In The Fog, John Carpenter’s 1980 horror film, the revenants of dead mariners return from within a dense mist to seek revenge on the descendants of those who wronged them.
In The Cloud (2017, in very, very wide release), the spirits of IT managers descend to torment AV integrators who thought the transition to 4K and immersive audio had secured their professional futures, only to learn that this particular bit of vapor intended to rattle their profession to its very core.
Very recently, the implications of AV’s convergence with IT have taken a new and seemingly swift turn as more integrators begin to consider, and in some cases embrace, the idea of transforming their business from one that used to install costly hardware to one that uses more of a rapidly diversifying personal mobile/cloud infrastructure as a frame upon which to configure and offer functions such as video conferencing, room control and automation through cloud-based software and connectivity.
In other words, it’s the concept of selling solutions as a service with recurring monthly costs versus a one-time sale. It’s a tectonic shift in the nature and the culture of AV integration, but it’s also viewed by a growing number as inevitable.
“I think we’ll see this all migrate to the cloud within five years,” says Aaron McArdle, president and CEO of integration firm Zdi in Normal, Ill. “We’re now at a point where the technology and the cloud are more convenient for our customers.”
Transforming the Foundations
McArdle says the number of cloud-based collaborative technologies that have been packaged as deployable products, such as Cisco’s Spark and AMX’s RMS Enterprise Hosted Cloud Service, are rapidly obviating the need to install and program expensive proprietary codec-based connectivity systems in a growing number of instances.
Combined with the ubiquity of personal telecommunications devices, such as smartphones and tablets, the rug is being pulled out from under the traditional, conventional AV environment.
Along with add-ons, such as analytics and help-desk services, McArdle sees the landscape for AV quickly adapting to cloud-based service offerings. In the process, the foundations of AV integration as a business are being transformed: new technologies require different skill sets, sales strategies now have to revolve around ongoing services instead of set-and-forget systems installations, and the toggle between windfall numbers of a large project and the potential for leaner times in between give way to a (hopefully) steadily upward-ramping recurring revenue stream of monthly subscription services.
“Yes, it does feel like revenues fall off a cliff,” says Lou Chiorazzi, vice president of unified communications for AVI-SPL, explaining the turbulence that has characterized a surprisingly rapid uptake from upfront non-recurring to monthly recurring revenue from cloud-based services the company has rolled out under Unify ME, a video-collaboration service it launched in 2012. Unify ME is serving as a model for scaling the concept from enterprise to SMB clients.
“In the cloud, the play is based on volume, and the commoditization and standardization of the services. That’s dramatically different from the conventional AV integration business model.”
In many ways, say integrators who have embarked on as-a-service strategies, the shift was inevitable.
“This is being driven by customer expectations more than ever now, rather than the demands of spaces or rooms,” says Chiorazzi, who says the iPhone is emblematic of this cultural transition that, ironically, wants its technology to be as transparent and ubiquitous as what integrators used to call POTS — plain old telephone service.
“Users want collaboration, especially video, available everywhere. Companies want to embed a collaborative culture and turn video into a utility that makes it more natural and reliable, like a telephone. That’s not to say that there won’t be situations where they also continue to leverage traditional AV components, like interactive control systems, custom touch control, etc., but [the collaborative session] needs to be independent of a physical space. And the only way to do that is with software.”
Still Figuring It Out
This is new territory for most integrators, including adapting the business model to accommodate smaller recurring revenue versus project-based lump sums. McArdle says Zdi is still experimenting with rates for subscription services, researching comparisons for other ongoing IT-based services such as help-desk support.
The transition from invoicing once for tens or hundreds of thousands of dollars for a project versus automated payments of a few hundred dollars a month may be jarring, but it also vastly broadens the potential market for these services, with thousands of small businesses looking to access affordable and reliable video conferencing services remotely.
“The value of these software-based services in the market increases as AV becomes an integrated work tool — something you use every day, all the time, rather than something you have to schedule in a room,” McArdle explains. “Now, instead of installing a huge enterprise system, you’re deploying three end points and providing the service that connects them and everyone else.”
That service is often Cisco’s Spark, which Zdi is a reseller for and which Cisco has expanded into app territory with as it leverages the cloud. It’s one of a growing pool of video-as-a-service (VaaS) platform providers that offer white-label propositions that third parties — such as AV integrators — can provide to their clients.