific job opportunity. Some aspects of digital signage are obviously more compatible with system builders than others. VARs may wish simply to buy and mark up specialized display PCs (NEC, for example, has machines designed for this task), but system builders can keep some extra margin by doing the configuration work themselves. In fact, if you consider the small form factor coverage we did in RAM last month, you can see how customers might gravitate to mobile-on-desktop or other small form factor designs able to offer high resolution video to multiple displays with low power consumption and essentially no noise. This becomes particularly pertinent if a signage implementation involves the construction of interactive kiosks. Albregts notes that most narrowcast content gets outsourced by the customer. This is why resellers with expertise in multimedia creation tend to do better in signage. Slide presentations and even still photos are not uncommon in this space, but the old maxim about getting what you pay for holds true here. Signage is a contest to capture eyeballs, and the more compelling and persuasive you can make a customer's content, the better the ROI he'll see on the investment. Again, consider the 20-minute pseudo-infomercials that now run in front of digitally projected movies. Two years ago, we were all munching our popcorn while ignoring the looping on-screen slide shows. Now, even if we hate the idea of watching commercials, those 20-minute segments grab your attention and don't let go. That's signage at its slickest and best. Naturally, NEC is not the only display manufacturer around involved in this space. However, we lean toward the company because of its long-term commitment to the niche, both in fostering a sales channel as well as optimizing its highly regarded products for signage deployment. "We build very intensive technologies that allow us to run our displays in a signage environment," says Albregts. "For example, take tile matrixing, where you can grab 25 LCDs and make a 5 x 5 video wall out of them. You can put different images on each screen or one image on every screen to create an overwhelming video. We have CableComp, which allows you to run cables for up to 300 meters without any signal degradation. Our NaviSet allows you to control an entire network of displays and troubleshoot any one of them. So if you've got a regional rollout with three or four NEC displays in 16 different locations, the company managing that network has the ability to see what content is on each display based on our software. It can tell you if the display is on so you don't have to go out to the location and look. Also, from a compliance standpoint, it can tell you exactly what content was on the screen at what time, which is very persuasive proof if a customer is ever audited." Due to the custom nature of signage installations, many jobs will require custom software written precisely for a customer's needs. That said, there are some out-of-the-box solutions available that can prove quite flexible. One example would be Harris' Inscriber InfoCaster (www.infocaster.tv). InfoCaster SKUs include InfoCaster Workstation, which on its own can fuel signage in a single location, to Workstation plus Network Manager and Player, which can power a global network of displays all showing different data streams anywhere. InfoCaster lets content managers combine and animate multiple data sources in an easy, template-driven format attractive enough for any venue. You might also check out Scala's InfoChannel line (www.scala.com), which works similarly to InfoCaster but puts even more emphasis on design and reporting capabilities.
Still, out-of-the-box can only get you so far. If a customer wants a system that can dynamically update inventory levels shown on store displays, for example, that's some serious custom work. Or in a similar vein, a retailer might want a signage system that could automatically change content based on other factors. If the signage campaign launched on Monday aims to sell Guess jeans and it proves so effective that stock runs out Wednesday, you want a signage system smart enough to switch to alternate advertising while the store waits for its next jeans shipment the following week. Another part of the value you can offer signage customers is advisory. A client's first impulse might be to run a video loop of the store manager near the checkout line where patrons are more or less stuck watching. But if the content entails a call to action, such as picking up another product, then the signage is asking patrons to leave their place in line—which they probably won't. Moreover, short content loops may prove so annoying to checkout employees that they may sabotage the system. Placement of displays is critical, and content needs to be engaging enough to draw in viewer attention but diverse enough to keep those eyeballs coming back. In short, a smart signage installation requires a fair dose of marketing savvy, and if your customer isn't up to providing those skills, then perhaps you'll need to fill in. One potential pitfall in signage is underestimating the required resources. For example, if a client wants five screens each at ten locations, and each screen runs different content sensitive to its store location, you're talking 50 content streams. Each stream may entail a 1GB HD video file, so we're up to 50GB. Fifty gigs is no big deal when it's on your hard drive, but getting it there is the trick. Improperly designed narrowcast deployments can make content updates feel like a denial-of-service attack on the network. (It's no coincidence that tons of narrowcasts are still conducted by a content manager walking a burned DVD into a back room PC.) Moreover, money-saving tricks up front, such as opting for a one-way satellite downlink to a large customer rather than a two-way link, may come back to haunt you since you'll have no way to prove how and when ads actually ran on-screen. If you're a small reseller focused on helping small businesses, the signage arena may sound a bit overwhelming. That's OK. Tackling a multi-regional signage job may be biting off more than is advisable right out of the gate. But consider the market. In 2003, iSuppli/Stanford Resources predicted that "retail dynamic displays" would grow 300% from roughly $550 million to $1.5 billion by 2008. And we've seen over and over in this industry how high-end technologies inevitably trickle into the mainstream. (Think RAID or Gigabit networking or, more pertinent to this context, large LCD screens.) Manufacturers agree that this past 12 months has marked the first time that small businesses have showed serious interest in digital signage. A single-location outfit may not need such displays, but once you have two or three outlets, the benefits start to become too compelling to be ignored. Local health- or whole food-oriented grocery stores are now rising in popularity, for instance. Consider the possibilities of signage, especially interactive kiosk signage, that could educate otherwise uninformed shoppers on the benefits of organic or naturopathic products. As mentioned above, digital signage projects may easily run into the tens or hundreds of thousands of dollars—more than most resellers will want to float from their own pockets. This is one more area where NEC has made arrangements to facilitate sales. "I can't stress enough what a tremendous value financing is to VARs," says NEC's Albregts, "because if someone wants to roll out a digital signage network, even if it's three or four locations, they may not want to spend the up-front costs. It may be out of the scope of their IT budget, or even if it's not out of the scope of their budget, they don't want to tie up their cash. Most VARs don't feel comfortable financing that kind of a deal, so we offer that as a pass-through option for those integrators. If it's $100,000 over six locations, NEC can help a VAR finance that on behalf of an end customer." More important than any other message we've been hearing about digital signage is the fact that resellers are fielding many more queries than ever before from customers, but most resellers have no idea how or what to reply. This is the time to learn. Modest signage jobs are within any competent reseller's reach, and the more savvy you get with partnering in this space, the bigger the jobs you'll be able to take on. ...more |
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