My 2007 Crystal Ball

It's time to dust off the crystal ball. Here's what I see for 2007:

1) Most of Our Markets Will Grow
Health care will continue to grow in 2007, especially the hospital market. Schools seem to have money in most states. The religious market, in particular the Evangelical Christian segment, continues to grow. Hospitality construction is surprisingly strong. And, everybody is building and expanding prisons. Some markets, like manufacturing, may show little growth but only residential is likely to decline.

2) Our New Competitors Will Grow Stronger
The national contractors are expanding beyond fire and security to offer telecommunications, networking, building control, and even sound and video. Those electrical contractors who have low-voltage divisions are expanding their capabilities into areas we once thought safe.

3) Integrated Security Will Become More Common
Some customers still equate "security" with "burglar alarm." But, more and more customers will want all of their security systems integrated into a single control and response center.

4) Hosted Security Will Take Off
Hosted security is a concept enabled by fast internet connections and IP video. You outsource the monitoring and management of your security systems to a remote hosting company. With the exception of cameras, card readers, and sensors, most of the equipment is remote. We should expect the national contractors to offer this service soon.

5) DRM And Copy Protection Will Become Technical Hurdles
I tried one of those "upscaling" DVD players that takes a 480p DVD movie and upscales it to 720p or 1080i. I thought this would be great through my home theater projector which has a DVI input and accepts 1080i. But, it doesn't work. My projector is two years old and doesn't speak the right copy-protection codes back to the DVD player. Watch out for this kind of problem. It's going to bite us in jobs from home theater to church projection systems.

6) 480p May Be The Next Big Video Standard
The next-generation iPod is supposed to have a 480p display. This may drive the market for video content more than HD or digital or widescreen or anything else. That, in turn, will drive our business. If the church wants to do video podcasts, better tune them down to standard definition.

7) Commoditization Will Turn Markets Upside Down
In the past, we used service, in the form of warranties, as an inducement to buy our systems. Now, many contractors sell their systems at a discount to get the more profitable service work.

8) Design-Build Will Gain Market Share
Some engineers and architects believe they have no place in a design-build world. Nothing could be farther from the truth. Some customers choose the design-bid-build process because they believe they will always get a lower system cost. That's also untrue. The good news is that customers, engineers, and architects are beginning to understand the benefits of design-build and that should result in a growing number of design-build jobs in 2007.

9) Some Product Categories Are Temporary
For example, the "digital snake" will merge into our networked digital world and lose its identity as a separate product category. As another example, DSP "speaker processors" will disappear as more speakers are self-amplified and even stand-alone amplifiers begin to include their own DSP.

10) Some Product Categories Are Too Early
The powered, intelligent ceiling speaker is a great concept but the technology isn't ready for prime time. Wait a few more years, however, and this will become the norm.

11) Large Analog Mixing Consoles Will Begin To Disappear
Digital mixing consoles are low enough in cost and high enough in performance to attract most high-end buyers and many mid-range buyers. The low-end is next.

12) Cable Prices Will Stabilize
It appears that much of the increase in cable price was caused not by material scarcity but by financial speculation. As the speculation diminishes, the price of the raw materials (copper) will stabilize and our cable prices will follow suit. I really hope I'm right about this one!

13) The Web 2.0 Is Here
For contractors, the Web 2.0 will enable collaborative estimating and bidding, on-line job management, virtual offices, and who knows what else.

14) Basic Systems Are All Commoditized
Basic fire alarm, security, telephone, paging, and other electronic systems are completely commoditized. If you're not adding value to these systems in 2007, you'll find yourself stuck on the slippery slope of declining prices and paper-thin margins.

15) The Rise Of The Vertical-Market-Focused Contractor Will Continue
Contractors used to focus on products. Maybe you were a "sound contractor" or a "security dealer." Now, we are seeing contractors who offer multiple systems to a single customer type. The best example is the church contractor who offers sound, video, lighting, acoustics, and theatrical accessories-but only to large churches. Other contractors focus on prisons. More will come.