As convergence continues, will AV and IT coexist?
The urge to merge
Andy Sellers, a principal in Indianapolis-based AV integrator Sensory Technologies, says he’s yet to see significant infiltration by IT companies within the teleconferencing channel his company specializes in. However, as the technology his company deals in becomes increasingly inextricable with the computer networks of his clients, he envisions a day in the not-so-distant future when dealers and systems integrators of IT and AV technologies regularly tread on each other’s turf.
“We’re preparing for it,” Sellers says. “Our director of technology is a Microsoft-certified engineer who’s much more of an IT guy than an AV guy. We’ve gone as far as to write reimbursements for college-level classes and industry certifications for any employee who wants to take them. The last thing we want to happen is five years from now we look back and find that IT companies took all of our videoconferencing business.”
As digital audio and video content moves to Cat5 cabling, Jeff Galatro, owner of Sacramento, CA-based Commercial Sound and Video, believes the IT and AV worlds will be “crossing each other like crazy,” he says. “I’ve been learning both sides, so I don’t have to learn about pointing fingers.”
Other systems integrators see the threat of IT infiltration into the pro AV market as more immediate. Jim Crawly, director of integration sales for South Field, MI-based Blue Water Technologies, notes that big IT distributors are fast moving into markets such as education, sapping his business along the way. “We’re seeing a lot more computer companies taking on AV or offering just the AV on bids, and the inverse isn’t happening,” he explains. “I can tell you about all the recent school bids we’ve dropped out of because half of the bidders were computer companies selling things cheap. They’re completely watering down the bidding process because they’re not really experienced with AV integration, and they tend to underbid.”
With the growing demand of convergence, Andrew Sellers, a principal at Indianapolis-based AV systems integration firm and conferencing solutions provider Sensory Technologies, is dedicated to staying ahead of the technology curve in order to compete with potential IT competitors that might encroach on his turf.
For now, AV integrators say that the two disciplines are fairly segregated on the systems design and installation front. However, a number of big companies that have traditionally manufactured or distributed IT hardware and software have moved into the pro AV space in recent years. Huntsville, AL-based Avocent Corp. is one good example. The company’s legacy dates back more than 20 years in the computer business — it has long specialized in server equipment that enables operators to remotely control their networks from back-office locations.
Reporting revenue of $370 million in 2004, Avocent now controls about 65 percent of the market for keyboard, video, and mouse switching (KVM). Much of the company’s research has been focused on consolidating cable — a fairly straightforward task for low-bandwidth mouse and keyboard signals, but one that gets quite a bit trickier when it comes to VGA. “To switch and move VGA across cabling is kind of an art,” notes Matt Nelson, director of marketing for Avocent. “Lots of different compression technologies are involved.”
Three years ago, Avocent introduced LongView Wireless, a KVM switching technology that allows operators to remotely control a PC or server from as far away as 200 feet without any cables. “What we were doing with VGA over distance turned out to be better than anything else on the market,” Nelson says. “We started getting all these calls asking us if we could use LongView to connect to a projector or other large-format display. We started to look at where our sales were going — education, corporate, hotels, and hospitality — places that the AV guys are real familiar with. That kind of got us involved in the pro AV space.”
While it now has a dedicated sales staff for the AV market, Nelson estimates that less than 10 percent of Avocent’s revenue comes from that channel. But as the company struggles to grow its market share any further in the relatively mature server business, he thinks AV revenue could ultimately eclipse that derived from the data-center market. “The pro AV space has opened up a whole new world of sales channels for our products,” he says. “We’re getting them in places where they’ve never been used before.”
Nelson adds that Avocent is looking to develop channels for AV products within markets including “education, corporate, hotel, and hospitality — places where the AV guys are real familiar.”
For its part, Avocent has succeeded in adapting its IT technology for the AV market. At least in AV circles, more troubling has been the notable incursion into their market by IT distribution giants like Clearwater, FL-based Tech Data Corp., Vernon Hills, IL-based CDW Corp., and Santa Ana, CA-headquartered Ingram Micro. These companies sell name-brand pro AV products — everything from projection and display equipment to videoconferencing technology — at low margins, either directly to end-users, or through IT and AV dealers and integrators. They all emphasize the consulting aspects of their respective businesses, seeking to be technological oracles for a wide range of vertical markets on most things relating to both IT and AV. Through large regional distribution hubs, these companies also do a small amount of systems design and building.
As convergence continues, will AV and IT coexist?
Two years ago, Tech Data launched its “digital environments” specialized business unit (SBU), touting it as a “one-stop source” for products and accessories from such manufacturers as NEC, InFocus, JVC, and Russound, while offering service and support for everything from LCD displays to home theater projectors to home audio and structured wiring. “IT training and certified systems engineers are available to assist resellers in understanding the technology applications of digital convergence and how they can enter or expand their market presence in this category,” a company announcement stated.
While acknowledging a level of “fear, uncertainty, and doubt” in the pro AV world regarding the prospect of IT companies getting into such traditionally AV-centric endeavors as home theater installation and digital signage, Dan Smith, Tech Data’s marketing manager for peripheral products, says the shift represents a natural progression for the firm as IT and AV technologies continue to merge.
Computer companies like Tech Data have been selling projection and display equipment for years, he notes. Besides, within the AV channel, Tech Data acts like any other AV distributor — albeit, one that ranks 107th on the 2006 Fortune 500 list with net sales exceeding $20 billion in fiscal 2005, as well as a network of distribution centers that can reach 85 percent of the U.S. population by next-day ground. “Our AV business is on scale with the largest AV specialty dealers today,” Smith explains. “Cabling, wall plates, distribution, projection screens —we’re supporting all the core technologies. If you look at our line card, and you look at the brand names we carry, we’re on par with the rest of the industry. We have a dedicated AV staff with a separate website and a separate 800 number for the AV market. When you call us, you’re not calling an IT company. We want to give our customers an industry-specific experience.”
Competing directly with Tech Data and a bit bigger in size, reporting $28.8 billion in 2005 revenue, Ingram Micro is also aggressively reaching out to AV channels, including residential services and digital signage. “There’s some market saturation in the IT world,” concedes Irene Chow, senior category manager, digital home and digital signage for Ingram Micro. “We’re always looking for growth opportunities that make sense, and we believe anything that leverages the network is pretty much fair game.”
As for supporting IT dealers and integrators in their efforts to gain a piece of the pro AV pie, Chow says it’s a natural progression. “The network end of the business is hard to grasp, and IT resellers know it like the back of their hand,” she says.
In fact, it’s that knowledge of IT networks that makes technologies like videoconferencing a natural fit for CDW Corp., notes Brian Schwartz, a technology specialist for the company, which posted $6.3 billion in sales for the last fiscal year. “We work very closely with companies like Polycom,” he says, noting CDW’s recent focus on the videoconferencing market.
With IT and AV merging so much in the digital realm, and well-heeled computer distributors eager to transition their constituents into the AV market, are AV integrators giving in — as Tech Data’s Smith puts it — to fear, anxiety, and doubt? Yes and no. Certainly, the convergence between the IT and AV disciplines has been occurring for quite some time now — the very IT-oriented Miami Computer Supply (aka MCSi) is testament to that fact, having grown into perhaps the largest AV integrator on the planet before it went bankrupt several years ago.
Still, from trade organizations like InfoComm International and NSCA to AV systems integrators themselves, there’s now a rather intense focus — and a notable sense of urgency — on developing IT training and IT-fluent personnel. InfoComm, for example, offers a curriculum called “AV/IT Convergence — the Networking Track,” while NSCA also offers a robust track of IT-related courses that are both technical and business oriented in nature. “That’s what our big push is — we’re starting a whole training program to teach convergence ourselves,” says NSCA President Chuck Wilson. “We’re going to help our people from within develop these network integration skills.”
While there’s a general consensus among AV pros that they’ll have to gain a greater technical understanding of computer networks in order to compete in a world in which their products and services increasingly connect with them, concern isn’t all that great that IT companies will take over segments beyond those driven by commodity-level products such as LCD projectors. “Their mission is to handle data, and mine is to handle communication,” says Kevin Sandler, president and CEO of Phoenix-based ExhibitOne, which specializes in the courtroom presentation market. “I just don’t think we’re going to see a lot of these IT guys saying, ‘I need to learn more about Extron matrix switchers,’ because it’s just too far off from what their mission is.”
CDW’s Schwartz confirms that notion: “Our focus will remain on the technologies that enable convergence —bandwidth and networking gear, not so much on high-end receivers,” he says.
As convergence continues, will AV and IT coexist?
Because they sell AV products so cheap, Sandler can envision scenarios whereby CDW, Tech Data, and Ingram Micro could affect his business — particularly the fates of his AV distribution partners. “They could enable smaller organizations to get pricing that would create problems within my market,” he explains. “Today, they can’t touch me, but their pricing is only going to get better.”
Commercial Sound and Video’s Galatro has seen AV vendors trying to streamline their distribution by going with large IT distributors rather than going directly to integrators. “I think things are going to get more and more consolidated that way,” he says.
But can these big IT distributors build profitable businesses by selling complete lines of AV products at rock-bottom prices? Not even all IT distributors think so. “When we first started selling projectors 15 years ago, we could make a double-digit margin on them,” notes Dan Vitiello, head of inside sales for Annapolis Junction, MD-based IT distributor Pro Mark Technology. “But now you have big guys like CDW offering quotes at 1 percent. If we get an order for 100 LCD monitors, that’s great, but we won’t get too excited.”
ExhibitOne’s Sandler says IT competitors typically only carry projectors and displays. “They might even carry Polycom,” he adds. “But from my perspective, I’m not going to run into them carrying Kramer or Biamp. I just don’t see that happening.”
In fact, as Tech Data works to develop what it terms as “niche markets” — pro AV is among them — company officials have recently publicly conceded that they have a long way to go before they’re viewed as a serious player by AV dealers and integrators. And in terms of service and installation, AV integrators seem safe — at least for now — from inter-professional competition.
On the corporate client side, for example, IT denizens say that even if they do now have access to cheap AV wares via volume purchases from Tech Data or CDW, that doesn’t necessarily mean they’re going to dump their AV integrator. “We’ll still have an AV contractor for any office construction we do,” says Brendan Heffernan, global project manager for Western Asset Management, headquartered in Pasadena, CA. “In some cases, we could probably pull it off ourselves. But somebody has to do the project drawings that show the conduit sizes, and someone has to know how to do all the cable termination. Besides, there’s value in having one party own the whole AV system. That’s a service that will continue.”
For his part, Sandler believes it will be easier going forward for AV service companies to assimilate computer wherewithal than for IT service pros to gain necessary AV skill sets. “If I wanted to build an IT division over here, I could go out and pick any number of Microsoft-certified engineers off a tree,” he says. “In the AV world, that doesn’t exist. There’s no formal lock-step training course I can take like there is in the IT world. I’ve seen plenty of IT companies try to infiltrate the AV business and fail because of that. One of the challenges in the IT world is finding experienced bodies — it’s hard enough for us to do it in AV.”
Indeed, as large IT distributors look to integrate AV presence beyond the level of merely selling commodity products — and into their technology consulting acumen — such knowledge assimilation will be crucial for AV integrators. “More and more of our clients want us to provide additional turnkey solutions,” Sellers notes. “We feel the need to train and staff accordingly for that.”
As convergence continues, will AV and IT coexist?
AUDIO FOCUS BELIES CONVERGENT IT COMPETITION
While large IT distributors like Tech Data and Ingram Micro have aggressively sought to gain market share in the pro AV sector with display products, their offerings on the audio side haven’t been nearly as robust.
Jerry Gale, vice president of marketing for Columbia, MD-based AV integrator SPL Integrated Solutions, says establishing a depth in audio products and services is a good way for AV integrators to gain an edge over computer-world competition. “To prevent IT departments from taking over our industry, AV integration and design companies should stress the advantages and benefits to integrating high-quality audio systems and products for corporate boardrooms, conference rooms, and training rooms,” Gale says.
Display products such as plasmas and projectors represent “safe ground for the IT departments,” he notes. “They understand VGA, XGA, and SXGA. What they don’t understand is audio. They’re more interested in disaster recovery plans than microphones, loudspeakers, and amps. The best example is that most IT departments are willing to use the loudspeakers on the projector rather than install separate loudspeakers. They want to make audio requirements insignificant. In other words, we aren’t experiencing the convergence of AV with IT. It’s the convergence of V with IT.”
Daniel Frankel is a freelance writer based in Los Angeles. You can reach him at email@example.com.