The AV industry has seen many changes and innovations come along throughout the years. From the development of digital signal processing to protocol innovations such as AVB, these technological breakthroughs have heralded the biggest and most important change of all: the convergence of AV and IT. This change means adopting new ways of doing business and reinventing the ways we create value for customers. This is our industry’s latest and greatest challenge. But with every challenge, there’s opportunity, and we have models and lessons from other industries to guide us along this reinvention path.
For example, the music industry hasn’t done a good job of reinventing itself with technology and the market’s preferences have evolved. Record labels would like people to buy CDs because that business model worked for them and created vast revenues; however people don’t want to buy CDs any more. They want to consume music online and even that’s changing. The MP3 revolution changed how record companies needed to do business but they ignored the signals for change and didn’t reinvent their business model to capitalize on this new music delivery method. Now there’s even more change happening because people want to borrow music online through services like Pandora and Spotify. These new companies have created a business model based on how people are currently interacting with music and technology, while traditional record companies lost their edge and their market opportunity.
This kind of change is exactly what the AV industry needs to be aware of today – or face being swept up by the IT industry. Full-blown convergence and reinvention has already happened in some parts of the world, for example India. In these parts of the world, markets approach audio and video as just another form of data, so why wouldn’t it run over the same hardware and be managed by the same company handling cloud servers and VoIP? Other markets are moving toward this vision, so the question is no longer “when”, but “how” will convergence happen elsewhere.
In India, the IT companies offering AV solutions aren’t only making their money on equipment sales, rather, their profits come also from labor, services and software. In fact, IT companies typically undercut AV companies on equipment margins, so the game becomes about increasing labor, service and software prices and offerings, as opposed to the traditional AV model of selling hardware.
If AV companies are going to compete in this ecosystem, they must change their business model and rebrand themselves as services companies. This is already in the works as some AV companies hire IT professionals and begin diversifying their services. The bigger companies are making this happen, but smaller integrators, consultants and distributors must consider their resources and what will make them profitable as convergence becomes a reality across the globe.
To begin this process, I suggest taking a good look at what current and future customers are willing to pay and determine what a fair price is for labor and services within the IT world. Since AV is often foreign territory to an IT manager, basic skills such as being able to properly tune a room are marketable as services. IT approaches system commissioning as a science and although that’s partially true for AV systems, we all know there’s an art to sound. This can be translated into a service-modeled business that’s able to ride the wave that is AV/IT convergence. Additionally, I suggest looking at convergence as a business opportunity rather than a threat. If AV professionals immerse themselves in all things IT, the industry will thrive and we’ll be ready for the next innovation.
What are some other suggestions for reinventing the AV industry in the world of convergence?