In CI’s 2018 State of the Industry report, Editor in Chief Tom Leblanc calls to the incredible “shrinking” nature of the AV industry.
He isn’t referring to the AV industry itself shrinking, but the number of players shrinking as companies like AVI-SPL, Diversified and a few other big players continue to grow, creating the proverbial grand canyon of gaps between the biggest, the big, and all of the rest. [related]
The type of growth that these companies have experienced is impressive for the AV industry; however, I would be remiss if I didn’t suggest that it is hardly the exponential growth that draws headlines in Silicon Valley.
Moreover, companies are often criticized when their growth strategy is to get bigger by acquisition if each acquisition itself doesn’t see meaningful growth.
As an AV integration analyst who pays attention to big tech, I’ve heard this type of market feedback on companies like Cisco and Dell for their growth via acquisition.
Nevertheless, in the AV industry, getting to $1 billion is still a stretch, and we will be watching closely to see if that happens in the years to come.
Follow the Leader: Expand!
Having said all of that, as I read the State of the Industry report, something slightly different came to mind.
The challenge of an industry that, in its entirety, is only around $60 billion (globally) is that there are only so many dollars to go around.
With thousands of total companies proclaiming to offer AV installation services (including not just traditional integrators, but electrical shops, IT VARS, furniture companies and security installers), the projects are spread pretty thin.
While there are the core companies which are your traditional AV integrators, the brief list I just noted included a whole bunch of company types that are in no ways a dedicated AV shop.
In fact, many of them only make up a few percent of their gross revenues offering Audio Visual services.
This opens an argument about niche versus casting a wider net in order to grow your business.
When many of these companies got into the AV space, offering presentation or video solutions, it came down to meeting the needs of their customers.
Some traditional AV installers use a similar approach by offering structured cabling, security or even furniture, but for most in this space, expanding outside of the comfort zone is avoided like the plague.
This leaves many AV integrators in the cold for projects that go outside the norm. Which takes me back to what I believe is the key for growth for most integrators in the space…
Expanding beyond your comfort zone.
Be More Like IT VARS
As someone who spends a lot of time analyzing tech beyond AV, I find that companies increasingly pool everything from room presentation tech to mobile tech to collaboration tech into a single bucket.
Decisions to purchase these types of tools fall into two buckets:
- The first, most integrators understand, is IT.
- The second is within the line of business.
That is why many CMOs are now considered significant tech buyers in the tech industry.
They are buying collaboration, SaaS, mobile and Big Data tools for their companies. They are also building out company content that may incorporate into digital signage networks and the requirement for studio equipment purchases and/or buildout.
The trend I see, and this isn’t so much new as it is becoming more critical with each passing year, is that AV integration experts need to be more like IT VARs (value-added resellers).
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They may not be able to build out data centers or deploy wireless across an enterprise, but they need to sell more than just the same presentation and video conferencing technology that they have been selling for the past 20 years.
These IT VARS and Security firms didn’t know the first thing about AV integration, but they figured it out and many have monetized it. This is certainly the case with video collaboration with software and room systems.
Get Past the 9% Mark, and You’re in the Clear
In 2018, we will see the most prolific integrators enter the mobile, AI, AR/VR and analytics space as part of their business model.
They will tie more services into the current offerings and finally see the full power of leading with services and SaaS.
Ultimately, all the players will follow, but if we don’t make the entire industry meaningfully larger, the only way we will have to grow will be through consolidation of many companies into fewer.
This may be working to help a few companies in our space grow to that billion-dollar mark, but unless we are horizontally integrating, vertically integrating and growing at a rate of greater than 9 percent, the industry as a whole will never allow for may integrators to grow meaningfully.
That is, unless the AV integration industry finally takes a bite out of the industries that have long taken a bite out of them.
