In every technology-based industry there is a perennial debate about the “commoditization” of key parts of the supply chain. In the pro Audio world, it’s amazing how many loudspeaker manufacturers there are and how the market can support so many players operating with ever-shrinking profit margins. In pro AV, the same holds for video projectors – “how can companies make money manufacturing, distributing, spec’ing, or installing video projectors?” we ask ourselves year after year, as projector features and prices align among all the providers.
As much as commoditization is painful for many suppliers, often overlooked in our industry analysis and hand-wringing is the fact that falling prices for a product category– as challenging as it is for margin for some– is in fact the mechanism whereby the market grows bigger. While commoditization of a product category will never be the tide that lifts all boats in a market, it is always the free market mechanism that makes the entire pie bigger– excuse the mixed metaphor but that’s the best way to say it. Falling prices mean that those products are now more affordable to a new group of customers. So the market expands, and it’s no longer just a question of winning market share but it becomes possible to increase sales even if both prices and your own market share decreases.
In Digital Signage, the LCD display is our perennial whipping boy, as it becomes more commoditized each year, even as it manages to propel the industry forward. And just when some observers start thinking that most LCD panels are the same, or that LCD is headed for oblivion in the face of new technologies like OLED and other new platforms, we get a whole new generation of advances. This year there is a bumper crop of new LCD technologies (see my report in this issue on new-gen displays that were shown at the Digital Signage Expo in March). High Brightness LCD, new more architecturally interesting LCD panel shapes, and transparent LCD panels were all on view at the Digital Signage Expo in Las Vegas in March, proof that this technology is not just here to stay but the large manufacturers are indeed adding new features that not just keep the technology fresh but open up new markets and applications.
Of course, the LCD panel is not just a tool for digital signage. It’s also the dominant platform for consumer TV sets, for cell phone screens, and for countless other consumer and industrial displays. This means that our relatively smaller digital signage market will never dictate the future of LCD. We are but a tiny part of a larger world. And as challenging as it is, each year, for the large LCD panel manufacturers (all but one of which manufacturer both consumer “TVs” and commercial application LCD displays) to balance their own commercial market vs. consumer market manufacturing, pricing, and distribution regimes, all of this market overlap has only been good for the digital signage industry. And it’s behind the consistent, annual double-digit growth of digital signage for the past ten years- with, thankfully, no end to that growth in sight.