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The burgeoning digital signage market

In three years more than 900,000 displays will be sold in North America

The digital signage market is showing signs of entering the hockey stick phase.

According to a recent Frost & Sullivan report, by 2011 the North American market for large flat panel displays for signs will be worth more than US$3.5 billion.

Today, the market is a respectable US$800 million. Or as research firm Display Search reports, 433,000 displays were sold just for signage as of last year.

That report also notes solution providers are selling between one to 50 displays per location with an average of four per site.

The top manufacturers are NEC Display Solutions, Samsung Electronics, LG Electronics, Mitsubishi, Sony, Sharp and the 50 plus other vendors who have seriously overcrowded this space.

The challenge for solution providers in this burgeoning market is that digital signage is not a transactional sale: it is a solution sale. That means a successful VAR needs to have expertise, some smarts and installation know-how.

Retailers over VARs
Currently the market is being served by retailers. According to a Gartner Group study, 28 per cent of IT retailers in North America are providing flat panel displays for digital signage this year. Gartner expects that number to increase to 33 per cent next year.

Solution providers “are graduating beyond the display,” said Doug Albregts, vice-president of sales and marketing for NEC Display Solutions, based in Itasca, Ill.

Albregts said solution providers are realizing that they need to talk beyond the panel itself and provide wireless cable, mounts and software to deliver a whole solution rather than a product.

“Customers have a keen interest in digital signage and public information display solutions,” Albregts said.

However, NEC is only dealing with 40 partners, which it helps to facilitate customer solutions. Albregts said the company could easily do more because the market is growing. Display Search estimates that the digital signage market will have a need for more than 900,000 displays by 2009.

Digital signage applications work, according to a recent InfoTrends study that polled consumers. The study found that digital signs have a 47.7 per cent effectiveness on brand awareness, increase the average purchase amount by 29.5 per cent, create a 31.8 per cent upswing in overall sales volumes, generate a 32.8 per cent growth in repeat buyers and pull in 32.8 per cent more store traffic.

Expanding screen sizes
NEC is expanding its large screen category and will soon launch a multi-function monitor with video, PC, HDTV and Web inputs. They will start at 24 inches in size and move up to to 55 inches.

Albregts said the display enhances content, which is why NEC has partnered with display software vendors such as Omnivex of Toronto.

Omnivex software enables partners to format and build scheduled content over a vast network.

Some of Omnivex’s installations include the new Toronto airport, Reuters, the Toronto Stock Exchange and Canada’s Wonderland theme park.

“If you want to show ads on a quarter of the screen they make the software to do that, and you can schedule the content to run every five minutes for the season to sell products in a total solution,” Albregts said.

Albregts admits that channel education still needs to take place.

Digital signage, he believes, can be a good fit for mid-size firms and small business, including local grocery stores and hair salons.

“Digital media is better than static images. In the past, we got displays and that did not help the VAR. Now we come in and do the total package and recommended these software partners and wiring,” he said.

NEC hopes if it provides VARs with the products, the partnerships and the deal, VARs will back NEC over competitors.

Airports and retailers have been the early adoptors of digital signage, but Albregts said that transportation will be the next big market.

New York City, for example, is looking at digital signage for its subway system. This installation, he said, will be complex because the solution provider will have to work with advertising rights holders who have to move from static displays to digital.

Other potential markets range from universities to theme parks, Albergts said. Kiosks with touch screens, for example, can replace ticket booths leading to productivity gains through automation.

Screen size is no longer an issue. Solution providers can now stack 46-inch wide LCD panels to make a video wall containing one image.

Because of this, it also looks like LCD has taken over plasma. “All the money is going into LCD. LCD uses less heat, it’s lighter in weight, easier to mount and has better ambient light. Plasma has burn-in issues,” Albregts said.

“Signage is a total solution. Resellers have been used to dismal margins and some VARs do not want to deal with hardware and sell just services. Now they can sell hardware with services and make high margin dollars if they sell cabling, mounts, hardware and software.

“They can make more if they know how to manage the content on the network. It’s three points here, six points there and 15 to 20 points off the display,” Albregts said.

He added that managing content is a real possibility because the local supermarket is not interested or technically inclined to want to manage content.

Digital signage opens a new avenue for resellers and currently the market is not too competitive. “The easy part is the demand is out there.”