The current economic climate, coupled with the rapid acceleration of interest in the benefits of digital signage has produced a number of interesting indicators of change. We have long anticipated an industry consolidation, both on the network and the solution sides. A little bit of that has started on the network side, notably with the creation of Outcast in the U.S. network space (the merger of Bhootan and Fuelcast). We have also seen some network failures, both in North America and Europe, while at the same time new network launches continue unabated.
Perhaps the most significant change has occurred on the solution side, where it appears that the field has evolved into two groups: elephant hunters and gatherers of nuts and berries. New and large deals are out there to be had and scores of smaller deals pop up every month. There are advantages and disadvantages to pursuing each. “Elephants” typically take longer to close, are more competitive in every respect, and operate on corporate time (i.e., not fast). “Nuts and berries” deals are greater in number, smaller in size, less competitive, and bring generally higher prices, along with proportionately higher support costs and risks. The evident split between hunters and gatherers is even more apparent when one looks at the signals from two of the more visible entities on the solution side: BroadSign and Wireless Ronin.
The actions of BroadSign, formerly a prodigious hunter of elephants, are remarkable. The company recently abandoned their direct sales force, moved toward a reseller channel model, and now recently announced a turnkey SaaS offering with Bell Micro. This represents a 180-degree turn in strategy, and it is fair to say that they are betting the farm on this approach. As a competitor, I couldn’t be more pleased, as it signals that BroadSign will be less able to control its market messaging and will encounter challenges in competing for and servicing the elephants. It also signals a move toward a generic and mass market approach that takes them closer to the folks starting new businesses in garages and incubators, and away from the differentiated, focused and lucrative market where elephants are known to graze. Wearing a more impartial hat, I would assume that their own analysis indicated a large enough installed footprint (and recurring revenue level) to make an attack on the mass market that VARs can sell into more cost-effectively.
Another signal comes from the public face of the solutions space, Wireless Ronin. Rather than join the chorus of those critiquing Ronin’s financial performance, it may be more useful to understand what they now consider to be “big”. The company had put its chips on Chrysler and KFC, and it now seems apparent that the Chrysler gambit isn’t going to work out very well. As for KFC, after years of work, there are 124 locations live, and a thin promise of more to come, but only in new and remodeled stores. The elephant in this deal is the retro-fit of existing KFC stores, but after sifting through the answers to softball questions lobbed by their own investment banker, it doesn’t sound like a retro-fit is on the radar. It sounds more like the Colonel’s secret recipe now includes nuts and berries. Finally, Ronin has been relegated to trumpeting a deal that will never leave the domain of granola: 33 installs at 76-location Sun Tan City. That is less than one install for each remaining Ronin employee. It is interesting to see that the two biggest spenders at digital signage trade shows have shifted gears: in one case rethinking sales strategy and in the other changing the threshold of what is “big”.
Another highly visible industry veteran, Bill Gerba of Wirespring, recently introduced a stand-alone, repackaged version of the company’s FireCast software, dubbed EasyStart, designed to attract smaller deals for “just a few screens in a few locations”. Given the cost and time required to produce a new product, it would seem to be a hint that Gerba sees more opportunity (or less competition) at the low end of the deal spectrum. A line extension at this stage is an interesting indicator of one person’s assessment of market dynamics.
A final clue to impending change in the solution space comes in a recent blog post from Nate Nead. In his post, Nate contemplates the emergence of “white label” and “private label” digital signage programs, as well as the benefits and issues with such an approach. The clear implication of these programs is that new companies will emerge as solution/service providers, without the need to invest in intellectual property by developing their own solution. Rather, they will repackage existing solutions, which may be easier to come by as existing providers search for new revenue opportunities. This type of business model, which could be termed SESaaS (Someone Else’s Software as a Service), is clearly geared toward the mass market of smaller networks, where pricing can support the required overhead.
It may be premature to assume that digital signage penetration is high enough to support a global shift toward the smaller deals of the mass market, although evidence seems to indicate that such a shift, if not underway, is at least on the minds of many industry players. There still appear to be many elephants left to hunt, and it is likely that the ranks of the hunters will narrow in coming months.
NIcely written post which deserves a much wider circulation. I’d just add that unlike BroadSign, Wirespring decided to launch a totally new site for their new product. There seems no reason not to hunt rabbits and elephants at the same time does there?
Also from what we see and hear it is STRATACACHE that is very definitely shooting all the elephants.
Thanks for the feedback and comments, Adrian. I have no issue with Bill hunting any prey that fits on a plate, and the link above does go to the separate web site. As for the folks in Dayton, perhaps I have missed the announcements on their big US wins.
Ken:
Thanks for your posting on Elephants and Hunter/Gatherers.
Because you and RDM sit right in the thick of the action here, you obviously understand what’s happening and have some great insights as to why they are happening.
Personally, I am impressed that any large deals are being done in this environment. Because so many of the prospects for these deals (retailers, hospitality companies, etc.) have been burned so badly in the past via promises made by technology vendors in this Digital Signage market, it always impresses me when an Elephant actually decides to dance with us.
I suppose it means that the growth in this market is real, and that, despite many of the false starts in this business, we all picked the right field in which to stake our career claims.
Bye for now. Let’s stay in touch.
— Bill Collins