Last Spring, Wired magazine’s Editor-in-Chief, Chris Anderson, made a number of provocative speeches in an effort to promote his book entitled Free: The Future of a Radical Price, which was free to you if you attended certain events, but not so much if you didn’t. We took a look at the possibilities and implications for free in the digital signage space here. Today, software and advertising giant NEC announced that their Vukunet suite of content management and advertising software would be free to all takers, regardless of display choices. When NEC first introduced Vukunet, it was focused upon getting the ad serving software implemented in as many networks as possible. It offered its content management software for free to anyone who signed up for the advertising piece and/or used NEC displays. Since they didn’t really talk to software vendors about interoperability or architecture, that effort may have fallen short of expectations. (Those nasty software guys, always getting in the way of selling glass…. errrr…..I mean ads.) Now it is free for everyone. Which is really cool, because that will generate more marketing dollars for spiffy webinars, breakfasts and sponsorships of blogger lounges (much appreciated). Oh, wait. Maybe it won’t.
One can argue that software wants to be free, and certainly Google has demonstrated the power of providing free tools to millions of users. Google generates plenty of revenue by selling advertising. This is made possible by the openness and scale of the web, and the fact that they created the dominant search tool first. Perhaps someone at NEC read Jeff Jarvis’ great book, What Would Google Do? . I read it myself a couple of months back on the advice of a good friend. I’d recommend it to you if you haven’t already read it. The takeaway for me was about openness, not about pricing. Google did not become the dominant search engine by pushing the price button. It did so by being better and faster. They then leveraged that position and the openness of the web to create a global juggernaut. Here’s the problem for NEC:
- They are not Google
- The DOOH marketplace is not the web
NEC’s digital signage software will never become dominant simply because it is free, and it won’t become dominant because it is better.
If you want to read a third party opinion of why, Dave Haynes writes about it here. There is actually a good chance that the free strategy will work against NEC. Free products in the non-web space have a way of attracting smaller, undercapitalized and less sophisticated users. Sophisticated users actually want to pay for software so that they can be assured of support and enhancements. The freeware users will require a tremendous amount of support, and the current Vukunet terms of service posted on their web site do not even contemplate support. Enhancements, updates and upgrades are qualified by the phrase “if any”. In the end, it is doubtful that any serious software providers will lose sleep over NEC valuing their software asset at zero. Network operators who value software the same way will find a willing partner.
The Vukunet introduction and huge marketing spin and spend since November has been puzzling. One wonders what market NEC believes it is addressing with the still-evolving Vukunet strategy. If it is the digital signage software market, they will not win. If it is the ad aggregating, selling and serving market, they need to figure out exactly what problem they are solving and how they plan to solve it better than others who have demonstrated much more focus.
NEC decided to invest in the DOOH market space by building a software platform. Their display competitors are not sleeping, and are looking at many different ways to increase their market share in DOOH. None have shown an interest in building or selling serious software. They appear far more interested in partnerships and creative deals that advance their core business. NEC is now defending three fronts in the battle for DOOH relevance: software, displays and advertising. Their rivals in each segment, both large and small, will nimbly compete against NEC’s three-pronged offer by being bettter or perhaps going to market together if circumstances favor such a strategy. NEC’s only path to ROI on Vukunet is to generate significant ad sales and incremental display sales. They are unlikely to win over the most attractive and largest networks, limiting at least the national ad sales potential. Piecing together lots of small properties will take time.
NEC is all-in on Vukunet. As such, the internal eyes at NEC must be watching closely at this point. The software is now free, but the free ride for the software strategy is probably not endless.
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