2007.05.02

Signage and Professional Display Shipments to Rise Six-Fold by 2011

By Sanju Khatri, iSuppli

Although manufacturers of digital signage and professional displays are facing the challenge of tepid revenue growth for their products, fast-rising unit shipments are presenting significant  opportunities for these companies, iSuppli believes.

The digital signage and professional displays market is set to grow to US $14.6 billion by 2011, managing a compound annual growth rate (CAGR) of 9.8%, up from US$9.1 billion in 2006, according to iSuppli. However, it is the unit growth that is the impressive part of the market. Unit growth in the digital signage market will hit 22.7 million units by 2011, rising at a CAGR of 42.2% from 3.9 million units in 2006, a nearly six-fold increase.

The main reason for the weak revenue growth is the substantial price declines occurring in display technology enabled by improvements in manufacturing processes and the maturation of technology. This steep decline in prices is Advertisement enabling the adoption of displays in signage applications. Price competition is less intense and margins are much healthier in the digital signage market than other display areas, so companies are anxious to enter the segment.

Users of signage and professional displays such as retail and department stores, fast-food restaurants, museums, hotels, auditoriums, trade shows and retail banks are expected to provide more opportunities for display manufacturers to sell products for higher margins in less-crowded markets.

Loving the great indoors

The biggest application for the signage market and professional displays continues to be the indoor venues segment, which amounted to US $704 million in the fourth quarter of 2006. The indoor venues segment is forecasted to reach US $7.2 billion in 2011, representing nearly half of the total revenue for the global signage market by that year. This segment also is benefiting from the upside cycle of the hospitality industry after many years of downturn.

Profiting from healthier revenues such as luxury and super-upscale hotels and franchises has mostly shifted from traditional CRTs to sophisticated flat-panel displays (FPDs) for guest rooms. Other hotels also are following this trend of adopting to FPD offerings. The shift from CRTs to flat-panel technologies has been further aided by the continuous decline in FPD prices.

Another major factor driving the hospitality industry is the need of hotel operators to differentiate their brands and to enhance customer satisfaction by providing new in-room entertainment services such as high-definition TV (HDTV) and video games. Because of this, the hospitality segment will continue to generate the largest sales volume in the indoor venues signage segment.

This growth in the hospitality segment is not limited to Western Europe the US; the Asia market also is expanding, driven by the robust economic environment that is promoting business travel. A steady rise in demand has been seen in hotel rooms in major metropolitan areas such as Shanghai, Beijing, Bangalore and Mumbai.

Going retail

The retail-signage market is fast approaching the point where people are taking notice. This market is expected to reach US $2.8 billion by 2011, up from US $1.4 billion in 2006, making it the secondlargest signage market after the indoor venues segment.

The retail-signage market is being driven primarily by the demands of the retail marketplace that are changing due to factors including:

-Rapid product revisions
-Retail feature proliferation
-Lack of a knowledgeable sales staff
-The need to effectively communicate ads and sales to customers on retail floors

The advantage that digital signage presents to the retail environment includes interactive and dynamic solutions that address these challenges and provide the capability to communicate timely and relevant information regarding product features and benefits about brands and content to customers effectively.

Retailers also benefit from digital signage solutions because of their capability to display information on a greater range of products than a store would typically carry due to space constraints. This enables customers to review all product models and features even if they are not in stock.

Typically, the third and fourth quarters are the times when demand for digital signage peaks. However, because the retail signage market is in a nascent phase, it is expected to grow even during the off-season for retailers.

While LED video display will be the technology of choice for outdoor billboards and signs, direct-view PDP (plasma display panel), LCD and rear-projection videowalls will compete in the indoor retail signage space.

Despite the substantial initial cost to migrate to dynamic signage, the benefits to retail establishments are far greater.