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What does Clarity's Acquisition of CoolSign Software Mean for the Digital Signage Industry?

Author: Bill Gerba on 2005-03-21 10:15:45

If you haven't heard by now, the big news in the digital signage industry is that flat screen and video wall manufacturer Clarity Visual Systems has essentially acquired the CoolSign software division of AdSpace Networks, the company perhaps best known for its retail and cinema digital sign networks.  CoolSign/AdSpace/whatever they want to be called has been moving towards owning and operating their own networks instead of selling software to others who own and operate the networks.  Consequently, they often found that they were competing against their own customers when bidding on a network or running a trial deployment.  How do I know this?  Let's just say that the things that make for an unhappy CoolSign customer turn out to be the very same things that make for a happy FireCast digital signage user.

It's obvious what both parties are looking to get out of the deal:  AdSpace, now divested of its expensive (and unprofitable, according to the press release) software division, frees up some working capital and can re-focus on its new core competency of building networks and selling ads.  They also get cheap (or perhaps free) access to the software as Clarity continues to develop it.  Clarity, on the other side, has some interesting LCD and projection displays, but lacks a turnkey system to quickly light up digital signage networks.  Oh, and they apparently have some substantial cash on hand.  The acquisition allows them to leverage some of that money, and gives them access to a software package that's already vetted and shipping, thus avoiding the huge expense and years of development time needed to bring a digital signage package to market.

But what does that mean for the rest of the industry?  For starters, what will happen to the well-publicized projects that Clarity was working on with digital signage software provider Mercury Online?  If I were Mercury, I certainly wouldn't want to buy hardware from a competitor.  For that matter, WireSpring has no motivation to use Clarity anymore either, and I would suspect that would hold true for other digital signage software providers as well.  This deprives Clarity of any income from current or future digital installations handled by other software companies.  The other noteworthy point, of course, is that there's a new digital signage player on the block -- one that's well capitalized, has industry presence and experience, and has demonstrated a clear desire to expand that presence in the marketplace.

Will an unburdened AdSpace be able to profitably deploy and maintain ad-sponsored digital signage networks, a'la PRN?  Will Clarity be able to support the CoolSign software in such a way that doesn't give AdSpace an advantage over other customers?  Is it possible that we're already seeing the consolidation that people have been predicting since the digital signage industry first came about?  Or perhaps Clarity is getting ready to diversify, anticipating plummeting margins on its hardware offerings (or maybe it will get out of display hardware altogether)?  I think it's too early to answer any of these, but it will certainly be interesting to watch both AdSpace's and Clarity's next steps as the acquisition unfolds. 

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