Kayye’s Krystal Ball – 2007 Edition

It that time of year, again…

Welcome to my eighth annual Kayye’s Krystal Ball feature article about predictions for the upcoming year for Professional AV, and even some Home AV technology, trends and products. If you’re a regular reader of this column, then you know that each year I actually start by reviewing my predictions from last year’s column (Kayye’s Krystal Ball for 2006 ran in the December 19, 2005 issue of Sound & Communications magazine).

Why do I do it this way? Well, when I was a kid I loved TV and always loved watching those TV psychics sell their predictions to viewers who called in with their credit card numbers. Every year, they would reappear on TV selling the next year’s predictions. But, I could never remember what they predicted to see if they were right. I always wanted them to remind us of their predictions from the previous year so I could see if it was worth the price (I knew my dad’s credit card number).
In this case, I’m free. You didn’t pay to read this, so keep that in perspective. But, if I may say so myself, over the past seven years, I’ve actually done a pretty good job – or been real lucky.

So, on to the review of the 2006 predictions; and then I will jump into my predictions for 2007.

A Review of 2006

China, China, China, China, China: My first prediction was that China would be the big country impacting the professional AV market more than any other. Although this wasn’t too much of a stretch since everyone seemed to see it coming, I was actually surprised how much of an impact China has had already. Last year, I focused specifically on the display market; explaining how China’s new pack of display manufacturers would not only bring prices down ever further, but also flood the market with new products. All that occurred. You would be shocked at who’s manufacturing their displays in China now – virtually every Japanese and Korean manufacturer, in fact!

But, what surprised me was the impact that China had on segments of the market that I didn’t see coming – the glue. Everyone from control system manufacturers, to interfacing, switching, routing and cabling companies are manufacturing a great majority of their line in China – it’s cheaper and the quality is, I am told, equal or better than what was coming from Mexico and the USA before.

In addition, there are now China-based companies that are making an appearance on the market with their own branded products. Companies like TeqGear, Humax, Oley and Walcom are certainly not names that roll off our tongues at the water cooler when we’re talking systems design in the professional AV market, but you actually use more of their products than you think. Although these companies have their own branded products, they also make products for four of the top seven projector and flat-panel display manufacturers on the US market today!

And, what’s impressing me as well is that we’re starting to see some original design coming from China. Watch for this trend to continue in 2007.

Projector Market Consolidation: I was dead-wrong. I thought the sheer number of display manufacturers in the business would force market consolidation, but it didn’t. So far, everyone’s still in the market and still using the same name they were using at the beginning of the year.

But, with InFocus hanging out a giant for sale sign, there’s bound to be consolidation in 2007 – unless they go out of business (unlikely).

More content servers: Although content servers don’t dominate the landscape of the AV market, products like AMX’s MAX and Crestron’s Adagio are certainly changing the way systems are designed and content is delivered. You’ll see more content servers coming in 2007 and they’ll deliver video, audio and PC content of more than adequate high-quality to be able to serve up virtually anywhere in most professional AV systems, like boardrooms, classrooms, hotel and conference center signage, houses of worship, live content delivery, etc..

The service model: Just about very dealer I know is working on or has already changed over to a service model for making money. Although profit margins for selling AV gear, according to NSCA, went up a few percentage points in 2006, when you drill down in the report they published, you find that most of this came from either audio gear or from the additional services that the integrators were offering – like proactive service contracts. Kudos to those dealers! And, if you’re not already selling services like systems design, installation and service contracts, please start! It’s more profitable than selling AV gear and the residual income is forever, if you do a good job with it.
Fricking small, bright projectors: Well, we did see the truly hand-held projector debut in 2007 from a number of projector companies out there – following Mitsubishi’s lead. But, what’s amazing to me is what companies like EPSON are getting in light output from products like the PowerLite 1715c (rated at 2700 ANSI lumens and really getting closer to 3000) and all in a 3-pound, wireless-networkable package at around $2,000 – yes, $2,000. Why aren’t you all putting this projector into your basic boardroom, conference rooms and classrooms? It’s incredible!

What we’re seeing now just simply amazes me – super-portable projectors that are bright enough to be used in almost any ambient lighting conditions that are all between 2500 and 3000 ANSI lumens in sub-5-pound packaging in BOTH LCD and DLP formats. Certainly the leaders here are companies like EPSON, Mitsubishi, Christie, and Toshiba, but virtually every projector company has their version now too.

 Smart projectors: As I mentioned, the aforementioned EPSON 1715c is both networkable and wireless. But, what’s really impressive is what you can do. Not only are the new generation of projectors networkable (and most are wireless, in fact) but also they are capable of projecting (via the air) everything your computer can project – everything from PowerPoint, to Excel, to PDFs and even HD-video! Yep, wireless video via a network! Could the truly wireless system be too far away?

Audio art: Everyone knows that the most profitable segment of the professional AV market is still installation audio. While the typical InfoComm member integrator has been focused on the projected image in the room, the NSCA member integrator has been focused on the less-glamorous audio segment of the market. But, guess who’s more profitable? I predicted that 2006 would see a resurgence in the audio space and a refocusing of the typical AV dealer on the art of audio and that’s exactly what’s happened. According to research we did for a MAJOR audio company who is nearing close to $4 billion a year in sales, the percentage of the gear in a typical AV system that was audio grew almost 10 percent from 2003 – 2005. Coincidentally, the audio-centric systems were also 6 percent more profitable than the video-centric systems.

Big time growth: Finally, I predicted that in 2006 we would ALL experience growth like that we saw in the late 1990s. Well, I am excited to say, I was right. The market had a record year in 2006 and virtually every dealer is in hiring mode. In fact, I was at the NSCA Fall Business Conference in October and one dealer told me his problem with switching to a totally-service model from a historically totally-gear-selling model is people. He can’t find enough highly-qualified people to move that way quickly enough.

My response? Check out what InfoComm and the new ESPA alliance from NSCA, CEDIA and CEA are doing. Both InfoComm and ESPA have certified educational programs that will take someone directly out of high school and make them an installer or an AV systems designer in less than a year – without ANY AV experience.

I predict that education will determine the winners…

The 2007 Predictions

HD, HD, HD: This may not happen in 2007, but it will soon thereafter. Almost every projector manufacturer is telling me that they will eventually ONLY make 1920 x 1080 (native HD format) front screen projectors. Sure, there’ll be the 4K and 8K projectors out there for large staging venue applications as well as Digital Cinema projection, but the truth is that the future of all consumer displays is what’s known as 1080p (1920x 1080 progressive scan) display technologies. In fact, the flat-panel LCD market is already there. And, that entire market will be there by 2008!

The fact is the projection technologies used in the professional AV market comes from the HomeAV market demand. That market is actually 23 times the size of the professional market and simple economies of scale will determine the eventual output native resolution of every projector on the market – and it will be 1080p.

So, what does that mean to you? Well, two things, really: 1) You need to consider the impact of 16:9 aspect ratio projection in the design of your room. Whether you like it or not, projected images are going to wide-screen imaging and that will change the design of the room – more often than not, significantly. You don’t want to force your instructor to stand in the corner of the room to keep from being in the projected image light path and you don’t want to have to eliminate the back of the room because they can’t see the projected image from so far away (remember, the image – and character – height will change). And, 2) HD imaging will drive HD audio and content – and all sorts of HD-capable gear and expertise (hey, just look at the new HD-VTC systems and you’ll see the impact that HD is having there – they finally work!). More on that later…

Simpler Control Systems: The ultimate irony of the control system market is it sprang up as a way to simplify control over complicated AV systems – but, in many cases, these systems don’t do that. How many poorly-programmed touch-screens have you seen that were too complicated to use? Everyone, even most of the control system manufacturers, say that you shouldn’t have to touch a screen more than three times to perform any function. But that rule is hardly ever followed.
A new generation of simpler control systems will have a huge impact on the professional AV market in 2007. Logitech’s Harmony 1000 is a great example of that – a $500 touch-screen that can control virtually every function in any boardroom, conference room and training room and be programmed to do that in less than two hours. Believe me, I have done it myself. Sure, the big control system manufacturers will bash (and are) this product all day long, but one of the two is actually currently negotiating with Logitech to OEM this product and expects to introduce their version of it by NSCA 2007. Hypocritical? Maybe not. What would you do if you were them?

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Also, a lot more manufacturers have jumped into the control system market. At CEDIA, I counted 22 (!) manufacturers with control system products. Of course, half of those are Windows-based products, so I don’t really consider them viable (i.e.: see Windows blue screen of death). Still, such entries into the market offer a whole new slew of options for integrators from which to choose.

But, back to simplicity: just look at products like Extron’s MediaLink and Crestron’s QuickMedia and what they have done to the professional AV market. Super-simplification at its best! Watch for more of that in 2007 – a lot more!

iPod Pro: The iPod has become the most ubiquitous consumer product, ever. No one now disputes that. But, will it make an appearance in the professional AV market in 2007? Yep. With the next generation iPod, you’ll see the networkable player potentially become a tool in public address systems, in digital signage, in kiosk advertising and maybe even in control systems. Truth is, the form-factor will have to change a bit for this to all happen in 2007, but Apple’s watching this potential segment of the market as closely as they are the display segment – by the way, you should finally see Apple consumer/professional display products in 2007, too. Oh, and don’t’ forget iTV – Apple’s wireless content server for audio, video and HD stuff (all outputting signals from an HDMI port).

Blu-Ray Wins: I can’t believe that the industry’s DVD manufacturers didn’t learn this lesson with the Divx DVD debacle from the late 1990’s – Divx DVD finally called it quits on June 16th, 1999 and DVD player sales boomed in 2000 as a result – even though the technology floundered for three years prior (all because of the DVD versus Divx battle). Well, I came out in favor of DVD and against Divx then, and this time I am taking a stand, too. Blu-Ray will win and HD-DVD will lose. But, it might not happen all in 2007. I hope it does, however, as otherwise the acceptance of HD content on the DVD format and integration of HD-capable DVDs in computers will be slowed as well.

HD-DVD is a good format, but Blu-Ray is better. I don’t have the space to explain why here in this column, nor do I have to – this is my space and I am telling you my opinion – that Blu-Ray will win the High Definition DVD battle – and HD-DVD will LOSE. I’ve even gone ahead and purchased a Blu-Ray DVD player (i.e.: early adopter) for my home theater and I don’t consider this taking a leap of faith because to me, buying an HD-DVD player would be the equivalent of throwing money in a fireplace and lighting it with a Cuban cigar.

HD Conferencing Boom: No question that HD Videoconferencing (also known as TelePresence) works, and works well! Finally, VTC technology does what the manufacturers have been saying it would do for more than 10 years: work. I recently sat in a demo for the new Polycom HDX high-definition VTC system and their VP of marketing for the product line spouted off why this system was the best thing out there and what it was going to do for the videoconferencing world. Ironically, it was exactly the same sales pitch I heard six years earlier. But, this time the claim was true. It worked, worked well, worked often and worked consistently – and looked awesome.
But, switching to HD conferencing quickly won’t be easy as most professional AV contractors have been burned with past VTC systems, and the league of AV design consultants will probably play it safe with this new technology. But, I say: Don’t play it safe! Do NOT slow this technological development down. Don’t stand in the way of something big here. One of the unique features of the Polycom system (that currently the Cisco system or any of the others, for that matter can’t do) is that it can be used as a standard 384-style conferencing system too – and the image quality is the best I have ever seen on a 384 or IP-to-IP call. So, spec it! Even if you’re not doing HD, spec it as an SD system and upgrade to HD when you’re ready. And, I am quite sure that Cisco and the others will add this feature, too.

Built-in Projectors: I recently saw the first prototype of a laptop with a built-in projector. It’s a concept design, but it is from one of the top three computer manufacturers out there and should garner a lot of attention as it had the capability to project on different colored surfaces, and it adjusted colorimetry accordingly to project a very nice 1500 ANSI lumen-plus image. It may not make it out in 2007, but you will start to see projectors integrated into other PC, AV and IT tools and gear. You’re already starting to see if you remember the day when the cell phone was just a cell phone.

AV Security Boom: Cameras everywhere. As we start to see cameras appear everywhere, so will NOCs (Network Operations Centers) – and plenty of AV gear. The US Government and its local affiliates have purchased more network and sat-based cameras than all other camera buyers combined since 2002. Cameras are not just for traffic any more. And, security and surveillance will drive the professional AV market in 2007 much like the educational market did in the early 2000s. Remember that?

If you’re not doing security and surveillance, you better start!

802.Whatever: Speaking of security and cameras, 802.xx technology will explode all over the place in 2007. Sure, we have wireless internet in our homes, our coffee shops, our offices and, of course, our hotels. But, we’re about to have wireless towns, cities and states! And, AV manufacturers are in the process of leveraging it more and faster than ever.

For now, all we have is wireless projection technology, but by the end of 2007, all displays will be capable of wireless (integrated or via 3rd party peripherals) and it won’t stop there. You’ll see wireless content delivery systems that go far beyond the computer (think iTunes in a PDA with the capability to drive audio, video, internet and PowerPoint – even in HD format and resolutions). For the consumer it will bring us IP-based cell phones that work on any network and stream video to watch TV. For the pros, it will mean that you’ll be able to sell 24-hour maintenance and security contracts to customers forever and very profitably. Still don’t get it? Stay tuned, as 2007 will bring a few columns from me where I will tell you, specifically, how to do this and make a ton of money!

Cisco, Dell and Steelcase: Our market is about as close to mainstream as we have ever been. More people are carrying projectors on airplanes than were carrying laptops in 1995. The affordability and availability of AV gear, combined with the now proven and documented ability to yield higher retention for the attendees of a meeting, have driven the customer base from just the Early Adopter buyer and allowed us to finally sell to the Early Majority buyer (read Crossing the Chasm by Geoffrey Moore if you don’t have a clue what I just said).

So now, Cisco, Dell and Steelcase are taking aim at the professional AV market and integrating AV technology into office spaces. It doesn’t really matter how or what their products are; the point is, they’re here. And, they aren‘t the only ones – more are on their way (I know that because we’re consulting with many of them).

But, this is ALL GOOD NEWS. As we head toward and appeal to the Early Majority buyers, we will find that they buy more, buy more quickly, and at a higher profit margin. It’s true. If your logic tends otherwise, you are flat out WRONG – W-R-O-N-G. Again, read Moore’s book and you’ll get a clue.

The exposure these and other manufacturers will bring to the professional AV market, AV technology and, better yet, AV as solutions to problems like information retention, security, creative advertising and marketing, virtual environments and all that other stuff, will translate into a BOOM for all of us – assuming we all know how to leverage the network.

I say that in passing, but that’s the BIG MESSAGE for 2007. Learn, leverage, manage and master the art of connecting and integrating technology to the network, the LAN, the WAN, the Internet, etc. Or, you will die! In fact, go ahead and send someone from your company to Cisco training – become Cisco-certified. No, not to get into doing IP networks, but so you can use the network in your AV world. Or…

You will die.

See you in 2007 and have a Happy Holiday season (or as Wal-Mart – the latest to sell, direct to the consumer, HD-based, sub-$2,000 brands of plasma, DLP and LCD displays from companies like Magnavox, Hitachi, Panasonic and Philips) would say now (as politically incorrect as it appears to be) Merry Christmas.

Oh by the way, the VP of Marketing from Philips assured me, personally, that they wouldn’t sell the Philips brand in Home Depot. This was after I wrote about seeing a Magnavox plasma for sale there! Whew – thank God they are only in Wal-Mart!

Are you writing these brands down? Is anyone taking note of this?