Custom Turns a Corner
Integrators are heading to CEDIA Expo with optimistic attitudes fueled by improvements they’ve seen in their businesses during the last six months.
Although TV margins are stuck in the gutter, integrators said that vendor unilateral pricing policies and third-party online marketplace restrictions have brought some relief.
But their better bottom lines are mostly the result of devoting more resources, focus and training on IP technologies, security and its recurring revenue opportunities, and other solutions that extend beyond the traditional AV installation model.
Morshed Shahid, principal of Audio One, Dania Beach, Fla., said he has seen an uptick in medium-sized projects, which are slowly coming back. “We’re hoping large-scale projects will be at full swing, as they were before 2009,” he said.
Tom Doherty, principal of Doherty Design Group in Indianapolis, reported that new projects are on the rise in his area. “We’ve noticed an increase in future product potentials,” he said. “Architects and builders are meeting with new clients that are planning new work.
David Pidgeon, CEO of Dallas’ Starpower, noted that his business was “slightly ahead” for the year-over-year period, mainly with the help of audio and custom leather seating sales. Automation and outdoor solutions are also up, but TV price compression continues. “UPP efforts by manufacturers are starting to help, but even with UPP, the margins are certainly lower than we are used to,” he said.
Peter Cook, president of Automation Design + Entertainment in Portage, Mich., said new construction starts in his market have rebounded.
“When I looked last, we were up about 25 percent in the first half,” he said. “It’s hard to see through the fall, though, and it’s going to be up and down. That up-and-down nature is what’s hardest for dealers right now. If something happens in Europe that impacts our economy, or in the stock market, all of a sudden, clients start to get nervous and may hold off a little on a project or take longer to pull the trigger. But certainly, the smart home and security sides of our business are growing.”
Franklin Karp, COO of Audio Video Systems, Plainview, N.Y., likes what he’s seeing, especially with audio.
“Based on what we see now, we know we’re going to be busy well into next year,” he said. “There’s a bit of a renaissance in the good old-fashioned audio business. That may be a result of people focusing on it more, maybe because the control part of the business has changed and has become less profitable.”
Karp also said the networking side of his business is also up, mainly due to consumers realizing they need a robust, secure infrastructure to optimize all of their digital solutions.
“As people come to grips with the fact that you can’t just install an inexpensive router you buy at the corner store, and expect it to support this giant infrastructure that you want to have in your home, [that’s] opening up opportunity for us.”
IT integration was top of mind for all integrators. Developing that expertise is one way to build a foundation for current and future technologies, especially as the sale of home entertainment systems remains flat, or in some cases, declines. “The big things that are happening are on the IT side,” Cook said. “We’ve really ramped up our IP/IT training and support. We’re also looking at how we line things up, employee-wise, to support that growth.”
Integrators said they’ll be watching control companies at CEDIA EXPO to gauge product development and other moves. Shahid said he hopes more powerful IP-based control systems make their way onto the show floor. He also expects more companies to fill in their lines with energy-management solutions.
“In places like South America, there are on-off buttons on every device, not just standby modes,” he said. “If energy prices go up here, it will stimulate manufacturers to develop those kinds of products. Things like cable boxes with DVR are real energy hogs.”
For his part, Cook will keep an eye on new sub-systems, and advancements in whole-house music distribution, media servers and HDMI products that lead to more reliable switching.
Doherty is seeking new shade solutions, especially since the window treatments side of his business has begun to trend up. He also said he wanted more choices in “profitable home network solutions and simple, repeatable network-enabled security systems.”
Doherty—and most other attendees—will spend a good portion of their time at EXPO not only looking for the next “new,” but also seeking fresh ways to further adjust his business for today’s realities. “We need to develop our service value proposition, such that more of our income is derived from billing for our time and services, and less and less for tangible products that can be price-shopped.”