The AV industry, as we know it, dates back to somewhere around 1930s. It started out as a niche business providing AV equipment to businesses. At first, there were overhead projectors, slide projectors, screens whiteboard and TVs. In the less than 100 years, AV has been in existence it has evolved into a sophisticated and complex business, worth several billion dollars.
In the last 30 years the industry has shaped itself, in part thanks to the efforts of Infocomm and we have grown and defined our roles and responsibilities. If you take a look at a demographic of the businesses which operate within the AV industry we find:
· Equipment Manufacturers
· Manufacturers Representatives
· Equipment Distributors
· System Integrators
· Control System Programmers
· Rental & Staging
· Box Sales
· Press & Media (trade associations, publications etc.)
In the past, the lines of responsibility for each of these businesses have been for the most part, clearly defined and adhered to. But recently the lines have been getting blurred and manufacturers have been taking a more aggressive role in marketing their products – now extending outside of our industry and pursuing sales directly with architects and end-. This circumvents what used to be considered “normal” channels (sales through the system integrator) and may inevitably change the face of this industry.
We haven’t seen anything like this since Polycom introduced the videoconference “roll - about” systems when normal AV channels for portable videoconference units were marketed directly to end-user clients. If you remember, this was met with a tremendous amount of resistance from both AV Consultants and AV System Integrators. In the long run it actually helped create the market for integrated videoconference “room systems”. (Executives screaming – get that ugly cart out of my Boardroom!)
Now, for whatever reason, the videoconference market has always maintained a slight amount of independence within the AV industry – partially because videoconference equipment was packaged by the manufacturer and sold as stand alone “systems” requiring very little if any design, engineering or integration. These systems were sold almost as box sales. The same can be said for Telepresence Suites where Cisco, Tandberg and Polycom have marketed these products direct to end user clients – again circumventing normal AV equipment distribution channels. Videoconferencing equipment was also heavily marketed through IT channels – as items such as gateways, routers, multipoint bridges etc. have always been viewed as telecom equipment. Point being that there has been an established pattern for the videoconference market to play outside of the traditional AV channels and “rules.
But this was just the tip of the iceberg. Earlier this year – the game changed– drastically – and we have not yet begun to see the impact. If you haven’t guessed where this is going, let me spell it out - Cisco / Tandberg.
We now have a goliath company with unlimited resources, global reach and plugged into just about every major market – with their claws deeply imbedded into a key, leading manufacturer of AV equipment. I don’t expect for a minute Cisco is going to play by the long established rules or “understood roles” of the AV industry.
As a company, Cisco has its own infrastructure and way of doing business, they don’t yet recognize the value of an AV consultant, nor do they see a strong need to work with AV Systems Integrators. They manufacture equipment and sell systems through their very IT concentric “channel partners." Like any other large IT company – they also maintain direct relationships to their larger “enterprise” clients. Like it or not, this approach has been very successful.
Should we be concerned – heck yes!
Cisco’s business model will inevitably force other large companies in our industry (such as AMX, Creston and Extron) to take a similar position and begin to market their products as end-to-end solutions, i.e. complete systems without the need for the conventional model of sales (Consultant / System Integrator / Manufacturer Rep / Manufacturer). It is just a matter of time before we see turn-key “packaged” AV systems hit the market. Take a look at the product lines of AMX, Crestron and Extron. Each company manufactures just about EVERY component required for an AV system – almost everything – and they would love nothing more than to have their products, end-to-end, specified, purchased and integrated into every AV system. The only products which are not yet wrapped into these companies’ product lines are the true “commodity” items, such as:
· Flat panels
· Video projectors
· Projection screens
· and you guessed it – CODECs
Aside from the above components, we could easily see the larger manufacturer being pushed into developing pre-packed AV systems in order to compete. These companies have the brains, manpower and other resources necessary to design, engineer, manufacture, fabricate, assemble and test AV systems. At present the only area where they may struggle is in the onsite supervision and actual integration of the AV system within the facilities. But, just like Cisco / Tandberg and Polycom have done with their Telepresence systems – they will contract with local contractors to provide this onsite and installation support. This model already exists in several other technical industries where systems are configured and customized by the manufacturer, delivered to the jobsite, installed and then a factory representative commissions the system.
This model will change the face of the AV industry. I could be wrong, I hope so – but last time I checked the local hardware store was replaced by Home Depot, the local electronics store replaced by Best Buy and the corner grocery was swallowed up by Super Stop ‘n Shop.
As an industry, we are going to have to have find ways to ingratiate ourselves to the top manufacturers. We will need to differentiate our design, engineering and project management services to our clients. We will have to offer different types of services, sell packaged maintenance plans and excel at customer relationships.
I am confident our specialized niche and technical expertise in Audiovisual systems, which are still very different from IT systems, will allow us remain viable for years and ultimately prevail as an industry.