AV trends MegA - InfoComm

AV Megatrends Opportunities and Implications
AV
Megatrends
Opportunities and Implications
Randal A. Lemke, Ph.D., InfoComm International,
Executive Director
Mary Baehr, CTS, PRC, InfoComm International,
Senior Market Research Analyst

AV Megatrends
Opportunities and Implications
Randal A. Lemke, Ph.D., InfoComm International,
Executive Director
Mary Baehr, CTS, PRC, InfoComm International,
Senior Market Research Analyst
In 1982 John Naisbitt wrote Megatrends (1982) and
foretold the future in which we live in today. In this
international best seller, he discussed 10 trends
that moved the world from the Industrial Age to the
Information Age. At the same time Alvin Toffler wrote the
Third Wave (1980), which provided additional dimension
to a future dependent on the ability to collect, organize,
understand and make decisions with information.
Twenty-five years ago the AV industry was part of the
emerging worldwide trend promising the capability
to organize and present information to facilitate
understanding and decision making. Displaying data in
graphical formats in front of a group of decision makers
was possible when our industry provided our first data
projectors that went well beyond what could be done
with viewgraphs on an overhead projector. Engineers
could suddenly view CAD drawings in high resolution
graphics. College students saw new relationships in
data when it was displayed on LCD panels illuminated
by overhead projectors. From command and control
centers, to boardrooms, to classrooms, the AV industry
enhanced people’s ability to understand data and make
decisions. Today the client’s content is delivered via the
network and we see it, hear it and manipulate it in a
world of unified communications.
The AV Megatrend continues. We are still at the heart of
a cultural and business preference for visual and aural
information. At the recent meeting of the InfoComm 100
(2009), industry leaders identified the AV Megatrend
and saw its expression in many forms, including the
newest social media tools and 3-D displays, complete
with the accompanying client demand for information
that is available anywhere and anytime. While we
should not always jump to the conclusion that today’s
newest tool will determine our future, there is a long line
of scholarly research that points to the effectiveness
of visual communication. Consider research that
Hewlett-Packard offered in “The Power of Visual
Communication” (2004) including:
“The psychologist Jerome Bruner of New York
University has described studies that show that
people only remember 10% of what they hear
and 20% of what they read, but about 80 percent
of what they see and do.”
“Training materials used by the federal
government cite studies indicating that the
retention of information three days after a
meeting or other event is six times greater when
information is presented by visual and oral means
than when the information is presented by the
spoken word alone. The same materials also cite
studies by educational researchers suggesting
that 83% of human learning occurs visually.”
“Researchers at the Wharton School of Business
compared visual presentations and purely
verbal presentations and found that presenters
using visual language were considered more
persuasive by their audiences, 67% of whom felt
that presenters who combined visual and verbal
components were more persuasive.”
How does that translate into a business opportunity?
InfoComm’s Market Definition and Strategies Studies in
North America (2007), Europe (2006) and Asia (2008)
all point to a worldwide market of $75 billion U.S. and
annual growth rates of 10-12 percent. The strong
cultural trend toward visual communication along with a
real and growing market is the environment that the AV
industry works within — it is a great opportunity.
With this bright future comes client demands for access
to all content, all the time and by anybody on the
network. For businesses and organizations alike, AV
technology transitions from a “nice to have” capability,
to a “must have,” and with it comes the responsibility
to deliver 99 percent uptime and interfaces that are
intuitive, elegant and generalized. As it progresses,
this favorable trend will be both comfortable and
challenging. But the discomfort must be dealt with,
because if the AV industry does not capitalize on the
opportunity someone else will.
© Copyright 2009, InfoComm International 2

AV Megatrends Opportunities and Implications
Other Industries and Clients Will Go After
the Larger Market
Opportunity draws new players and new relationships.
Other industries including telecommunications,
information technology, security and others have the
same electronic blood as AV. At one time AV was all
analog, but between the input and output transducers
there are now digital devices that operate on pathways
that AV shares with other industries. Processing and
routing digital information is done by many industries
and those that can do it will be attracted to the AV
industry. More hardware and software manufacturers
and their distribution channel will enter the AV market
because they have the same digital blood type. There
is no stopping the entry of new players, and in fact
the best path is to embrace the new opportunities
presented by their entry.
The new and expanded AV Megatrend operates in
a world of Internet pricing, client-provided product,
and reverse auctions that challenge all enterprises
to examine how they do business. It is easy to
conclude that providers (manufacturers, system
integrators, design consultants, live events companies,
programmers, sales representatives and presentation
professionals) need to have a relationship with their
client in order to keep from being just a commodity
provider. It can be difficult, but the creation and care
of a long-term relationship is vital, and it begins with
consultive selling. The relationship with the client should
be continuous, because the knowledge gained about a
client’s needs should continually renew the relationship
so that the provider is always top-of-mind, not just
on a bidders’ list. The sale of engineering and design
services, programming, and value added service after
the installation is where the provider can stand out from
competitors – one of which is the client.
The “new client” as the market expands will not only
shop for the low-priced boxes, but will also become
an “in-house” competitor. They will be guided by IT
departments which a few years ago gained the IT
knowledge to do the simple, and sometimes the most
complex, computer systems itself. As the budget
for AV increases, this will be a challenge to providers
because in many organizations AV is now a part of
the IT department and the client will likely expand its
capabilities to be its own AV provider. Higher-order
engineering for acoustics, videoconferencing and other
“hard to do” projects will continue to be opportunities,
while simple “hang and bang” jobs will become larger in
number but lower in margins.
When AV moves from being a “nice to have” to a “need
to have” along with it comes the client demand for 99%
uptime and superior performance. After all, it is the
client’s ultimate responsibility to deliver high functioning
reliable systems to its internal clients at a reasonable
cost. Unlike an outside provider, they can’t go back to
the shop and look for another client when the CEO is
unhappy; their CEO is in their shop complaining. Part
of that long-term relationship is making the in-house
staff look good, because it make sense to keep a client
instead of going out to sell services to a new one.
It is About Communication, Not Hardware,
and Not Even Software
The AV Megatrend opportunity has moved beyond
selling to the early adopters who care about hardware
and software as much as the industry does. Those
“AV Geek” clients are still there, but they are usually in
positions where they get their budget and direction from
upper management that just wants to communicate –
they don’t need to know or care how it works.
The AV industry comes from a heritage of hardware, and
in the last 15 years it has focused on the integration of
input and output transducers, signal transformation and
distribution, and user control devices. Digital signaling
and software systems are growing in the middle ground
between input and output transducers. Analog systems
that 10 years ago were built in four racks now fit into
two because the digital systems need fewer boxes
while being more powerful. Programming of these digital
boxes is a key skill, and providers are employing both
in-house and independent programmers to meet the
need for programming hardware devices, as well as for
control systems that tie together all the hardware and
software components.
The rubric is AV/IT convergence and the debate runs in
the industry between how rapidly it is happening, or if it
is already done. The answer in the debate means less
than the premise – that the AV industry, if not already,
will be a digital-based industry. Those that fail to learn
that lesson will be less successful and are doing it at
their own peril. Capitalizing on the AV Megatrend relies
on the provider’s ability to provide networked solutions
that meet the needs of the client which wants to use
its communication systems anywhere, anytime. To do
so, software skills must be learned, bought, rented, or
hired as companies’ capabilities will be measured on
the number of accredited software, as well as hardware,
engineers.
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AV Megatrends Opportunities and Implications
Does it end there? Does the future AV provider only
need to list its capabilities as design, engineering,
installation, programming, and after-the-sale valueadded
service? Today that may be true, but the
provider needs to remember the ultimate client. The
one that sets the budget and expands usage is not
the AV Geek, and is not as concerned about hardware
and software capabilities (perhaps even dismissing
them as back-of-the-house issues) because the real
issue is communication. At the InfoComm 100, it was
summarized as “Making visions a reality: Clients will
expect providers to make their dreams and visions into
a practical reality.”
The AV industry often limits its scope when the client
begins to talk about content. It certainly listens to
the client describe what content and communication
are needed, but with an ear to providing the systems
so someone else can provide that content and
communication. At its peril the AV industry will continue
to shy away from content and leave that to someone
else – peril because communication is what the ultimate
client is concerned about.
In the AV industry, those who produce live events
currently marry together hardware, software and
content. For them it is the “show” that drives the
system and they know clearly that the show is what
will earn them new business and keep clients, not the
hardware and software used. Providers of installed
systems need to look for ways to be part of the “client’s
show” throughout the year. Providers with producers
of presentations, conferencing, distance learning, and
other content applications of the installed systems will
have another sale to make and another connection to
its client. Those providers may make these services
available from in-house talent or via agreements with
outside companies or individuals; or take a very active
role in providing training to the client’s internal staff so
that they can get their expected return on investment.
The Word is Sustainability and Economics
Will Drive It with the Government Steering
Recent studies on polar ice caps and popular movies,
such as An Inconvenient Truth, have made everyone
take a closer look at the planet and how human beings
are using and abusing it. While sustainable business
practices may be a newer concept, the decision
makers of tomorrow have always had Earth Day, and
see green living as a necessity, not just a nice-tohave.
Their social values will drive their preferences
toward products and companies that share similar
values regarding green initiatives and sustainability. As
the price of energy increases, the social value will be
reinforced with the economic reality that sustainability
produces a better bottom line.
The government has several initiatives in place to
help stimulate the demand for green products. Home
owners and business owners can reduce their taxable
income based on qualifying energy efficient product
purchases and there is a significant amount of money
in the U.S. Government’s recent stimulus package
earmarked for sustainable projects and initiatives.
Of the $787 billion in the American Recovery and
Reinvestment Act (ARRA), $78.6 billion is specifically
for sustainable initiatives (de Morsella, 2009). The U.S.
Department of Energy will be getting $30.7 billion as
part of the stimulus package and it is this portion of the
stimulus package that the AV industry could attempt to
capitalize on.
Beyond government stimulus funds, green and
sustainable practices are here to stay. The U.S.
Environmental Protection Agency has put in place
programs such as ENERGY STAR and Environmentally
Preferable Purchasing to promote energy efficient
homes and businesses and to stimulate demand
for environmentally friendly products and services
(Urban Sustainability & the Build Environment, 2007).
These programs are providing a competitive edge to
companies that are adopting their practices.
LEED ® (Leadership in Energy and Environmental
Design) projects are seen as desirable by building
owners because of the lessening of environmental
effects, but when the savings are calculated a LEED
project can also save money. The marriage of financial
and environmental benefits is what makes green
sustainable.
The AV industry has valued green practices for years
without actually touting them. Control systems can be
programmed to turn off all devices when a room is not
in use, to draw shades on windows to reduce heat in
the summer months, control HVAC and many other
functions. Conferencing systems reduce the need for
travel, increasing employee productivity. Providers
in the AV industry need to take a better look at their
products and services, and quantify how they save their
clients’ time, money and energy. They must evaluate
current products and services, decrease deleterious
environmental impacts or make them environmentfriendly,
and convey their shared commitment to
sustainability with their clients.
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AV Megatrends Opportunities and Implications
The AV Megatrend is Global
The opportunities for the AV industry are everywhere.
InfoComm’s trade shows in Amsterdam, Moscow,
Beijing, Hong Kong, and previously in Singapore,
Tokyo and Shanghai all demonstrate that the same
technology is used everywhere. Changes in power
supplies and other small technical differences are
handily accommodated by manufacturers. The
distribution channel has similarities everywhere, with
the notable differences in the role of distributors
worldwide and the joining of residential and
commercial outside of North America.
AV and its communication capability is one of
the tools of globalization in the same way that
telecommunications, IT and other technologies span
the world and allows organizations to operate across
country boundaries. In North America and Western
Europe, technical development, business practices and
culture are similar. Moscow, Beijing and other quicklydeveloping
economies are making similar technical
developments even though the business practice and
culture are different. A common theme is that high-tech
AV applications are first applied by global organizations,
mostly Western companies, and then domestic
organizations adopt similar applications.
The AV Megatrend is everywhere. Even in the most
print- and verbal-oriented cultures, the use of mediated
communication is growing as the popular culture makes
the same change. In addition to catering to the current
global players as they enter new markets, development
of the local market is a big opportunity. Global
opportunities will abound and global providers will also
flourish. The new markets have adopted technology
from the established, but they are also creating their
own. The AV industry will have more manufacturers,
more integrators, more consultants, more distributors,
and more of all kinds of AV companies from all over
the world. Talent and competitive drive are equally
dispersed in the world, so in a developing market
when talent is educated and markets are enabled,
the global output in our industry will be more equally
dispersed. Currently, Western AV integrators and
design consultants are developing businesses around
the world, but new local providers are also serving
their own markets. These local providers will not only
serve their domestic market... they will compete with
providers from around the world anywhere in the world
– it will be a two-way street.
Other boundaries will also change with the growth of
the global market. No longer will it be the industry of
the “AV Geek” because it will attract more women,
more races and more ethnic groups. The change in
demographics will bring with it new capabilities to sell
to and satisfy the broader market of buyers. Because of
the AV Megatrend, the industry will attract the non-AV
Geek with an MBA who buys or starts an AV company
simply because it will be a good business investment.
The new players and a growing business sophistication
will enable even more growth.
Beware of and Embrace Disruptive
Technology and Competition
Our industry relies on technology that is always
improving and changing, and therefore the definition
of the AV industry is going to be a living definition.
But anyone who thinks that trends continue without
disruption needs to rethink that assumption. In the IT
world, mainframe computer makers never believed that
mini-computers could ever challenge their dominance.
And then mini-computer makers never thought that
the personal computer could put them out of business.
And today, with millions of users around the globe, it is
the iPod and mobile phones that possess ever-growing
processing power, applications and utility. Anybody
established in a leadership position may be tempted
at their peril to see new products or applications as a
competitive nuisance, but not a real threat.
“The 10 Most Disruptive Technology Combinations,”
listed in PC World discusses, among other examples,
how MP3s made audio files small, portable and
convenient (Tynan, 2007). With compact audio files,
companies like Napster made it easy to share music,
and the recording industry was in an uproar. CDs are
now on the way out as the client seems to prefer buying
only the songs they like even though the quality of an
MP3 does not match a CD. Little-known artists that
couldn’t afford to distribute the quantity of CDs needed
to sell in major stores across the country now reach
individuals anywhere there is an Internet connection. At
the same time, Apple created an easy-to-use recording
studio in the Macintosh and again the little-known artist
was given a more affordable way to produce music.
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AV Megatrends Opportunities and Implications
Recording studios and record labels both suffered
from these two technologies, while the consumer says
that it benefited from these disruptive technologies.
How will providers react to the next big “must-have?”
Is there a killer app headed toward the AV industry
that disrupts how business is done? New technologies
and new practices happen and AV industry members
need to always keep an eye open and a flexible
business plan ready.
How you prepare for change can help dictate how
successfully your organization moves through the next
disruptive change. Is your company diversified in its
revenue streams? Do you keep up with the technical
and business pulse inside and outside of the industry?
Do you have a good relationship with clients, listening
to their needs and feedback to see where they are
headed? How are your products being used in ways
that the engineer who designed it may not have
thought of?
The AV Megatrend will accentuate innovation and
competition, but this kind of change and challenge
make it an exciting industry. Business and technical
models must be fluid in order to adapt to the changes
within and outside of the industry to continue to serve
current clients and the new clients that are yet to
appear.
Be Part of the AV Megatrend
It is often said that the only constant variable is change.
In the AV industry, we often revel in the dynamic nature
of our products, clients and businesses. But in the end,
change is not easy and it is almost always threatening.
The AV Megatrend is an opportunity that is welcomed
for its potential and the financial success it promises.
But providers have to compete for that bigger market
and to do so will challenge most of what is done today
as standard business practice. The client is going
to be different, with more of them and with bigger
projects, but they will have different needs and will
want to work in new ways. One difference will be their
and societal demands for sustainability and AV will
not be left out of the green movement. So far AV has
not been top of mind for LEED or ENERGY STAR, but
like all other industries it will be challenged to provide
communication solutions that lead to sustainability.
The AV Megatrend will take companies around the
world, and a global market is a two-way market as
talent is everywhere and it will search out opportunity
everywhere. Every company will be looking for the
next best product or service for its new clients, and
sometimes that technology will overturn the current
world of AV communication. Be ready to succeed in
the AV Megatrend.
Bibliography
de Morsella, T. (2009). The Stimulus Bill Includes Numerous Green Initiatives – Find out Exactly What They Are. Retrieved May 21,
2009, from The Green Economy Post
Website: http://greeneconomypost.com/stimulus-bill-green-initiatives-533.htm.
Hewlett-Packard Development Company, LP. (2004). The Power of Visual Communications. Retrieved May 21, 2009 from the
Hewlett-Packard Website: http://www.hp.com/large/ipg/assets/bus-solutions/power-of-visual-communication.pdf.
InfoComm International. (2006). 2007 AV Market Definition and Strategy Study: Europe.
InfoComm International. (2007). 2007 AV Market Definition and Strategy Study: North America.
InfoComm International. (2008). 2007 AV Market Definition and Strategy Study: Asia-Pacific.
InfoComm International. (2009). InfoComm 100... A View on the Near Future of the AV Industry.
Naisbitt, J. (1982). Megatrends. New York: Warner Books.
Toffler, A. (1980). The Third Wave. New York: Bantam Books.
Tynan, D. (2008). The 10 Most Disruptive Technology Combinations. Retrieved May 21, 2009, from the PC World
Website: http://www.pcworld.com/article/143474/the_10_most_disruptive_technology_combinations.html.
Urban Sustainability & the Built Environment (2007). Retrieved May 21, 2009, from the U.S. Environmental Protection Agency
Website: http://www.epa.gov/sustainability/builtenvironment.htm.
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