Has the Digital Signage Industry Become Tainted?

Posted by on Jul 6, 2011 in DOOH, Industry, Insight

Here is an interesting quote from Michael Porter (founder of the model known as “Porter’s Five Forces”) which I though applied so well to the digital signage industry that I just had to share:

“Developing a strategy in a newly emerging industry or in a business undergoing revolutionary technological changes is a daunting proposition. In such cases, managers face a high level of uncertainty about the needs of customers, the products and services that will prove to be the most desired, and the best configuration of activities and technologies to deliver them. Because of all this uncertainty, imitation and heging are rampant: unable to risk being wrong or left behind companies match all features, offer all new services, and explore all technologies. 

“During such periods in an industry’s development, its basic productivity frontier is being established or reestablished. Explosive growth can make such times profitable for many companies, but profits will be temporary because imitation and strategic convergence will ultimately destroy industry profitability. The companies that are enduringly successful will be those that begin as early as possible to define and embody in their activities a unique competitive position. A period of imitation may be inevitable in emerging industries, but that period reflects the level of uncertainty rather than a desired state of affairs.

“In high-tech industries, this imitation phase often continues much longer than it should. Entraptured by technological change itself, companies pack more and more features–most of which are never used–into their products while slashing prices across the board. Rarely are trade-offs even considered. The drive for growth to satisfy market pressures leads companies into every product area. Although a few companies with fundamental advantages prosper, the majority are doomed to a rat race no one can win.

“Ironically, the popular business press, focused on hot, emerging industries, is prone to presenting these special cases as proof that we have entered a new era of competition in which none of the old rules are valid. In fact, the opposite is true.”

Do you really think this industry is any different from what Michael Porter was speaking about here? I do not. But it is an interesting phenomenon and a great quote. I think more discussion about evolution and involvement in the industry is good. But, unfortunately, the industry is what it is and I see many of the problems mentioned by Porter happening all around us in the digital signage world.

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