Scala’s Dominant Market Share?

Adrian J Cotterill, Editor-in-Chief

For those of you that have been following our Frost & Sullivan story with regard their research claims that Scala have 34% of world wide market share for digital signage software the original post itself has some useful comments from Philippe Lemaire, Director, France Channel Sales and from Rufus Connell, Vice President – Information and Communication Technology for Frost & Sullivan

Two things of note that we have found out since our initial research and earlier post:-

  1. Frost & Sullivan say that the percentage figure is not venue / screens related but dollar sales revenue
  2. We are told that the report focuses on digital signage deployments “whose business model revolves around merchandising or advertising” – i.e. it excludes our original ‘Real Estate’ Classifications – meaning that the research numbers we came up with for Scala in our earlier post will be lower than we originally calculated

We also have a Scala press release on the research in its entirety below.

Scala Commended for Strong Growth and Dominant Market Share by Frost & Sullivan

December 10, 2007, Exton, PA – Scala, Inc., the leading provider of end-to-end solutions for the Digital Signage market announced that Frost and Sullivan has placed Scala, Inc. at 35.4% worldwide market share of the Digital Signage software industry.

In a newly released research report entitled “World Digital Signage Markets”, Frost & Sullivan undertakes a strategic analysis of the worldwide Digital Signage industry and makes strategic recommendations for growth in the industry.

According to the report the World Digital Signage Systems market grew 21.3% in revenue in 2006. Scala significantly outpaced this growth with an increase in sales of 59% (vs. 2005). Frost & Sullivan expects the World Digital Signage Systems market to grow from $313.9 million in revenues in 2006 to over $1 billion in 2012 at a compound annual growth
rate (CAGR) of over 20% and Scala expects to continue to outpace this growth rate. The overall ease of installment, network flexibility and management, the ability to remotely control multiple screens, and increased reliability are driving growth in the market.

The report identifies three tiers of Digital Signage software providers, of which, Tier I is comprised of software vendors with a global presence and a large capital base. Frost and Sullivan places Scala squarely in the Tier I category.

The revenues of Tier I companies far exceed that of Tier II and Tier III companies. With Tier I companies holding more than 60% of the market – Scala commands a 35.4% overall market share position. With as many as 50 competitors in the Digital Signage market, Scala is the only Digital Signage software company that Frost & Sullivan positions with the highest ability to deliver multifactor solutions and the highest market penetration.

Frost & Sullivan suggests that ultimately, the success of a Digital Signage network is based on its ability to deliver relevant content to customers at the right time and location. Digital Signage provides a unique opportunity for brand building as well as a strategic channel to influence customer behavior. Digital Signage can create a stimulating environment where the customer’s long and short-term behavior can be shaped, which ultimately results in sales lifts that can justify the initial implementation costs according to Frost & Sullivan.

“Scala has built on the success of its InfoChannel 3 product, with the June 2006 launch of InfoChannel 5. The combination of powerful tools for content creation and network management pushed Scala to 35+% market share for 2006,” stated Rufus Connell, Vice President – Information and Communication Technology for Frost & Sullivan.

“The Frost & Sullivan report not only confirms the dominant market share Scala has earned in the global Digital Signage Industry but forecasts healthy continuous growth,” said Scala CEO Gerard Bucas. “With tremendous growth for the past 2 years and sales into more than 60 countries, Scala continues to solidify its position as the global leader in the Digital Signage industry. This report reinforces that position.”

The Frost & Sullivan report focuses on digital signage deployments whose business model revolves around merchandising or advertising, and excludes digital signage applications that focus on corporate communications, flight simulation displays, security and cable TV. It is important to note that Scala is seeing growth in these excluded areas as well, and expects them to continue to grow at aggressive rates.

So in order to summarise again or to re-summarise if you like. We feel it makes no sense to calculate and then claim a 34% market share figure in a growing industry like digital signage based on software revenue figures. Bottom line it will in NO WAY be accurate.

We think that Frost & Sullivan need to read ‘The Long Tail’ – their claim that “The revenues of Tier I companies far exceed that of Tier II and Tier III companies” is not accurate.

Statistically that is just not going to be the case!!!

They go on to say that “Tier I companies hold more than 60% of the market – Scala commands a 35.4% overall market share position”

Our research data shows that this is NOT the case – a hell of a lot of worldwide digital out of home installations are powered by local / geographic home grown / self developed software solutions (though we think this trend will reverse going forward) – even more are powered by EPOS solutions and of course all the small digital signage software solution providers out there as well and not forgetting that Scala do have lots of global competitors as well!

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