Disruption and Denial – thoughts after DSE 2014

February 18, 2014 by guest author, Mark Hemphill

Guest Post: Dana Buys, PageMan

I just finished up attending Digital Signage Expo 2014 at the Sands Exhibition Centre in Las Vegas. It was my first visit to DSE and I think the timing was really good. No shortage of really big screens, super high res 4K screens and video walls all over! Las Vegas must be one of the best showcases for the actual deployment and use of digital signage, so DSE is very well located.

Interesting to see Players like Dell enter the market with a small Android based media player. Google’s announcement of a small Chrome box was also widely reported as another sign of big change looming. The bulk of major stands still focussed on the traditional type of media players with all of the focus on the latest greatest features. It was amazing to see the massive range of mounting hardware, transparent LED displays (made for putting on a fridge door for instance) as well as all the outdoor signage kit.

The best session I attended was titled ‘Digital Signage Disrupted’, chaired by Dave Haynes of The Preset Group. He is also founder and editor of the well regarded blog called Sixteen-Nine.net. Most telling, every one of his panel members was either from outside the US or represented a company from outside the US. Why would that be? The US is normally first when it comes to new technology?

It is still the early days of the new ARM based low power media players running Android or Linux, and I see most of the traditional DS players trapped in what Harvard Business School Professor, Clayton Christensen described so well in the ‘Innovators Dilemma’.

This always plays out the same way: The incumbents become ‘fat and happy’ in their business models and their products add more features than required by the average customer. At the same time the complexity and total cost of ownership rockets.  New technology comes along, initially without the features required by the average customer, but catching up fast.

Remember the mainframe computers, remember the mini computers, remember the likes of Siebel before Salesforce.com ? There are many, many examples of how disruption has played out over the last few decades. The incumbents are always loath to change their business models, change their prices, organizational structures and channels to market. The small newcomers with the products that first first look far too wimpy always end up eating their lunch…

When the features of the new technology reach the point where it meets the needs of the average customer, the new technology suddenly becomes fully viable for most of the market and takes off like a rocket. The previous technology leaders are left clinging to a business model that is now doomed.

I think the combined revolution of low cost, low power Android/Linux based players along with Cloud based Digital Signage Content Management and Distribution solutions is just about to reach that point of no return. The incumbent solutions are very fancy and deliver more than most customer really need. They are also complex and very expensive.

It was exciting to see some industrial grade Android media players, as well as integrated screens/ media players, reach the market. These devices are going to be a bit more expensive than the cheap consumer products that have been around for the last year or two, but they will run 24 x 7 and that is most important. I think they will become a volume market at less than $149 and will push towards $99 when the volume really comes.

Add to that the major savings in terms of:

• Most use less then 5 watts of power – so most of the Android based solutions like PageMan will pay for themselves just from the savings in monthly electricity bills. Add to that reduced cooling needs and the payback is immediate.
• Most of the Android based digital signage solutions are delivered using the Software-as-a-Service model. So no costly software licenses upfront, no servers required, backup and upgrades are all done in the cloud – all for the low monthly cost of $15-20 per device. Plus you can manage the whole system from anywhere!
• Another big saving comes from the fact that the devices are cheap enough to get rid of the cost and complexity of back-office based media players, signal distributors and amplifiers. Add to that the cost of installing all that cable and related infrastructure. All of the Android devices use either a simple RJ45 Ethernet cable or WiFi signal along with modest power requirements. As WiFi installations get better along with better WiFi receivers in these players, most players will require only a little bit of power.
• Much lower ongoing maintenance costs. Android, if properly setup is much cheaper to run than the traditional Windows based PCs. They have no moving parts and run cool. Very little to go wrong!

Why have most of the Android based solutions come from outside the USA? The Android based mini computer/player was a Chinese innovation and was initially regarded as ‘Micky Mouse’ in the US.  I also think its partly an expense based issue. Incumbent Windows / PC based technology that may be relatively affordable in the USA is often relatively expensive elsewhere.

Add to that high costs of Internet bandwidth/slower links elsewhere, the attraction of these little devices with enough flash storage and the capacity to operate independent of Internet access jumped up a few notches. As software companies in South Africa, Israel, UK, Scandinavia, Germany and Asia started developing solutions, the Android digital signage market emerged.

Over time these devices (predictably) have become faster and more powerful.The software solutions’ feature sets expanded to the point where it reached critical mass and became easy enough to use widely. These solutions will only become better and more reliable as they start maturing.

It will take time for this new generation of technology to become the new market leader.  In part due to understandable skepticism of new technology and new companies, but also  because many of the players in the digital signage market want to maintain the current status quo. They like big prices with big margins and big installation and maintenance fees.  Who doesn’t ? The customers of course!

This whole eco system will have to adapt or die, as many such eco systems before it.

It is a very exciting stage of inflection for the digital signage industry, with massive growth opportunities ahead.

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