Do you think that sounds like science fiction?  It’s not.

All the technology needed to deliver that experience can already be found in the Apple AppStore.

	RedLaser, owned by eBay, is a barcode-scanning application for comparison shopping and finding product information using a mobile device.  It uses the iPhone’s built in camera to take pictures of barcodes and return competitive pricing from hundreds of thousands of stores.  It’s been downloaded over 2 million times.
	Amazon Mobile includes the “Amazon Remembers” feature, which allows you to take a picture of any product, and (using the Mechanical Turk service) identify the product and put it in your wish list.  This isn’t real-time yet, but several product categories (movies and books) are already automated.
	Layar is one of many popular augmented-reality apps on the AppStore which allow you to see the iPhone’s camera output in real-time, with supplemental data overlaid on it.  For example, it can show you the nearest cafe or subway station.

The capabilities of these three apps hasn’t been combined yet, and handheld phones don’t yet have the power to do this all in real-time for an entire shelf-full of product, but at the current pace of handheld hardware evolution, it will happen in the very near future.

The mobile era has already arrived.  59% of American adults already go online wirelessly.  By 2014 there will be more mobile internet users than desktop users.   Shoppers are using mobile technology at a rapidly growing rate and teenagers are the heaviest users of mobile technology.  It is clear that using your mobile device when you shop will soon be the norm rather than the exception.

What will traditional retailers do when the likes of Amazon and eBay turn physical stores into nothing more convenient showrooms for their on-line services?  With Amazon’s Local Express Delivery, they can even neutralize the immediate gratification advantage of a physical store.

Smart retailers are going to need to find competitive advantages to build into their own mobile apps to make sure shoppers are using their apps in the store rather than those provided by their online competition.

Luckily, there are many things a savvy physical retailer can build into their apps to give them a competitive advantage.  For starters, a physical retailers app can know what is in-stock at a given time, so that it can make recommendations for immediate purchase.  A physical retailer’s app can be tied into the store’s affinity program recommending new purchases that are relevant to the shopper based on their prior purchases history. 

Most importantly, a physical retailer is now able to know where you are in the store and what you are doing.  Physical retailers need to consider building near-field transmitters into their shelves, telling your mobile app about the products in front of you, products you’re currently holding, or add-on purchases to a product have already put in your cart.

Are you making your regular family grocery trip and want to see your typical purchase list with current shelf locations and prices?  No problem, fire-up your Safeway shopping app.  Making a special trip for an embarrassing personal product, and want to opt-out of having your shopping behavior tracked?  You can do that too.

Got the sniffles?  Enter your symptoms into your handheld shopping app (instead of a not-very-private public terminal) and the app can communicate with the store, get the current inventory of cold medicines, and turn on indicator lights attached to the cold remedies that best match your symptoms.

Retail stores are definitely going to want to consider digital fact tags and/or indicator lights to provide customized assistance to each shopper.

Shoppers could use their mobile devices to get in the queue for services (deli counter, Geek Squad, Genius Bar, sales assistance, returns line, etc…), letting the shopper keep roaming the store waiting for notification that it’s their turn.

Is the screen on a mobile device too small for the rich experience you want to provide?  No problem… let the shoppers use their handheld to put products in their shopping queue,  They can then visit a terminal at a central location in the store that is able to read their queue and give them a large screen experience for the products they’re interested in.  That’s a lot more cost effective and practical than providing large format digital screens for every product in your store.

Other interesting potential features include using the mobile device to manage wish lists, shopping lists, affinity memberships, and even allowing shoppers to pay.  The mobile device could save checkout time by allowing a shopper to store their preferences (payment method, extended warranty, etc…) and in a single barcode scan transfer payment info, affinity info, and answers to all the annoying questions that clerks are often obligated to ask.

Physical retailers are already building some innovative features into their shopping apps.

	Best Buy’s iPhone app lets you see weekly specials, check your reward zone points, and make suggestions on their IdeaX exchange.  The app allows you to scan QR barcodes and get product info and reviews.  Look for Best Buy to start putting QR barcodes on every fact tag in the store, very soon.
	Walmart’s app will let you get product recommendations from your peers on your social networks, and even help you figure out the ideal size TV for your living room.
	Starbuck’s has two apps which allow you to see the balance on your Starbucks card and even re-fill it.  You can find the nearest Starbuck’s that is open right now (handy at 11pm), store your (and your friends) favorite beverages, and at some Starbucks you can even pay using your iPhone!

The future of mobile-assisted shopping is very bright.  If you’re in the retail business you need to have significant resources invested in developing your mobile strategy.

What cool mobile shopping experiences have you had, or do you wish you could have?

I’ve seen similar Walmart data before, but always in private meetings, so now that the data is public I can comment… Here is why you shouldn’t believe it.

Contrary to Spicer’s article, Digital Merchandising is already widely used in retail merchandising.  But the majority of deployments are NOT delivering paid ads.  The video based displays are used to enhance shopping experiences, communicate complicated value propositions, and drive incremental sales.

Retailers make money by selling products and services for a profit.  Not by capturing an audience to deliver paid advertisements to.  Yes, retailers do try and get their supply chain partners to share in the cost of operating the store through the use of co-op advertising, slotting fees, merchandising accrual systems, etc…  But at the end of the day, retailers don’t want promotions that merely shift sales from one brand to another, they want great experiences that drive incremental sales.

Walmart has a major initiative underway called Project Impact.  The goals are to focus on the most strategic product categories and reduce their efforts in less important ones.  They are also trying to dramatically reduce store clutter, and improve the shopping experience.  Project Impact is being implemented in the form of major remodels to 1000’s of stores.

Because of Project Impact, there is now less shelf space and fewer promotional opportunities available to non-strategic brands.  If you’re one of these brands, you are at risk for getting a smaller piece of the pie.

So because Walmart is offering viewer promotional opportunities,  won’t they generate less co-op dollars?  Not if they charge more for each opportunity… and that’s where the Walmart Smart Network (aka Walmart TV 2.0) comes in!

For the brands that still have shelf space at Walmart, you can now buy a promotional slot on the Smart Network (that includes promotional content on a digital merchandising system and premium product placement on a Walmart endcap). 

The Walmart Smart Network actually has three different types of digital signage.

1.   Welcome Signs – 57” LCDs w/o audio that hang over the front doors of the store and are (potentially) seen by all shoppers as they enter.  Typically running 5 second spots.  200 million people go by these signs weekly (106 million people watched the superbowl where ads sold for $2.6M).
2.   Category Signs – 57” LCD signs w/ option for audio that hang in strategic departments (Health Grocery, Electronics).  These signs are sometimes mounted in landscape and other times in portrait. Typically running 10 second sports.
3.   Digital Endcaps – that include a smaller portrait format display with product specific content and includes product placement on end-cap.  Screens appear touch-capable although I haven’t seen an interactive one yet. You’ve got to wonder how much the digital sign is helping shoppers with the $0.48 ramen noodles.

Walmart has a team of people that sell these new SmartNetwork promotional opportunities and they are more expensive than brands are accustomed to paying for in-store co-op.   Those Ad-Sales people need to demonstrate a good return on investment for the brands.  And that’s why Walmart has published data on the efficacy of the SmartNetwork, to sell ads, not out of some sort of altruistic gift to the digital signage community. 

Walmart hired Candance Adams a very credible Customer Insight exec with a PhD, and she partnered with DS-IQ which is full of ex-Microsoft rocket-scientists.  So I’m sure the research methodology is very legitimate.  But here is the rub… the raw data get’s interpreted by people tasked with ad sales, and it’s there output that Walmart publishes (don’t we all know better than to trust ad men?).

So when Walmart says that a food item that buys a spot on their network get’s a 13 percent lift in sales, or a health/beauty product gets a 28 percent.  What they don’t point out is that in their program is not just a spot on a digital sign, but also a product placement on a scarce end-cap!  How much of that 28% lift is a result of the end-cap vs. the digital component?  Walmart doesn’t say and there is no (published) DS-IQ study on the sales lift of the end-cap w/o the sign.   When the SmartNetwork was launched, Stephen Quinn the CMO at Walmart said the goal was a 30% lift for the endcap products, which he said would typically result in a 5% lift to the entire category the product was in.  As you can see, Walmart now says that even the most successful product is not achieving that goal.  Further, Walmart doesn’t even try to claim to that the Category signs or the Welcome sign have a measurable effect on sales of a particular product.

The bottom line is that the Smart Network is all about keeping Walmart’s co-op revenue flowing in, while reducing the visual clutter and making Walmart a more pleasant place to shop.  It’s a great strategy for Walmart but it’s far from evidence that digital signage advertisements drive retail sales.

I’d love to hear from Brand Managers that have bought into the program (even privately).  What are you’re thoughts?

Update:  It appears Walmart may be re-thinking project impact.  Also, you can find more photo’s at http://photos.retailgeek.com/Retail/Project-Impact/.

An old boxing axiom starts with the advice “You gotta have a good nickname.”    But my own profession struggles to find a universally recognized label.  The lack of a universally understanding manifests itself in a variety of challenges.

My work is at the interesting intersection of a two industries, In-Store Marketing and Digital Marketing.  Both industries are the logical evolutions of earlier disciplines, and both suffer from a confusing variety of labels.  It  makes it all the more difficult to define what happens when the two industries converge.

When Pierre Lorillard put the first Cigar Store Indian in front of his tobacco store in 1760, the point of purchase industry was born.  Over the next 250 years, permeations of this industry have labeled themselves “Point of Purchase”, “Retail Display”, “Store Fixtures”, “Visual Merchandising”, “Retail Design”, and many others.   And as you might expect, the practitioners of each of these disciplines make important (and accurate) distinctions between these various labels, but these distinctions are often lost on the rest of the world.  Today “In-Store Marketing” and “Shopper Marketing” are in vogue.  

Similarly, when the Florsheim Shoe Company first put touch screen kiosks in it’s stores in 1980, the retail kiosk industry was born.  This industry has used numerous labels including  “Interactive Kiosks”, “Self-Service Technology”, “Digital Signage”, and “Interactive Merchandising.”

The challenge lies when trying to describe the use of digital customer facing technologies for in-store use.  Digital Signage is one common label, but it doesn’t imply interactivity and has many use cases outside of retail stores.  Interactive Merchandising is used by some, but it is also used by marketers who primary sell products over the web.  Digital Out of Home (which has the cool Homer Simpson sounding” acronym “DOOH”) includes a variety of non-retail use cases such as out door advertising.

So for lack of a better label, I’m going with “Digital In-Store Marketing” (DISM).  Why does the label mater?

Because our industry also struggles with the tools to develop standards, best practices, establish credibility with end users, and all the other things that come with being a well established professional discipline.

The In-Store Marketing Institute is a trade organization that hosts a web portal, publication, and trade show.  They occasionally attempt to have a section of their trade show dedicated to “Digital” and recruit “Digital” members.   POPAI is a well regarding non-profit trade org for “Marketing at Retail”.  They have created a “Digital Signage” workgroup, and even published a glossary and some proposed industry standards.  POPAI, along with several other industries including the Association for Retail Environments / ARE (formerly the National Association of Store Fixtures / NASF), hosts the GlobalShop trade show which has a dedicated area for digital.  The Self Service and Kiosk association has the Kioskcom trade show.  The Digital Signgae Association (until recently) hosted the Digital Signage Expo (DSE).  Several other industries including Infocomm, NAB, and NRF make some efforts to cover some aspects of the “Digital In-Store Marketing” industry.  Several of these players are for profit event and/or publishing companies that mainly want to make money hosting Trade Shows and publishing magazines, and they support the associations as a means to that end.  Some of these host multiple events every year.

This year the Digital Signage Association declared itself a non-profit (effectively separating from it’s corporate parent, event company and host of Digital Signage Expo, ExpoNation.  Instead of bidding to continue hosting DSA’s show, ExpoNation promptly formed a new organization “Digital Signage Federation” to host DSE, and the DSA will now launch yet another trade show, or affiliate itself with one of the many other shows listed above.

To market your “Digital In-Store Marketing” services, you could spend all of your time exhibiting at all these shows.  Buy ads in all the publications.  And don’t forget to buy ads on many of the stand alone websites, such as DailyDooh.  You might also focus on some specific retail verticals and participate in their shows/pubs/events such as Grocery, Consumer Electronics, Chain Stores, etc…

If you were a retailer or brand charged with learning more about using digital technology in stores, which of these resources would you find and use?  What if you were a VAR, Designer, Influencer, etc… that wanted to develop an offering for use in-store?  

If you were a Digital Signgae software company and decided to exhibit at GlobalShop, you might meet some brands and retailers but not many Out of Home Advertisers or Hospitality/Event Venues.  If you exhibited at Infocomm you might meet potential integrators but not many end-users.  If you exhibited at FMI you might meet some grocery retailers, but mostly not ones charged with exploring digital technologies for in-store. 

I got to meet Nikki Baird from RSR at Globalshop this year.  She did a terrific job of covering the show via Twitter, and when she got home she wrote an article “Why GlobalShop is Not DSE, But Should Be”.  She didn’t get to attend DSE this year, and so hoped to meet some vendors at GlobalShop, but when she got there she was disappointed with the lack of digital presence.

Personally and selfishly, I’d love to see one of the shows most focused on retail applications become the definitive resource for brands and retailers interested in using Digital In-Store Marketing.  Because DSE was the show getting the most traction and the DSA is now looking for a new host, POPAI and In-Store Marketing Institute should both be reaching out to the DSA right now.  But if DSA aligned with one of those, they will still have a gap in coverage for all the non-retail use cases for their solutions.  I suspect that DSA will align with Infocomm, which will serve some of the other use-cases well but doesn’t have much exposure to retailers or brands.

The result is that Digital In-Store Marketing is likely to continue to be a confusing and fragmented industry.  As a principal of a firm that earns over $100M/year providing services to retailers and brands, I am heavily solicited by all these marketing opportunities. 

Frankly, all this Trade Show posturing is probably rearranging deck chairs on the Titanic.  Trade Shows are a dying marketing tool (at least the kind that encourage exhibitors to fund events by bringing extravagant and expensive trade show displays).  The internet has become a far more cost effective tool for communicating with your customer base than the traditional annual shows.  This evolution has probably been hurried along by the global recession which has affected trade show budgets for exhibitors and travel budgets for attendees across the board.  As exhibitors continue to cut back, I hope some new model emerges.  I find it enormously beneficial to escape the hustle of my day to day job and have a chance to rub elbows with all the smart peers in my industry.  Perhaps we not only need some major consolidation of events, but that we also need to see the events migrate from trade exhibits to peer conferences.

I’d love to hear you’re thoughts.

I have no problem believing digital signage can be an effective tool in a window display (see my recent Harrods post).  But most successful windows displays are designed to draw you into the store.  In this case, these windows need to drive you someplace else.  Worse, the overwhelming majority of closed stores are in less than desirable real-estate where the shopper has already migrated away.  If I were an out of home advertiser (happily I’m not), I’m not sure I’d be too excited about buying sub-optimal locations and then hoping to change a hundred years of consumer behavior by using the windows to drive traffic to some other shopping venue.

Since the inventory of advertising locations is likely to be pretty liquid, it’s going to be a challenge for the network operator to have capitol equipment available to set up ad-hoc digital signage displays.

Does digital signage offer some special opportunity in these empty windows that some form of static advertising does not?  (other than all the usual intrinsic advantages of digital sigange).

All and all I just don’t get excited about this.  Am I too cynical?

Adrain Cotterill who writes the excellent Daily Digital out of Home blog, sent me a heads-up this morning about a new window display being unveiled at Harrods.

For US centric readers, Harrods is based in the UK, and is one of the premiere department stores in Europe along with the likes of KaDeWe from Germany or Printemps of France. The US doesn’t have a true equivalent in terms of eclectic and comprehensive product assortment, but I suppose the closest comparison would be to a premium Macys.

In any case, the new Harrods windows features a display technology called Itrans provided by Screen Technology Limited. The technology allows for super-bright daylight viewable video images that can be configured into irregular shapes. The Harrods window features a series of modules configured in the shape of an “L”.

I assume the display is being used to display full-motion video rather than static images, and I’m eager to hear what length of clips and how many different spots the Harrods windows designers intend to run.

I’d expect to see the spots be very short, since they have to capture attention and delivery their messages instantly.

Regardless, I love the idea of the irregular shaped display. The Psychologists call it the “Orienting Reflex”, an innate human disposition to give more attention to the unusual/unexpected. (Biologists point out that the OR response helped keep early humans alive by noticing predators, changes to the environment, etc…).

We’ve all spent our whole life looking at landscape oriented 4:3 (or now 16:9) TV screens. They seem neither unusual or unexpected to us, and most of us have become expert at tuning them out. That’s why I’m a much bigger fan of using monitors in portrait mode. Harrods use of an “L” shaped display is even better.

Of course it’s no surprise that Harrods (a world class practitioner of window displays) would know how to best leverage our most basic psychological responses to capture our attention. For most of the history of retail, the dressing of display windows has been considered the highest form of art in retail visual merchandising. It used to be common for talented students to study theater in school (for the great lighting and staging experience) and go on to apprentice for a top window dresser for many years before getting a chance to do their own windows.

Sadly, in the US as urban sprawl became the norm, and retail migrated from city centers to indoor mega-malls, windows displays became somewhat of a small niche. As we are currently seeing a shift back to city center retailing, it will be interesting to see if great windows displays re-emerge. I hope they do.

Ad:tech is an interactive advertising and technology conference and exhibition. They do a number of events each year at a variety of international venues. The primary attendees are brands, agencies, publishers, portals, and service providers.

I’m not sure if it’s the intention, but the bulk of exhibitors and content are primarily focused on web based activities (media buying, search, e-mail marketing, web analytics, affiliate marketing, blogging, etc…). There is not (yet) much of a presence for Digital Out of Home, much less retail environment specific content.

Obviously, their oversight willingness to let me in, shows they have some interest in retail. The exhibit floor has about 300 exhibitors, mainly with 10×10 or 10×20 booths. The anchor exhibitors were Yahoo and Google. It felt like the overwhelming majority of exhibitors were focused on some element of the web advertisement delivery supply chain.

The only Out of Home or Retail focused exhibitor was SeeSaw Networks. SeeSaw is a what I like to call a network aggregator for DOOH advertisers. Meaning, they allow an advertiser to buy spots that play across multiple DOOH networks. They also partner with LocaModa to do some interesting marketing campaigns to mobile handsets.

As for my panel, I found my fellow panelists pretty interesting. Our moderator was Lori Schwartz for the Interpublic Groups Media Lab (I’m looking forward to visiting her lab in Los Angeles next week).

After Lori introduced us, I led things off talking about state of in-store marketing, and my often repeated opinion that the goal of in-store marketing activities in the store has to be to drive sales and customer satisfaction, not to sell ad space. I shared a few case studies of our work with context sensitive digital signage, RFID based customer affinity, and SKU Activated merchandising. Lori and the audience asked some tough but insightful questions, and hopefully I didn’t stumble too badly. I think the RFID based customer affinity (aka “the Minority Report” style marketing) was most interesting to the audience.

Alan Schulman, the creative director of IMC2 talked about what was new and cool from the perspective of an interactive agency (Alan was quick to point out that IMC2 is the largest still independent interactive agency out there). He showed a case study of the next generation of proximity marketing experiences planned for deployment in New York City taxi cabs.

Michael Mak, demonstrated bCODEs kiosk/scanner for optically reading a text message from a standard cell phone. This allows a marketer to SMS a textbased eCoupon to a consumers phone, and then the consumer can redeem it in a store by holding their phone up to a kiosk. I’m a big fan of using a mobile phone (or other consumer owned device) as the “physical cookie” in retail stores. At the moment, bCODE has one of the best means of doing so. The minority report style experience we can create with a wireless keyfob is very compelling, but how many consumers will carry a pocket full of electronic tracking devices once the experience really takes off? Clearly consumers need a single device that they already have reason to carry, that lets them opt in to multiple environmental CRM experiences. Obviously an RF based solution would be much preferred to bCODEs optical system but at the moment bCODE is a pretty good cost/experience trade-off.

Last, we had Bruno Uzzan from Total Immersion demo their very cool “Augmented Reality” technology. This was by far the coolest live demo of the four of us, and drew all the oh’s and ah’s from the audience. Basically, they load 3D models of objects into a computer, and plug a video camera into the computer. So for example, Bruno had scanned the physical box that a set of LEGOs comes in, as well as detailed 3D models of the items you can build with the LEGOs inside. When he holds the box in front of the camera, the camera recognizes the box (no mater what angle or orientation), and the computer software superimposes the 3D model on the face of the box and even lets him manipulate the model. So you can imagine setting up a “Magic Mirror” in a LEGO store where kids can grab any box off the shelf, hold the box up to the “mirror” (aka Monitor w/ camera), and see what can be built with those LEGOs. It’s a visually stunning demo. I can clearly see the benefit for large scale presentations and events, but I have mixed feelings about its retail application. I have no doubt that the technology can be used as an effective traffic generating novelty. And I can also see the great benefit to interactive 3D models being used to demonstrate certain products in a retail store. I’m imagining back-yard swing-sets in a toy store that has no room for actual swing-sets, for example. It’s not clear if attaching the 3D model to a physical object and then watching it on a video display is really better than just directly watching the 3D model on the display. I could see it going either way, so I’d certainly want to test it with real shoppers before I made a major commitment of resources. If the price is right, I’d put one in a flagship store without a second thought. This has much more visual impact than say, a MS Surface.

Here’s a few more independent reviews of our panel:

Internetnews.com

techconfidential.com

ad:tech blog

My bottom line… if you are in retail or DOOH you can definitely get something out of these shows, but I wouldn’t skip a major retail show to attend ad:tech instead. On the other hand, if you’re looking for some cool IT services and tools to serve up banner ads, you’ve hit the mother load.

The confusion comes from the fact that the 2011 date is an estimate for when a touch screen table top computer might be available as a consumer purchase, versus the (apparently) immediate availability for select business partners.

AT&T has a concept store design which blends it’s traditional wireless offerings with AT&T Broadband services in what AT&T calls its “Experience” stores. On Thursday April 17th, the first five experience stores were retrofitted with the MS Surface to help consumers make wireless phone purchases. I visited the San Bruno, CA store on the go-live day.

The basic layout of the Experience Stores is pretty straight forward. The two long perimeter walls are the primary wireless phone merchandising area. All phones are real samples (not dummy phones) tethered to the wall with a coiled cord. The phones are charged overnight, so most of the phones are functional during the day. The wall features a long backlit lightbox feature as an AT&T branding element, and the long walls are broken up by portrait mounted digital signage, and touch screen kiosks approximately every 12 feet.

A false back-wall features 3 flat panel TV’s and a seating area used to demonstrate broadband products (and doubles as a waiting area / spouse parking area). Behind the false wall is the customer service area, which does a nice job of segregating disgruntled customers with billing disputes from potential new customers. The corners of the store have 42″ monitors mounted which serve as a wait-time-management feature (showing customers their spot in line) so they can safely browse while waiting for an associate.

The open floor space in the store features “project” tables which demonstrate specific wireless phone applications, such as digital music, video conferencing, games, and wireless data for laptops.

Of course, AT&T is also the exclusive US providers of the Apple IPhone, so the stores features a 6 foot wall display for that product, as well as a 4 foot freestanding display. Both displays are clearly designed by Apple, and are very much in brand for Apple, but a bit incongruent with the rest of the store.

A concierge desk is placed by the front door with a greeter who helps customers get oriented to the store, and/or puts customers in the virtual queue for a sales associate.

The stores are designed by Callison, and won a VM+SD Award for best new retail channel.

The five existing experience stores that were retrofitted with the MS Surface display include:

New York City
381 Madison Ave.
New York, NY 10017

New York City
350 Park Ave.
New York, NY 10022

Atlanta
3429 Lenox Road NE
Atlanta, GA 30326

San Antonio
13127 San Pedro Ave.
San Antonio, TX 78216

San Francisco
1206 El Camino Real
San Bruno, CA 94066

I visited the San Bruno location on the afternoon of April 17th. This store had six MS Surface units which replaced several of the “Project Tables” as well as a couple of round glass display cases.

The exterior of the store had been dressed for the launch. Vinyl graphics were applied to exterior pillars, a sign hung over the door, and window signs were installed. The store had clearly been hosting press all morning. Video lights were still set up around one of the Surface Tables to facilitate filming. There was quite a bit of extra staff in the store, with one dedicated employee doing demos on each of the six surface tables.

AT&T and Microsoft clearly intended to make a media event out of the launch. It is interesting that AT&T would do such a big event around adding a new infrastructure element to the store, rather than about a product for sale in the store. Granted, it’s much easier to make a splash in five concept stores than in 1000+ mainline stores, but on a per-store basis it feels like AT&T is making more of an effort to promote the arrival of Surface, than they did the arrival of the IPhone. Maybe AT&T just conceded that Apple Stores rather than AT&T stores would receive all of the media attention from the product launch? It’s pretty clear that both Microsoft and AT&T are getting a nice news cycle out of this surprise launch. The big question is if Surface will be compelling enough to convert mobile phone browsers into buyers and get deployed to many stores, or if Surface will remain a gee-wiz element in flagship stores only.

Each surface table has 8 mobile phones (4 on each side), and one accessory (such as a blue-tooth headset). The sales associates say that the selected handsets are the most popular models, but the handsets due seem to vary from table to table. The accessories are not related to the software on the surface at all, and are non-functional. They are simply attached to the Surface fixture via a thin steel cable on a retractor.

Each handset is attached to a plastic puck with a strip of very high bond adhesive, and a set of zip ties. The puck rests in a magnetic cradle on the side of the Surface fixture. The puck is attached to the fixture via a coiled cord which provides an electronic alarm if removed. The pucks on the Surface tables are different than those used in the rest of the store. However, the electronic alarm is the same system used throughout the store (Invue, formerly Alpha). The bottom of the puck has a sticker attached to it with a unique pictograph (a series of dots) printed with IR reflective ink. So when the handset is rested on the surface of the table, the sticker is facing straight down, and makes it easy for the MS Surface to recognize what product is resting on it. While Microsoft has talked about Surface using cameras to recognize common objects placed on the table, that isn’t what’s happening in this implementation. Here, an IR sensitive CCD is being used to detect the customers touch and a handful of stickers on the back of the handset pucks. The Surface doesn’t have the ability to recognize a customers phone if it is placed on the table, for example. Also if the stickers are applied to the wrong handset, the Surface will have no way to know.

All four corners of the screen have a simple user interface control. The entire display can rotate 180 degrees, so that it’s always facing right side up, no mater which side of the table the user is standing on. There is no facility for more than one shopper at a time to use the Surface. The UI lets shoppers see rate plans, accessories, and a coverage map. When a handset is placed on the Surface, the UI makes it easy to see the features, accessories, or rate-plans specific to that handset. When two handsets are placed on the Surface, a cool side-by-side comparison is made of the two handsets. The comparison shows features common to both handsets in bold, and grays out features that one handset has and the other does not. The most visually interesting features is the scrollable and zoomable coverage map that can show potential coverage for voice calls and separately for 3G data service.

Of course, because Apple is exclusively responsible for all the displays in the AT&T store that feature IPhones, the IPhone is not included on any of the Surface tables, which is a shame.

Like any brand new product, not everything is perfect on day one. Several of the sales associates said they met Microsoft programmers who where up late into the night, working on a final build of the software to install for the launch. Several glitches are still evident. While you can scale most of the UI elements, they act like pictures rather than live text, so when you scale them, the fonts get jaggy and illegible. When you put two phones on the surface, the software often gets confused about whither it should show the side by side comparison or the product info for a single phone. Often you have to reposition the phones to make it work. There are no personalization features, so you can’t see anything about your account history or add personalization features to your existing phone or account. Despite the face that these kind of one-to-one experiences where heavily emphasized in earlier Surface demos. There are some elements of the UI that seem to be buttons but do not work. Finally, and perhaps most significantly, not all the coiled cords tethering the handsets are the same length. Some seem too short to easily let you put the phone on the Surface, and many of the cables get tangled with each other after just a bit of use.

These flaws aside, the customers in the store getting demos seemed generally wowed by the MS Surface. I didn’t observe any shoppers go from the Surface directly to the cash register, but today was a lot more about introducing a new gadget than it was about signing up new AT&T customers. Time will tell if sales people will continue to drive customers to the tables, if the tables will be intuitive for self-service when they aren’t permanently staffed by a demonstrator, and if the information presented ultimately drives incremental sales.

My own research does consistently show that side by side comparison is a highly desirable feature amongst consumers shopping for a handset. So if the kinks get worked out of surface, this is a feature that could add real value. I’m not sure the other content is rich enough yet, that it will cause shoppers to purchase more network services than they were otherwise intending. Hopefully, the content will continue to mature and improve.

An interesting sub-plot is why/how AT&T became the first partner to get the MS Surface. Back in May of 2007, Microsoft announced Surface and said that the first three partners would be: Harrah’s Entertainment, Starwood Hotels & Resorts Worldwide, and T-Mobile USA. Not only was there no mention of AT&T, but T-Mobile is a direct competitor of AT&T’s. Then in November of 2007, Microsoft announced that the first deployments would be delayed until Spring 2008. Now of course, it is Spring 2008 and Microsoft has delivered on it’s promise to go live, but not with any of it’s original partners. It I were T-Mobile and I had made any kind of investment in development of this new technology, I’d certainly be upset. Particularly since the T-Mobile brand had been used in countless demos of a mobile phone application, and now AT&T is seemingly getting the same user interface that used to be branded T-Mobile. That raises another interesting question, who owns that look and feel? Microsoft or AT&T? If AT&T doesn’t own it, will they be upset if down the road Verizon or T-Mobile have an identical experience?

Here’s my flickr set from the store.

Here’s a short YouTube video of the experience (do a search on YouTube to find countless other demos).

According to Fortune Magazine, Microsoft now doesn’t expect to make Surface available until 2011.  I’m guessing we’ll see multi-touch implementations from others long before that.

It almost happened. A number of Clear Channel digital billboards in Los Angeles appeared to get hacked, in the first appearance of digital graffiti that I’ve heard of. As it turns out however, the graffiti was actually a purchased advertisement on the signs, made to look like a hack. A clever marketing gimmick to be sure, the digital equivalent of the “advitorial.”

Every digital signage provider will tell you how secure and hack proof their software is, but the reality is that even with the best security in your software there are countless ways in which you are relying upon the perfect compliance from a variety of people. A dirty little secret is that many public installations are far from secure. Do a Youtube search for “kiosks hacks” if you don’t believe me. It’s only a mater of time before something like this does happen for real.

I wonder if these signs will cause some hackers to set their sights on the digital billboards for real?

This year’s show got off to a slow start. After getting swamped in our booth the last two years, I was surprised to the trickle of people coming by. Our traffic is probably down 25% from last year, and although we’re seeing most of our key clients, we’re not seeing as many new prospects as we’d usually expect.

As for other exhibitors. The digital signage area would be a big disappointment to anyone who was at DSE. Of the 20+ software vendors who were at DSE, only NanoNation, Wireless Ronin, Stratache, and Symon are at GlobalShop.

As for more traditional visual merchandising and retail design tools… I haven’t seen anything I didn’t see at Euroshop.

I didn’t make it to any of the seminars on day one, so I can’t speak to the attendance or quality.

There are a number of theories to explain the low turn out. The show is in Chicago which is an exhibitors nightmare (in terms of cost to exhibit), and isn’t as big of a draw for attendees compared to Las Vegas. It’s the week before Easter. It’s the day after St. Patrick’s Day. The economy is soft. It’s a Euroshop year. DSE was just a few weeks ago. Etc…  Personally, I suspect it’s a combination of all of the above.

Usually Day one is the busiest day of a show, but hopefully I’ll be surprised by traffic tomorrow.