IT and Business Insights for SMB Solution Providers

Custom Digital Signage Systems Pay Off

To increase your bottom line from signage solutions, you need to focus on the total package and not just the hardware.

By James E. Gaskin

The digital signage marketstill booms because screens are still popping up everywhere. Does this mean system builders and integrators should jump into the custom digital signage hardware and service market?

“This market is more profitable than PCs, with even higher margins in the niche markets,” says David Bollig, president and CEO of Nor-Tech, a worldwide manufacturer of high-performance clusters and other specialty systems in Burnsville, Minn. “But for a supercomputer or a bunch of Intel NUCs, it’s all about where you can add your value to help your customer as much as possible.”

Alan Brawn, principal at Brawn Consulting, an audiovisual consulting, training, educational development, and market intelligence company, sees a lucrative market for some manufacturers. “Look at Intel’s NUC, Raspberry PI variations, some Android players, and even Systems on Chip from Samsung and now LG,” he says. “But the important part is not the hardware sold, but the application and [whom] you’re selling it to.”

Brawn continues: “Hardware is not very profitable, with maybe 10 to 15 points. Software you get maybe 20 points. Ancillary products like mounts and cables you can get 30-plus. But you should focus on the aggregate total of designing, managing, installing, servicing, and providing content for the system. The system sale in digital signage is profitable.”

Are there service opportunities beyond the sale? “Not only yes, but hell yes,” Brawn stresses. It’s a lot like managed services, says Brawn, in that companies want IT products and services but they don’t want to deal with it. The same goes for digital signage. “They just want results,” he says. Those could be ROI for advertising or dispensing information in a library.

While most digital signage serves the retail advertising market, Brawn recently consulted on two jobs for an airline and for an international shipping company. “Every screen was for employee-facing networks, not advertising.”

Bollig sees hardware customization and support as part of the box sale. “You may need to build the media players from scratch, load custom images, provide asset tags, and prepare all the hardware.” His advice to resellers? “Focus on areas big-box players don’t play in, like software loading, customization, and preventative maintenance and management.” If you work hard to take care of your customers, Bollig says, you will make some extra money.

New Way to Communicate
Part of taking care of clients is deciding what you want the signage to do before you get distracted with anything else, explains Brawn. To do that, you need to understand the fundamentals. Through his company’s educational consulting, Brawn works with resellers of all stripes and says that about two-thirds of AV resellers work in signage. But he sees something else as well: “There’s a new breed of reseller developing that is part IT, part AV, part advertising, and part content. They really understand that digital signage is a new method of communications.”

And the market is still growing. “There is 8 to 10 percent growth year [over] year that should continue for another five to eight years,” says Brawn. “That’s a good opportunity, but you need to do a clear analysis before you make your decision. A reseller capable of making not a parts sale, but a system sale, is in a great place.”

Brawn reiterates what many channel pros already know: It’s a commodity market and you have to differentiate yourself. “You can buy a Samsung display and an Intel NUC anywhere. Resellers have to figure out their shtick. Like [the lyrics] from the musical Gypsy, ‘You gotta get a gimmick if you wanna get ahead.’”

Bollig sees another “gimmick” as well. “People are getting tired of subscriptions. A signage guy with 40 installations at 80 dollars per month starts to really add up. Many are looking to move from the cloud and control their own hardware, maybe with Linux software. That could be your angle.”

About the Author

JAMES E. GASKIN is a ChannelPro contributing editor and former reseller based in Dallas.

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