Fewer Sources: Less Money, Or More?

homeavsources-0414If there’s any one trend that residential AV integrators need to come to grips with, it’s the fact that what’s driving the business today isn’t hardware, it’s content.

Time was you could tell a great AV system on sight not just by the quality of the gear, but the number of source devices involved. At its peak, my home system had a five-disc CD player, DVD player, VCR, S-VHS VCR, audio out from the 27-inch Sony Trinitron CRT, Sony Playstation 1, a dual deck cassette player and my beloved MiniDisc recorder.

But that was a long time ago. Today in my media room we use the Wii more for Netflix than for games, we still use the HD-PVR and we occasionally use the DVD player, but not often. On top of that, more media gets viewed in our house via non-traditional means. At any given time both iPads in the house are streaming kids’ TV via Netflix.

And that seems to be the norm today. Talking to both AV integrators and manufacturer’s representatives, homeowners focus isn’t on having as many sources in the rack as possible, but getting access to the content they want, where they want it. What are the two most popular sources today? Netflix and Apple TV (broadcast HD-PVRs are a distant third).

None of those three sources are exactly dripping with gross profit dollars either. So to borrow the question from the film Jerry Maguire, does that mean: “Fewer Sources, Less Money?”

Not necessarily. For one thing, taking dollars away from one category doesn’t mean taking dollars away from an entire project. If there’s one thing the industry learned from the way that iPad has rolled like a tank over control systems touch panels, it’s that. While dedicated automation touch panel sales have been in free fall for the past two years integrators quickly learned that the client’s budget is what it is. The consensus has been that if the client is spending fifty grand, a hundred grand, a quarter million, whatever, that money is still going to be spent. Replacing touch panels with iPads has meant taking thousands of dollars out of the control budget and funneling it into higher margin categories like speakers and projectors and screens.

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So the lesson here is that while the number of sources clients are paying you to integrate are dwindling, there are still profitable opportunities in the client’s system design that are within your grasp.

Beyond hardware margins, there’s also the profit from labor dollars for your expertise. All this stuff is networked now, and your clients want, no, they demand a seamless, trouble free Network. That’s where you come in, and that’s what you bill them for.

The bottom line here is that if a typical AV installation is now going to incorporate gaming, streaming media, HD broadcast and access to the clients own media files then the focus for integrators is on offering high performance solutions to display and hear them, as well as their network skills. As one of my friends on the manufacturing side said to me, people need simple controls, better speakers and bigger amplifiers.

Image via Atlona