Act 2: Up for Grabs
By Tim Kridel
The long-term impact on pro av might not have been immediately obvious, but two days last November could mark pivotal changes in the pro AV competitive environment.
On Nov. 10, Circuit City announced it would file Chapter 11 after closing 155 stores the week before (the company has since begun liquidating and closing for good). That's noteworthy because Circuit City was among the retailers that had been targeting the pro AV market. A survey by Menlo Park, Calif.-based Pacific Media Associates found that more than 40 percent of companies planning to add flat panels in 2008 expected to get them from Circuit City and other big-box retailers.
Then at a Nov. 11 press conference, baseball's New York Yankees gave an update on its new, $1.3 billion stadium. It includes $15 million worth of AV and networking gear, including 1,100 displays, from IP networking giant Cisco Systems. The San Jose-based company says its equipment is already in 60 percent of North American stadiums and that it's targeting new venues needing advanced video systems as a way to grab even more market share.
"Wherever stadiums are being built, Cisco is talking to those franchises," said Ron Ricci, Cisco's vice president for corporate positioning.
For now, that 60 percent figure comprises mainly its networking equipment, but that won't be the case for long. Cisco continues to build out its Digital Media System (DMS), a portfolio of enterprise and commercial products that includes enterprise TV and digital signage. Last month, in what it called a move to offer end-to-end systems, Cisco even rolled out its own flat-panel displays, manufactured for the company by Samsung (see "5-Minute Interview," page 23).
"We've gone from zero to a thousand customers in under two years," says David Hsieh, vice president of marketing for Cisco's Emerging Technology Group.
Cisco and Circuit City are just two examples of outsiders that have been targeting the pro AV market. In Cisco's case especially, momentum derives from the convergence of AV and IT. "It's only a matter of time before the IT industry and the AV industry are both the same," says Glenn Polly, owner of VideoSonic, a New York-based integrator.
That convergence is changing the competitive environment. Traditional IT vendors and IT integrators are looking for work in the AV market. Sometimes they go it alone; sometimes they look for partners that have the AV-specific skills, such as understanding room acoustics, they lack.
"In many cases, we're seeing teaming relationships open up because [IT] companies don't want to go into the space because it's outside their core capabilities," says Tom Corzine, vice president of government sales at Tampa-based AVI-SPL. "They also don't want to lose out on a revenue stream and allow their competitors to get access to it. As much as [companies such as Cisco and HP] may go directly and win a project, we're working with them."
And that could be sweetly ironic. Although IT firms increasingly compete with AV integrators, they're also acting as extended sales teams because they have to bring AV experts into jobs that AV pros might not otherwise get.
Telcos Teeming and Teaming
Like IT vendors and integrators, communication service providers–particularly telcos–are expanding into the pro AV market. Companies such as AT&T, BT, and Sprint–as well as some telecom and IT vendors–have begun offering videoconferencing and telepresence products and services directly to enterprises. One reason is because they want to pick up additional revenue, but they also want to drive more demand for bandwidth. But as you'd expect they sometimes lack the in-house expertise necessary to pull off those jobs, therefore it's not uncommon for them to make the sale and then subcontract tasks such as design and installation to an AV integrator. Building relationships with service providers, therefore, is key.
Some integrators say they get called in when a telepresence system, for example, requires customization or when the system has to be made compatible with existing videoconferencing gear.
"That's where we really see the play from a pure AV integrator: We can build telepresence rooms outside of just what the manufacturers offer as their telepresence-in-a-box solution," says AVI-SPL's Corzine.
"They're really taking the low-hanging fruit," says Scott Christianson, owner of Kaleidoscope Videoconferencing, a Columbia, Mo.-based integrator. "What I've seen is those IT guys that are selling videoconferencing solutions are really selling package-oriented solutions. But they're not very good at dealing with interoperability.
