Finding your vision in AV convergence
Forward-thinking IT VARs have woken up to the fact that many of their skills are transferable to the rapidly growing audiovisual market, but is it too late for late-comers to follow suit? Laura Hailstone takes a look at what the future of the AV sector holds
A blurring of boundaries between traditional IT products and audiovisual (AV) technologies has been taking place for some time, but the jury is still out as to whether resellers are ready to capitalise on this market.
However, distributors from the T and AV camps appear to have recognised the opportunity that IT resellers represent, with AV distributors targeting IT resellers and IT distributors launching their own AV divisions.
Specialist IT distributor Midwich now classes itself as an AV distributor with an IT portfolio, rather than an IT distributor with a portfolio of AV offerings.
Darren Lewitt, divisional director at Midwich, told CRN: “Traditional AV distributors such as Maverick and Steljes have been supplying IT resellers for many years, but many IT businesses, including Midwich, have changed their business models over the past five or six years. The majority of our business is now in the AV sector, although our IT business is still important to us.
“The interesting thing is that while Midwich has moved to become a specialist AV distributor, our two major competitors seem to have shifted their focus away from their core values. Maverick, once the giant in AV displays, has made its intentions quite clear lately; it no longer seems to stock any plasma or large-format LCD displays, but seems to concentrate on new businesses for its group. Steljes seems to have dramatically changed its approach. It is no longer adopting AV specialist core values, but appears to be chasing a more broadline business model.”
In December, Maverick said that it would be launching a new division in January to help it take advantage of the convergence between the IT and AV markets (CRN, 18 December). Called Convergent, the division will have a 12-strong team devoted to it and will focus on selling high-spec convergence products.
Jon Sidwick, managing director of Maverick, told CRN: “More than 60 per cent of our business is to IT resellers. We’ve still got a strong core of AV resellers, but in the past two or three years we have noticed an increase in the amount of business we do with IT VARs.
“Within a year I anticipate we will be 75 per cent to IT resellers with the addition of our new division, Convergent.”
According to Steljes, IT VARs getting into AV is not a new strategy. Julian Klein, managing director of Steljes Trade, said: “If anything it’s a trend that has been going on for some time. Just over half of our business is with the more traditional IT reseller channel and this hasn’t just happened over night.
“Ever since the IT boom came to an end in 2001/02, IT VARs have been looking at where they can specialise. Some have focused on security, some in storage and others in AV. Particularly with the natural convergence of AV and IT, many IT resellers are making AV a primary part of their business.”
One such VAR is Bolton-based Leapfrog Computers. Founded in 1999 as an IT reseller with a shop front, Leapfrog entered the AV market two years ago and has claimed that AV now represents about half of is business.
“Trying to stay in a retail environment is tough because there are so many people jumping on the bandwagon; the retail market has been hammered with cheap PC vendors,” said managing director Lee Bevan. “The repair side of our retail shop is a cash-cow, but we’ve noticed a real down-turn in the sale of PCs. If it wasn’t for the repairs business doing well then I would have shut up the shop a long time ago.”
Due to the downturn in PC sales, Leapfrog decided to diversify and entered the world of AV by becoming an interactive whiteboard (IWB) reseller. “We checked out the market and set our sights on the market leader in IWBs, Smart Technologies,” Bevan added. “We became a Smart accredited reseller through Steljes two years ago and last year we became an Elite partner. AV is now a large proportion of our business that’s getting bigger and bigger. We do everything from start to finish with IWBs. We don’t use any third parties – we have our own electricians and installers and have got deals right across the country at the moment.”
While IWBs are the main focus of Leapfrog’s offering, the VAR also sells interactive voting systems, LCDs and plasmas, and has just started dabbling in videoconferencing with Polycom products.
“I’m looking to grow our AV business further this year,” Bevan said. “We’ll bring in new sales people and target key industries. We’ll also consider whether to walk away from our retail presence completely. It might be more viable to just open up a repair counter somewhere and get rid of the actual retail shop.”
Asked if he thinks there will be more IT VARs making AV a core focus of their business, Bevan replied: “I think they could, but it may just be a bit too late for them. If a reseller wants to give up retail and move into AV then they can’t just do it overnight – it’s taken Leapfrog two years to get to this point.”
Andrew Smith, senior associate at AV analyst Sandy Brown Associates, agreed and added that it will require hard work and training on the part of the reseller if they want to establish themselves in the AV arena.
“With the convergence of the AV and IT industries, many IT resellers are now selling AV equipment,” he said. “However, AV still requires a high degree of integration skill and product knowledge in order to execute successful installations. If the sales team at the IT reseller don’t understand AV, and/or don’t understand how to analyse the clients’ needs and propose the best value solution, then the end result will be an unhappy customer – potentially a customer who won’t return.
“IT resellers need to ensure that their sales team understands how AV technology integrates, what is possible and how to question the customer as to their needs and be able to translate that information into a working AV system. Without that skill, the customer won’t get what they need and all is lost.”
According to Lewitt, resellers are actively gaining additional skill sets. “We now have many IT and AV resellers who are not only getting involved in AV, but are expanding their expertise,” he said. “As well as addressing their core education, SME and corporate businesses, they are focusing on homebuilders, leisure, installation services and becoming part of the Custom Electronic Design and Installation Association. Many are also expanding to focus on consumer AV too.”
IT VAR Misco has an AV division, but claims it will never solely focus on AV. Mike Gammie, IT services development manager at Misco, said: “AV is now a big part of our business. With a turnover of £180m in the UK, AV currently makes up about 10 per cent of our business.
“We started getting into AV in a proper planned way about three years ago – our main focus is IWBs and we sell Smart, Promethean and Polyvision boards. We carry out the installs and mainly target the education sector, but also do installs in corporate boardrooms as well. We can also offer training on IWBs to end-users, which is a nice differentiator for us.
“We anticipate the AV side of the business will grow further this year – it is lucrative for us. Because we’re a general reseller, if we put in IWBs, schools will tend to buy laptops and PCs from us and maybe some software as well, so it would never make sense to stop selling the IT products and focus on AV completely.”
To date, the major market for most AV-related products, particularly for the interactive products such as whiteboards and voting systems, has been education. A key focus for most AV vendors and distributors is to now start getting these products into the corporate and public sector markets. However, most AV resellers do not have the contacts in these markets because they have focused mainly on building up strong relationships in education. This is where IT VARs could steal a march on their AV rivals.
Steve Dracup, managing director of Promethean Distribution, agreed. “Outside of education, the traditional IT reseller who has a big customer base in the corporate and public sector could do well, particularly with IWBs,” he said. “There is definitely an opportunity for IT VARs to take these interactive products to their customers and a lot of them have already got great inroads to the IT and training departments within corporate organisations so they won’t need to spend time establishing good links.”
However, Dracup doesn’t think many IT VARs are aware of the vast array of AV products available. “A lot of IT VARs have moved to sell projectors, but I don’t think we’ve seen a huge drive in them picking up the interactive technologies, which is probably because a lot of IT VARs haven’t seen them and don’t know what they are,” he said. “It is therefore up to vendors and distributors to alert them to the products that exist and provide support.”
Klein agreed. “One of our focuses over the past year has been to work closely with resellers in the corporate space,” he said. “AV products give them something new to talk to their customers about.”
According to Klein, IT resellers have the relationships in the public sector and corporate market so they could make some good margins in those sectors.
“They can’t become an IWB VAR overnight – they will need to invest in the specialism – but we can help them get there relatively quickly,” he said.
“It is certainly not too late for IT resellers to get into the AV sector. We’re talking all the time to resellers who have not previously been involved in AV, and provided they are willing to invest we can help them.”
Lewitt said: “Providing resellers stick to the major brand names such as Sony, NEC, Panasonic, Hitachi and Samsung to name but a few, they should always meet with a cleaner channel to market and one that allows them to plan for profitable growth. Once they move away from the core brands, VARs could enter a battle ground that is nearly always won purely on price and short term strategies.”
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