Digital Signage Growth Boosted by Cheap Hardware, Restrained by Security Costs

The reduction in prices for data storage and electronics goods in general is helping retailer IT departments afford to deploy digital signage and there would be even faster adoption of the technology if data security concerns were more easily addressed, according to an ABI Research report.

The researchers predict the U.S. digital signage market — including hardware, software, installation, and maintenance — will grow by about 33 percent this year. "This report was done in the fourth quarter of 2008," noted ABI Research analyst Zippy Aima. "At that time, the economy was not in as dire straits as it is now. We might have to revisit some of the numbers, but despite that fact, we are seeing very promising growth."

The fact that retailers might have trouble choosing a digital signage provider could also be dragging down the technology's adoption. ABI Research pointed out that the large number of vendors is one of the "factors working against" digital signage.

The researchers also pointed to "data security concerns and a lack of standards" as other growth impediments.

"What really happens, why security is a concern here, is that most of the connectivity is IP-based so networks become prone to being hacked when delivering content," Aima said. "It's not that it happens all the time but it certainly raises questions in the minds of content owners. As far as security is concerned, whether it's securing hardware or software on the network, it's something you cannot afford to compromise. You basically have to ensure it's all encrypted."

The costs involved in security are partially outweighed by the fact that backend networking hardware prices are currently low, she said. Although "the cost of putting up a digital sign network can be enormous," price drops for required hardware "has seen a decline over the past couple years, which is a good sign," Aima said.

In addition to security costs, setting up a digital signage system can be complex and time-consuming, stressed ABI Research. "Network management or content management can be very challenging," said the analyst. "For example, setting up a network can be very daunting. It is important you have all the right components in place to ensure the network operation is very smooth."

Pushing retailers into digital signage is the fact that "traditional advertising media are losing their appeal for many consumers," while digital signage "has emerged as a way to deliver highly customized and targeted messaging in a variety of locations. And in a fast-changing world, digital signs' ability to be updated in real time is a real benefit," Aima said.