CR Talks To: Cameron Smith, Director of Sales and Marketing, Intelix: Emerging From Behind the Scenes
CustomRetailer: You're a company that started in the commercial space and you just recently entered the CI market. Would you speak about the reasons for your progression into residential custom integration?
Cameron Smith: First, let me provide a little background on our company. It's true that we're relatively new to the CI market, and we come at it from a slightly different angle. We've been around since 1986, and our business has been primarily commercial A/V—churches, schools, paging systems for airports. We also do a lot of OEM manufacturing, so we're very heavy in R&D.
Seven years ago, or so, we began developing cutting-edge HDMI technology. Because of that, we started seeing CI resellers coming to us, looking for a more robust, more commercial solution. We were perceived, because we were commercial, as offering a totally different technology set. So, about five years ago, we started looking at the CI market, and realized we had this technology that was a great fit. And we cultivated it.
In 2010, we started to get a lot more aggressive in terms of marketing and presenting just how we're different. One thing that really differentiates us—and one of the things we pushed really hard at CEDIA EXPO—is that we're not selling a product, per se. We're selling technology, and the way we process HDMI. For example, one thing we had at the show, and something we won several awards for, was an HDMI system that incorporates things like HDMI extension over coax and twisted-pair cable, HDMI switching. But ultimately, the big thing behind it was that it can take analog technology and get it out to a digital destination. With a composite video source like a security camera or a VCR or an older DVD player, not only can you make it HDMI; now, you can get it to the end destination or multiple destinations—and we're running a success rate over 99 percent, because of all the proprietary engineering we've put into it. People really latched onto that. We're doing unique things on our boards and inside our products to get that success rate up near 100 percent—things like storing EDID signals within the product, things like discrete-channel processing and bandwidth limiting. We're marketing all this processing and not a product, and people really got it.
CR: Talk about how most of your product ideas are germinated. Do most of them come from integrators who need certain specific needs answered? Also, how has integrator input shaped your most recent introductions?
Smith: It's really a trickle-down. Ultimately, it's the installers who come to us with a need or a problem, and very often, they're trying to do something and it just doesn't work reliably. That information hits our application team. We spend more money on application support than we do in sales support, meaning that the real core of our sales team does design, troubleshooting, getting down to the nitty-gritty of how the systems work and how we can not just sell a product but a solution. Once they latch onto a problem, they bring it to the engineering team, which then looks at it from a different angle.
CR: What sub-markets of the custom integration discipline do you perceive to be most active these days and most in need of your solutions: retrofit, light commercial, simplified "cookie-cutter" installations, etc.? How are you answering those needs?
Smith: We focus primarily on retrofit. The reasoning behind it, in my opinion, is that 80 percent of the houses over the next 100 years are already built. It makes sense to use cabling already in those homes, and makes sense to expand those homes' needs with new technology. Our solutions do go into new constructions, but they're really ideal for leveraging existing infrastructures.
CR: Talk about the importance of build quality and reliability in your products and any other factors that you feel set you apart from your competition.
Smith: The R&D background gives us a leg up. We're not just re-branding technology and throwing it out there. Obviously, we don't develop everything from the ground up; we go to other manufacturers who lead the industry, and buy circuit boards and chips and reference designs. We take all of that technology, bring it here, and build it into a mainframe system, and then put Intelix processing on top of it.
In a lot of respects, we're not re-inventing the wheel; we're just taking the wheel and making it faster. A lot of what you see elsewhere in HDMI is offshore technology; we're doing the manufacturing and assembly of most of that technology right here in Wisconsin. It means we can evolve quickly, so when new chips hit the market, we can get those inside our products quickly. And when there's a new technology like 3D introduced, we can get that into our technology pretty quickly. We don't rely on waiting to burn through 10,000 units that are sitting in our warehouse.
CR: Are there any product areas you have not yet entered that could be on the back burner for the near future? If so, what integrator needs would they address?
Smith: One big area we haven't really courted is the showroom and the CE brick-and-mortar market. Most of our technology is for the installer, and is going into systems. But there's need out there to take this sophisticated technology and put it into an everyday consumer product, especially because HDMI is in all of these everyday products. One thing we're looking at is how we can take this cool technology that guarantees a performance success rate and implement it in a way that makes sense for a showroom floor and for everyday merchandising. We're getting there; obviously, we have to take into account costs and how it would be to manufacture things in the tens of thousands and hundreds of thousands. Typically, you don't go into a store and see an Intelix product sitting on the shelf. But we're putting the back end together to do that and looking at a couple of partnership opportunities.
We see a big opportunity in converters. There's still a lot of analog technology out there, but HDTVs are inexpensive now, so you need some kind of a bridge to get between that analog and that digital technology, and we see a huge opportunity for high-quality equipment there. We're currently doing that, but more on the specialty market side. About 70 percent of our reseller base now is commercial A/V, whereas about 30 percent is in the CI world. In the CI marketplace, we're working primarily with installers and value-added integrators. We're in the process of setting up a distribution network but it's really in its infancy. A major partner we work with is Liberty A/V.
CR: What sorts of integrator supports do you provide dealers that are unique and give you an advantage over competition?
Smith: We provide application design. We don't just throw a catalog in front of somebody and say, 'Pick a SKU.' We spend a lot of time doing webinar training and doing application and design-assistance support with integrators, so we're not just selling them a single product, we're selling them a system that solves the complete need. We also have an independent sales rep network visiting them locally to do on-site training.
CR: From your perspective in working with integrators closely, can you provide some predictions about the future direction of the CI market over the next six months, or over the next year? What factors do you think will be most influential in these time periods that will shape its direction?
Smith: What we've seen, over the last two years, with the change in the economy, is the desire for more middle-ground technology. People historically have looked at some really high-end solutions for routing A/V. You have top-level companies like Crestron who make great product, but it's very expensive. Then you have a lot of other manufacturers going for the entry-level business. We've seen this swing from the expensive down to low-end, cost-effective technology that didn't work so well. People need technology that they can value-engineer, that's cost-effective but at the same time, which offers excellent quality and the performance they need. You'll see more and more manufacturers not trying to compete on the low end and not trying to sell just to the high-end market. You're going to see people who are moving back to the middle, with more cost-effective solutions coming out—and you will see a lot of these 'importation companies' going away. There's value engineering on the high end, and there will be a shakeout on the low end. People are starting to meet in the middle. CR