Trends To Watch In 2007
Find out what pro AV experts say will significantly affect your business this year.
Ask a dozen different AV industry experts what they see as the biggest trend emerging in 2007, and you may very well get 12 different answers. That doesn't mean all 12 aren't valid; it just depends on the segment of the market in which these experts work. Some of these trends may look familiar, such as the ever-present AV/IT convergence, while others attempt to define new market influences. Whatever the case may be, there's no doubt you'll need to keep a close eye on the following trends emerging this year in order to stay ahead of the curve.
Resolution Reigns Supreme
For nearly a decade, videoconferencing has been touted as the technology that will end — or at least drastically reduce — the need for business travel. However, as we enter 2007, business travel hasn't drastically reduced, and videoconferencing never really took off the way it was expected to. So is there anything that can change the fate of this technology? One industry expert says yes, and the payoff will be realized sooner rather than later.
According to Scott Walker, president of Atlanta-based AV consulting firm Waveguide Consulting, trend lines coming together in the next 12 months will make HD and telepresence videoconferencing a formidable trend in 2007.
“There's substantial fiber in the ground, people have the bandwidth between their global offices, and many videoconference users frustrated with the past problems of videoconferencing are looking for something better,” Walker says.
With videoconferencing failures due to latency, poor video quality, and problems with ISDN call reliability fresh in the minds of early adopters, the question remains: Is there a really good reason to think the latest chapter in this technology will gain widespread acceptance? Walker thinks so, and is betting on traditional videoconferencing companies and new IT-focused firms to produce better products.
“The traditional companies like Polycom, Tandberg, and Sony are offering higher quality systems, and IT players like HP and Cisco are offering high-end solutions that I think will get a lot of attention and lead to interest and activity in the marketplace,” he says. “If you take the reach and leverage that a company like Cisco has, it has the opportunity to draw a lot of interest in this marketplace because it's so pervasive and so well known to so many clients.”
Walker also points to a rapidly expanding pre-packaged solutions trend as a complementary driving force in the market. “This is great for the user who wants it to be a one-button, simple solution,” he says, noting, however, that once a customer wants a variation, it's back to a custom project.
Walker also sees another trend branching off of the acceptance of HD and telepresence videoconferencing —an overall acceleration of the pro AV industry's adoption of fully HD systems. “Once you have HD videoconferencing, basically everything in your plan needs to be HD capable — your recording, streaming, and capture and storage,” he says. “This is a good thing for the AV industry and for the quality of systems we deliver.”
If Walker's expectation of enhanced HD knowledge by AV pros comes to fruition, they should be on the right track to take advantage of another resolution-based trend. Just as digital signage seemed poised to fully transition to high-definition displays and components, it may turn out that a trend called “Beyond HD” is ready to leap frog that progression. According to Randy Pagnan, president of Fairfax, VA-based AV industry association InfoComm International, immersive visual environments in network operation control centers have been around for 15 years. Pagnan, who also serves as president of Santa Ana, CA-based AV design and consulting firm rp Visual Solutions, credits a confluence of factors that could bring Beyond HD capabilities to commercial applications, such as point-of-sale advertising, in 2007.
“The ability to do multiple pixel replicating anywhere is becoming more and more common,” he says. “The hot-button applications right now are network control centers with visualization and immersive 3D blending, but those applications could move into retail point-of-sale advertising digital signage very quickly.”
Pagnan says solutions from Barco Folsom, Jupiter, Christie, Clarity, RGB Spectrum, and Sony, among others, enable multiple HD displays to be tiled into higher than traditional high-definition display walls. “With these solutions, you have a single, common server that's network-based, which allows you to control the content and send anything anywhere over network capability.
Pagnan says that in 2007 the market could see beyond HD in multiple formats, including display cubes, LED displays, or tiled flat panels.
Consumer Market Creations
As consumers become more tech savvy, their home entertainment systems are evolving to near-professional levels. This represents a huge opportunity for AV integrators looking to break into this expanding market. Along with new projects, service agreements designed to maintain the quality of the system, which have begun to take hold in the professional market, are expected to result in a substantial recurring revenue source for AV pros in the custom market.
Ken Smith, current president of Custom Electronic Design & Installation Association (CEDIA), an Indianapolis-based trade association of residential designers and installers, says service agreements in the residential market could be the core business of his Falmouth, ME-based AV integration company, Custom Electronics, in the near future.
“A few years ago, I got the idea to call a bunch of my old clients who I hadn't talked to in a while,” he says. “One hundred percent of them said, ‘I'm really glad you called. I love our system, and we use it all of the time, but we've had this little problem recently. It hasn't been big enough for me to call you, but I'm glad you called, and we can schedule a service call.'”
Smith says the key is selling the benefits of service agreements, which include prolonging the life of AV systems as well as making sure they're functioning at optimal levels. He points to the emergence of media servers in home installations as a perfect segue into selling service agreements.
“Because media servers need to be defragged, have their virus definitions updated, and need their backups ensured, those are all things we can add into our service agreements,” Smith says. “We can do the work remotely or from our office, and selling a service agreement lets us get in front of the client.”
A similar trend involves pro AV resellers venturing into consumer electronic component sales. William Coggshall, president of Menlo Park, CA-based display market research firm Pacific Media Associates, credits the flat-panel display market for setting the stage for this trend. “In 2002, the flat panel business crossed over from being predominantly a professional market to a majority consumer-based market,” he says. “The consumer sales have just skyrocketed.”
Coggshall says this track record of shifting from professional to consumer, along with declining component prices, has paved the way for another crossover display technology in 2007. “Front projectors currently are about 10 percent of the consumer market, but the consumer fraction of front projectors is growing because prices are coming down, and they're more affordable for individuals,” he says. “The 10 percent is heading toward 15 to 20 percent.”
Coggshall says this trend isn't going unnoticed by pro AV resellers looking to expand their businesses. “I believe that as resellers try to expand, they could expand into the consumer market,” he says.
Although this could represent more opportunities in the custom market, Coggshall warns that long-time pro AV professionals should be cautious. “It's a different beast to do installation in a home than to do a project in a business,” he says. “You have to deal with a spouse, you have to work different hours, and you have to wipe your feet when you come in.”
Regardless of the changes in procedure, Coggshall says the promise of a growing consumer market will accelerate pro AV resellers into the consumer market in 2007.
Convergence Takes Center Stage
Any AV professional who attends industry trade shows or reads industry publications has been inundated with the implications of AV/IT convergence for the past few years. Whether the predictions inspire fear or serve as welcome advice, according to Nancy Emerson, president of Cedar Rapids, IA-based commercial electronics systems industry organization National Systems Contractors Association (NSCA), convergence — or “integration” as Emerson calls it — is here and will be nearly unavoidable in 2007.
“I understand that the term means different things to different people, but to me it's amazing how IP protocol and integration are a part of anyone's business every day,” Emerson says.
Emerson, who is also vice president of West Des Moines, IA-based telecommunications engineering company MTC Systems, contends that most all new buildings will integrate everything dealing with audio, video, and data onto a broadband backbone. This includes security systems, building automation, communications, and AV components. Emerson says that AV pros looking to take advantage of AV systems in new buildings will have to have IT knowledge.
“Even if it's to talk the customer out of it, you're going to have to understand IP protocol, how everything can sit on a network, and how you could, with a policy switch, control bandwidth allocation to give priority on a network,” Emerson says.
The signs of an imminent need for IT knowledge can also be found in other places, such as manufacturer training courses. “For example, one of our technicians recently went to the Biamp DSP training,” Emerson says. “If he hadn't been computer literate in networking and understood IP addressing, he would have been lost.”
For all of the warnings to AV pros of the unavoidable clash of these disciplines, Emerson says convergence could present as many opportunities as obstacles.
“I think the gap is widening between the companies that can do this and those that can't,” she says. “It's a black hole. You don't want to be responsible for a customer's network, but you need to understand, ‘if this doesn't happen, this is going to happen.' This could be good job security for those who are willing to learn.”
Some trends come with existing monikers (such as convergence and service agreements, for example) while others remain nameless — at least for the moment. John Stiernberg, principal consultant of Sherman Oaks, CA-based entertainment and electronic systems market research firm Stiernberg Consulting, has identified three business trends that will affect the pro AV industry in 2007.
The “new value quotient” — Stiernberg says this business trend plays off the expression “good, fast, and cheap — pick any two.” However, the new spin for 2007 will be “good, fast, and cheap — all three.” Although Stiernberg says he doesn't like the word “cheap,” the point is that in 2007, customers will demand that products and service be high-quality, completed in a short amount of time, and be very cost-efficient. Stiernberg says that the “good” or quality part of the equation, which includes both products and services, is being directly affected by increased commoditization of both. The “fast” and “cheap” parts of the quotient are where Stiernberg says AV pros need to address two issues: efficiency and effectiveness.
“The systems integrator and consultant need to be more efficient operationally so they can maintain good operating margins,” he says. “The effectiveness part is that these companies need to be more effective at getting the message out about why the customer needs to pay a certain price — whatever that price may be.”
The effective communication of cost doesn't mean lower prices; it simply means doing a better job of explaining the value of the product or service. “I don't think as an industry that we've effectively communicated that message, and 2007 is the time to do that,” Stiernberg says.
Multiple AV networking standards — Just as the battle continues over AV connectivity standards, multiple companies and groups have gone to battle with AV networking standards; examples include CobraNet, EtherSound, and Harman's HiQNet. But if you're waiting on a clear-cut winner to emerge, Stiernberg says you're wasting your time. “For years, systems integrators and consultants have been waiting for a single standard to emerge, and I think the trend in 2007 is that the industry will finally acknowledge that there will never be a single standard,” he says.
Stiernberg says that while AV pros might have anticipated multiple standards would be the eventual outcome, it's been just recently that multiple disciplines have accepted this fact. “From talking to many people representing each of the various roles — manufacturers, systems integrators, consultants, specifiers, networking providers, and end-users — they're just tired of waiting,” he says.
Re-intermediation — A term coined by Jeanne Stiernberg, Stiernberg Consulting's other principal consultant, “re-intermediation” refers to the reintroduction of two-step distribution of AV components. According to John Stiernberg, the current business model involves manufacturers selling through systems integrators, touring companies, and rental & staging companies.
However, the new trend of re-intermediation could increase channel efficiency, says John Stiernberg. “It means there are more warehouses where inventory will be held, so contractors and systems integrators can get just-in-time delivery of key products without having to wait on orders from manufacturers,” he says.
For further proof of this trend, John Stiernberg points to companies such as the EDGE Group and Electrograph on the pro side of the business and AVAD on the residential side. “You look back five or six years ago, and the network of these distributors was either very small or didn't exist,” he says. “Today, they're multi-million or even billion-dollar businesses.”
John Stiernberg says the purchasing power of these groups negates price advantages of buying direct from the manufacturer, and the other results all seem to be positive — lower freight costs come with regional or local suppliers, less cash is tied up, and complicated equipment lists can be boiled down to one-stop shopping.
Market Moves to Displays
Some of the most talked about trends in the last couple of years have focused on shifts in the vertical markets —the house of worship rise, the recent acceleration in the corporate market, and the unpredictability of government AV. To that end, 2007 could be the year of lodging and leisure, as hotels, restaurants, and other entertainment venues seek to differentiate themselves in a competitive marketplace. One way those markets will be attempting to do that is through high-definition, flat-panel, and LED displays.
An important note is that while the trend is expected to affect what El Segundo, CA-based display market research firm iSuppli calls the “indoor venue market,” this doesn't extend to displays used for retail signage — an application the firm doesn't expect to see rapid growth in. “We're seeing that indoor venues have much more potential than retail, because retail digital signage seems to be more concerned with return on investment (ROI),” says Sanju Khatri, principal analyst, projection and large screen displays, at iSuppli.
However, according to Khatri, the non-retail, indoor venue market is full of opportunities. “There are 4.5 million hotel rooms in the United States, and right now only a small portion of displays in these hotel rooms are being replaced with flat-panel displays,” she says. “So there's tremendous opportunity there.”
Along with the lodging industry, which includes resorts, restaurants and museums are also turning to flat-panel displays for entertainment and information. “The restaurant business is becoming very technologically savvy,” Khatri says. “They're trying to cater to a more sophisticated generation of patrons. In museums, some of the content is going digital. Displays are used both to exhibit the content, as well as to give more information about the artists.”
Although a bit too large to be used in traditional lodging and leisure venues, Khatri predicts that one of the most expansive opportunities for indoor venues in 2007 is LED displays used in non-professional sports arenas. “Most of the major and minor league facilities already have LED displays,” Khatri says. “But there's tremendous growth coming from universities and colleges.”
Khatri points to improvements in LED technologies and lower LED lamp costs as a sign that this trend will become a reality in 2007.
Whatever trends emerge in 2007, NSCA's Emerson says the history of the AV industry uniquely positions it to evolve with any new technologies or strategies that arise. “We've always been systems integrators,” she says. “We take parts from a variety of manufacturers, we put them together, and we make systems work.”
Paul Kramer is associate editor of Pro AV. He can be reached at firstname.lastname@example.org.