Will AV Systems Become a Commodity? by Christopher Maione

7/19/2010 3:18:06 PM
By PSN Staff

I had a meeting last week with a long time colleague, friend, and client who works as the in-house AV engineer/project manager for a global investment banking firm. Here, in the middle of New York City, with an abundance of large and small AV integrators to choose from, he tells me he is using Best Buy to purchase and install flat panels in conference rooms and in their retail branches. Now, I have nothing against Best Buy – but if this is any indication as to the direction of our industry, please stop the train at the next stop and let me off. Something is just not right.  

Actually there are several things “wrong” with this scenario.   First, where are the numerous AV System Integrators that have already worked or are currently working with this client and why aren’t they pursuing this business with him?  Is it that the system integrators think this work is too small to want to handle or that there is not enough money in it to make it worthwhile and profitable? Next, why is our industry letting Best Buy turn this work into a commodity? And it’s not just Best Buy; HP and Dell are also entering the corporate “installation” markets thus further commoditizing our industry by packaging equipment and services that our industry previously maintained the near exclusive rights to furnish and install.

This is getting a little too reminiscent of the 1980s when companies like PictureTel began selling “packaged” rollabout videoconference systems. Many AV system integrators and consultants considered this a threat to our livelihood as these preconfigured, all-you-need systems did not require any design, engineering or system integration (well, sort of).

As a result of the hundreds of thousands of rollabout systems sold, the videoconference market grew. And grew. And grew. But after years of clients learning to use and accept videoconferencing, the time came when corporate executives looked at the AV folks and said “why can’t we build this stuff into the room and make it look good instead of like an afterthought.

As a result, the built-in fully integrated AV / Videoconference “room system” emerged enabling   consultants and AV System integrators to showcase their expertise and provide the design, engineering and installation of these integrated “built-in” room technologies.  Consultants happy. Clients happy. Win win.

Fast forward to the 1990s when the rocket scientists at HP looked at videoconference rooms and said “we can do this better” and hence the first generation telepresence suite (the Halo) was developed. Now of course, we have Cisco/Tandberg and Polycom leading the charge for what are now essentially prepackaged, preconfigured “telepresence room systems." Similar to what happened in the 80s, these systems are circumventing the need for an AV consultant and breaking all normal AV sales channels which typically flow through the AV dealer / systems integrator.   

Architects and designers are also losing work as a telepresence suite comes with walls, floors, ceiling, carpet, lighting, and even the furniture pre-selected as part of the package. With telepresence system costs in the $300K realm, there is a lot of money to be made – and it’s going directly to the manufacturer. In essence, Cisco/Tandberg and Polycom are in a duel to see who can win the race of commoditizing telepresence systems.

So at the low end we have Best Buy, HP and Dell taking away our hang-and-bang business. At the high end Cisco / Tandberg and Polycom trying to take away the integrated videoconference room system business. Is anyone else out there starting to get the least bit concerned that we, as AV professionals, could be squeezed out of existence?  

Sure, there will always be the large scale, unique, complex, super custom AV project which will require AV consultants and system integrators but – as anyone with experience in our industry will tell you – these complex projects are rarely very profitable. Our bread and butter comes from the repetitive mid-large size AV projects – these are the Auditoriums, Boardrooms, Conference Rooms, Videoconference Rooms, and Training Rooms which make up most of the (corporate) AV market.

So this is my advice – Beware! Our industry is being taken over by giants. Their mode of operation and their “channel sales” means simply “we sell direct to the client”.  If you don’t showcase your own “value add” to your clients, you will eventually lose them for all of your work. The time is now to rededicate yourself to how you can help them, day in and day out, so that you are there when they need that one flat panel installed in the conference room by Tuesday.

And to all the highly compensated, corporate, in-house AV specialists, including my friend, if and when AV systems and integration become something you can purchase “off the shelf,” your job may eventually be lost to the purchasing department. You may want to give that some thought next time before you pick up the phone and call Best Buy. Instead dial your local AV professional and let them help you, help yourself.

Christopher Maione, CTS-D, is president of Christopher Maione Associates, a firm specializing in all aspects of AV business, technologies, and marketing strategy. He also serves as an Infocomm Adjunct Faculty member and frequent speaker at global AV industry events. Reach him at cmaione@chrismaione.com.


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