In today's IT market, the audiovisual (AV) space appears to offer the best of all worlds. The technology is applicable to almost any type or size of organisation. Penetration is relatively low, giving plenty of scope for new business, yet systems installed several years ago are starting to come up for renewal.
Money is available for investment, especially in new markets such as education, and competitive pressures are forcing businesses to address the kind of issues with which AV is able to help, such as differentiation and cost reduction.
Various market researchers have estimated the size of the UK AV market in 2003 at about £2.5bn, slightly down on its 2001 peak of £2.6bn, but set to return to that level this year with estimated growth of 5.6 per cent. Equipment prices are falling sharply, especially in commodity products, but this is being more than offset by increased sales volumes.
There is no such thing as a typical AV customer, for the simple reason that AV can benefit virtually any organisation. Size is unimportant, with everyone from blue-chips and universities to start-ups and consumers buying the technology.
Projector sales, for example, are split pretty evenly between corporates (35 per cent), medium-sized organisations (28 per cent) and small firms (28 per cent), with small office/home office users accounting for the remaining nine per cent, according to specialist researcher Decision Tree Consulting.
Some traditional AV markets, such as video production and international conferences, have declined, owing to new technology or politico-economic pressures. But this is being more than offset by the fact that AV has become a much more mainstream product in the general market.
Ask AV experts which sectors are good prospects, and the responses are almost endless, ranging from education, retail, leisure, airports, banking and finance to health, automotive, pharmaceuticals, professional firms, emergency services, the public sector and even churches.
Education tops the list, as interactive whiteboards, plasma touch-screens and large-screen displays replace chalky blackboards and wonky old TV sets in Britain's half-million classrooms, in the hope that they will persuade today's tech-savvy kids to sit up and behave. On the continent, educational spending on AV is only just getting into its stride.
Sheer weight of numbers makes SMEs a strong market for AV, with opportunities for VARs that can demonstrate to owner/managers that the technology can work for them, according to distributors such as Computer 2000 (C2000) and Steljes.
Even start-up firms can benefit. "I've worked with a number of start-up firms and the first thing they've done to help launch them into their market is to put an impressive AV-based system onto their exhibition stand at a trade show to make them stand out," said Brian Pipe, operations director at AV specialist and systems integrator ITM.
The consumer market, especially for home cinema, is set to grow rapidly, as projectors and plasma displays start to rival conventional TV sets in price. Research in the US by TCFinfo has found that 86 per cent of high-end shoppers are likely to buy an LCD or plasma TV in the future.
AV experience gained at home and in the classroom is fuelling business sales. "Increasingly we are seeing AV products designed for the business market being used by home users, and those aimed at music, video or photography enthusiasts finding their way into the business-to-business market," explained David Watts, general manager of the PC and peripherals business unit at C2000. "This is going to present resellers and retailers with fantastic opportunities."
Another area of crossover is digital photography and imaging. "People have seen what they can do at home and now that's moving across to the workplace," said Watts.
"Estate agents, insurance companies, maintenance contractors - all kinds of companies can make good use of digital photography and video."
The flexibility of today's AV technology, combined with the relentless competitive pressures on businesses, mean that the users and applications of AV are superficially diverse. But most applications boil down to one of three main types: training, presentation and workgroup collaboration.
"Most companies are aware that AV equipment can make training more effective," stated Paul O'Reilly, distribution sales director at AV distributor Steljes.
"Evidence suggests that collaborative tools such as interactive whiteboards can raise levels of attention and attainment and contribute to consistency in perception." Few schoolteachers or training professionals would argue with that.
The same principle applies to the presentation of information, whether to clients in the boardroom or to shoppers in the street. AV can combine the immediacy of the flip chart with the persuasive power of combined sound and vision.
"One of the main benefits of AV is the ability to communicate any given message effectively while retaining the option of real-time updates to ensure the information is accurate and up-to-date," said Andy Dow, commercial director of distributor Westcoast, which recently established a dedicated AV division.
And AV gives consistency. "You can ensure that you always send out a standard message, with no risk of it getting corrupted," explained Pipe. "It can be recorded and broadcast at will, and it can be pushed out or pulled down depending on how you want it to work."
The message can be delivered remotely. "Depending on budgets, you can develop a truly interactive presentation medium that doesn't necessarily need the audience to be in the same room as the presenter, and where the audience can be spread across multiple sites," said Mark Robinson, business manager at distributor Hugh Symons Mobile Computing.
AV systems are also becoming popular in public spaces, from leisure centres and retail outlets to pubs, bars and clubs.
"Such organisations recognise the benefits of a flexible system that can be used for a range of applications, from advertising and information display to entertainment," explained Simeon Joseph, product marketing manager for plasma and projectors at vendor NEC. "Resellers are likely to see particularly strong opportunities in the retail and leisure sectors."
Again, consistency and cost-effectiveness are key benefits. "Prices and products being promoted can be changed easi ly and quickly in response to sales, availability and other factors," said Dow.
"Advertising on AV can be very cost-effective to produce, and allows the equipment costs to be recovered quickly by replacing conventional point-of-information, point-of-sale collateral, billboard adverts and so on."
AV technologies such as videoconferencing allow staff based at home and other remote workers to remain part of a team, and help businesses reduce costs in terms of office space and travelling. They can also assist international team working and collaboration with trading partners.
"Suppose you're doing collaborative working with colleagues in London, New York and Munich," said Pipe. "With video conferencing and visualisers, such as interactive whiteboards, you can be looking at actual printed circuit boards and their design drawings.
"You can point to the actual board and suggest where you might cut a track or solder a link. This is all being done in real time without the experts leaving their offices."
The majority of AV systems are still installed in training and meeting rooms, but it is increasingly common to see them on sales floors or in call centres. Portable systems are also in demand by the 'road warrior' class, providing laptop resellers with an ideal opportunity to upsell.
"The development of lightweight projectors with high brightness and contrast means presentations can now be done almost anywhere with the minimum of fuss," said Nick Heather, peripherals manager at vendor Acer.
"If you have a projector weighing less than a kilo that you can set up on a customer's table and use to display your portfolio professionally and clearly, this will certainly give you a competitive advantage."
Joining the mainstream
Buying habits vary widely, with some organisations, particularly in the public sector, tending to buy complete, standardised systems, while others, particularly SMEs and consumers, mostly pick up components piecemeal, starting with core items such as projectors and adding more according to need and budget. Corporates seem to be somewhere in the middle.
Sometimes there is a domino effect, resulting in follow-on sales opportunities for the reseller. "Sales of one product tend to spark off demand for others," explained Watts.
"Attach rates for whiteboards and projectors in education are extremely high and the same could happen with many other combinations.
"Once a user sees the benefits of using a flat-panel LCD monitor, it's easier to see the computer as a console for video playback, and they need better sound. The next step is to use a plasma screen or high-quality projector with high-definition audio for video footage and presentations."
As AV becomes more mainstream, so the number of AV systems a company owns is increasing, and a single meeting room or lecture hall may have several screens and projectors. A large corporate may have more than a hundred systems, spread across its reception areas, meeting rooms and training suites, according to Joseph.
However they choose to buy, customers are becoming increasingly demanding, in common with all IT buyers. The appropriateness of the solution to the application and the audience is probably key to growth this year.
It also will be key to resellers' profits, because they are unlikely to get rich selling basic commodity products.
"There are two kinds of AV: commodity, low-end products [such as projectors] sold by box-shifting resellers; and specialist systems based around a video solution such as video conferencing, video streaming or video editing, and sold by an experienced reseller," said Ian Vickerage, managing director of AV distributor Imago Micro.
"If a reseller sells only low-end projectors with PowerPoint, the scope for adding value is very low."
AV margins remain above the average for IT products. "Although street prices are declining there are still stable returns of 15 to 20 per cent," said O'Reilly.
"However, the margins often depend on how a product is sold. Internet sales lie at the lower end, while field sales still seem to command higher margins.
"Successful resellers are often raising their margins significantly by selling accessories or bundling training and installation. There is a 40 per cent attachment rate for accessories."
But as prices for articles such as projectors and whiteboards plummet, the real money is in the added value. Decision Tree Consulting, for example, predicts that within three years installation will be the most expensive part of an AV system.
There are opportunities for traditional added-value services such as consultancy, installation, systems integration, training, maintenance, support and rental. And, because many AV systems are fairly specialised to the user's own requirements, there also may be more esoteric considerations.
The right fit
"The components of an AV system reflect the needs of the customer and the size and aesthetics of the room it will be used in," explained Dan Moore, projectors category manager at Hewlett-Packard.
"To understand these needs, many resellers offer site audits and evaluations. For example, educational users may choose a projector, an interactive whiteboard, audiovisual equipment and a printer, while conference users may choose a screen, ceiling mount, projector, audio equipment and lighting."
The value-add opportunity begins before the sales pitch, because the relative novelty of AV means there are many first-time buyers who need to be educated on the pros and cons of the different technologies. And it extends well beyond the purchase, with opportunities to upsell.
"Once a buyer has some experience of AV systems they will want to upgrade because they will realise where they are getting benefits and, more importantly, where they could be getting more benefits," said Pipe. "So the reseller's approach must be continual hand-holding and progressive upgrading."
The typical AV reseller, according to Decision Tree, sells to all sectors, employs five sales people, and sold 160 projectors, 90 flat-panel displays and 70 interactive whiteboards in 2003.
AV resellers are as likely to have a background in general IT as in pure AV. Dow pointed out that Westcoast sells predominantly through IT resellers targeting their IT customers with AV products, usually as peripherals to IT systems.
"It used to be more specialist," said Dave Daniels, national account manager at Toshiba's professional visual products division.
"But these days more and more resellers are looking to sell AV items such as projectors and plasma displays as part of an overall package. They are good, all-round, proactive resellers with a strong salesforce who are keen to learn about new products."
Joseph added: "The reseller market is effectively split in two. Specialist AV resellers continue to focus on more traditional AV markets such as exhibitions, conferences and events. IT resellers tend to be more focused on the corporate market, where their experience and contacts are likely to be strongest."
According to Decision Tree, 45 per cent of AV decision makers are IT people. "AV products are shared resources and require a central purchasing decision, so IT resellers that are already in contact with the IT manager, or office equipment resellers tha t are in touch with facilities managers, are already talking to key individuals," said O'Reilly.
He argued that many IT sales representatives already have the necessary skills to sell AV. "AV products could easily be undersold or oversold without a good knowledge of the hardware that customers are using, so IT resellers can make more of the opportunities available," he said.
Pipe, whose company has decades of experience in reselling AV, explained that the most successful VARs are those that understand conceptual sales, concentrate on specific vertical markets, and focus on value-add and end-to-end solution selling. But he warned against underestimating the complexity involved.
"It's a lot easier to train an AV person in IT than to train an IT person in AV, because a lot of AV is to do with ergonomics and physics," he said.
"It's not enough to know that something produces an image or a sound; it's knowing where to put it and how to orientate it, and how the audience is going to react to it."
Appropriately for such an interactive medium, it seems that the proof of AV is in the eating, so perhaps budding AV resellers should eat some themselves.
"Using AV products in your own business is one of the best ways of promoting them," said Watts. "A large-scale plasma screen in your demonstration or reception area, displaying web pages, video conferencing, live performance data or television feeds, will immediately impress visitors and staff. It's worth investing so you can show customers just how easy it is to use digital images and video in business."
Activist investor puts forward five director candidates as turmoil continues at security giant
Nima Green asks what is driving public cloud uptake in Germany
In the wake of yet another lawsuit involving Oracle, we run through 10 of the vendor's biggest court battles
CEO Chuck Robbins says Cisco will use the Catalyst 9000 product range as a template for future launches