The Visionaries of the InfoComm 100 think tank have presented us with some interesting and sometimes conflicting assumptions about how the AV Industry will compete in the next 3 to 5 years. Let’s examine the list of primary assumptions and ponder their implications:
1. There will be more commercial competition in the AV industry from end users.
This trend is hard to ignore. End-users are the fastest growing segment of InfoComm. These professionals are often institutional Technology Managers and increasingly are highly trained, CTS, CTS-I, and CTS-D’s. They can make better clients and partners than less tech-savvy customers, but can also be quick to minimize the value-added services of Design-Build Integrators and Design Consultants. They compete in that they can take the most profitable tasks in-house leaving low-margin commodity sales to the marketplace. They also force manufacturers to split their focus and consider selling direct or risk losing the end-customer. See #3.
2. The blurring between the professional and consumer markets will increase.
When the CEO asks the integrator that installed his home theater to do the corporate boardroom, AV professionals may cry foul. When he asks his local electronics superstore to do both jobs, then there is no longer an AV industry. I think that this trend may not be dour as this premise suggests. Consumer markets are more likely to embrace professional standards and expectations than the other way around. Witness the growth of high-end residential integration versus the consumer-driven home installation market. The AV Industry still has the upper hand, but the point is well-taken: We may need to redefine professional, once again.
3. The amount of client-furnished equipment in AV solutions will increase.
This is a logical following of assumption #1. If products are becoming increasingly low-margin, then let the customer buy their own. I see two huge opportunities in this development. One, we will have to write some really tight scopes of work and finally master the change order. Two, we can sell larger service agreements and managed services contracts. The margins on service are still very good – for now. Will there be a service-only business model that will further minimize traditional integration models?
4. IT companies will be more involved in AV design and integration.
Scary? It’s already happening. We’re on their turf, how else might they react? And aren’t a lot of AV companies adding IT and Network services to their offering? The big picture here is that computers and network hardware are replacing AV devices as end points, conduits, and the user-control interface of choice. Education, certification, and innovation may keep IT and AV separate for a little while longer. At the end of the day, AV people have a passion for displays and audio that is hard to match.
5. Consultative selling (relationship-based selling) will become the norm.
The big concern here is that consultative selling is not the norm now. If equipment is a commodity and increasingly installation is too, then sales must be a value-added service. Listening will become the most important skill for a salesperson. Engineering might have to take a back seat in meetings.
6. IT may increase its knowledge and capabilities to deliver the visual experience traditionally provided only by AV.
This is essentially what #4 says, but there is a subtle difference. #6 says that given the trend in #4, IT pros will have to embrace the user experience over the cold efficiency of a tight network. IT companies and IT departments have a lot of clout and resources in large corporations. If they choose to take over, they can.
7. The definition and scope of the AV industry will continue to evolve.
Convergence, collision – whatever. The fact is we just don’t know what AV is anymore. We have focused a lot on what it isn’t only to find ourselves in the middle of a communications revolution. Aren’t IT, Telecom, and AV all related? We hope so. It is up to the industry – and by that I mean InfoComm – to define the AV Industry in terms that will embrace not only what we do, but what we may do in the future.
8. Prices will continue to come down; shrinking margins.
Well, that’s the thing: There is a new economy on its way that is going to redefine success as sustainable, modest growth with consistent profits. Sacrificing profit for growth or over-leveraging to gain market share won’t work if margins are low for everyone. There is still opportunity to introduce higher-margin services or products, but be prepared to see those margins shrink sooner than in years past. The game has changed.
AV Matters - Tom Stimson's Blog 