Is the Magician about to die? Part 2

How iDevice GUIs have taken away your "magic," forever changing the Custom Integration market and some suggestions on growing your business in spite of them.


Preface: If you have not read Part 1 of this series, please go back and do so now. If you don't, this continuation of the magician's story will not make any sense to you. Let's pick up where we left off......          

March 2004 - Convenience, Automation and New Construction become buzz words.

Convenience - The iPod has fully taken root now and most clients only care about how many songs they can carry in their pocket and not about the sound quality of the music. We are in the early stages of the iPod becoming the core music source in the home and quality music, especially quality 2 channel music, is starting to disappear from the stage.

Automation - Full sub-system automation (AMX, Crestron) is starting to become mainstream now and the perfect storm is brewing between it and huge growth in new construction. This new control category becomes a gold mine for A/V dealers to tap into and now the Custom Integrator channel is born.

New Construction - Banks are our industry's new best friend! All of the bigger houses that are going up (and there are a lot of them) are getting cost + financing. This means that a client that is building a 600K house is borrowing 750K from the bank. A lot of that extra 150K is going to buy our "toys" that consist of full automation, multi-room audio and flat panel TVs.

How did the above effect us as dealers? When you are digging for gold, you get gold fever. Generally as human beings, we take the path of least resistance and that even bleeds over into our salesmanship. Our clients are building these big houses and are asking us for 4 things: automation, multi-room audio (in which they want their iPod used as a source), flat panel TVs and a home theater. Notice what is missing.... good, quality audio (nice speakers and amps). We propose our design to them which includes everything they want but we try to throw in some quality audio also. They are not interested because they have their precious iPod and music has become a "convenience" for them and not an "experience." We take the easy path and take the sale but do not stress to them the benefits of quality audio. So quality audio (our anchor and reason we are in business) becomes something we drag along and if it gets into the job, it’s a bonus, not a necessity.

During this time there are three different types of business models in our industry.

1. 2 Channel Shops - These dealers did not see the future coming and are now stuck in the past. They did not embrace automation or home theater and kept denying what the iPod meant to their business. They are starting to feel the pinch and will dwindle down in numbers drastically in the next 5 years.

2. Custom Integrators with Showrooms – These dealers did see the market changing and adapted and are reaping the rewards in this time. They have had full out showrooms for a couple of years now where they can display all of their wares: Automation, Theater, Multi-Room Audio and the latest video gear. This is the "New Experience" that clients are looking for and this model is truly helping to close sales. All the while in these showrooms, automation is king and quality audio is in a back corner somewhere.

3. The "Trunker" is born - The scourge of the industry! He has no showroom (just a van) and therefore does not have the overhead that a true CI guy with a showroom has. So, he can be more competitive on price and often win the client over even if he has no way to provide that showroom "Experience." His description changes later in the story.

March 2005 - We as an industry strike gold in the midst of the perfect storm and I step up a level as a magician.

I moved to a bigger market with a ton of new construction and clients that were hungry for full sub-system integration. I needed to find a manufacturer that could provide this new set of tools. Remember, I had only done Pronto style remotes until this point. I chose AMX and it was a huge learning curve, but after training, I had the same feeling that I had the first time I held that Marantz RC5000 in my hand. I was holding an 8.4 inch, battery operated, AMX touch panel and looking at all of the cool graphics that were available, when a concept burst into my consciousness. What if I could take my proposal I normally give my client in a binder form, turn it into an interactive presentation on this panel (that is part of their design) and let my client take it home and play with it? They could view their proposal on it along with my job gallery, ad slicks of products, an example GUI with faux feedback, recommendations from other clients and, to top it off, it would be fully personalized with their name and even a picture of their home they were building. I step up from the magician to a wizard at this point! I get the form and structure down so I wouldn’t be re-inventing the wheel every time and begin wowing my clients. I again become the expert (in their eyes) they want to do business with because all of my competition are still giving a paper proposal in this new digital age and I’m delivering them technology that they have enough money to afford.

At this point, I’m still making decent margin on flat panels, multi-room audio, home theater and automation hardware. I’m making good margins on programming, mostly because of selling or the client requesting, cool customizations to the GUI of the control system. Again, I find the client wanting to take his control system GUI or hardware one step above his peers and he does not care (to a certain extent) how much money or time it takes for that to happen. Truly, automation is King of the day; quality audio becomes its peasant and the housing / automation Renaissance continues! (at least for a couple of years)

Is the Magician about to die? Part 1

How iDevice GUIs have taken away your "magic," forever changing the Custom Integration market and some suggestions on growing your business in spite of them.

Preface: I have split this blog into four parts because it is so long. I have a lot to say on this subject because I have lived it as a dealer and am continuing to live it as a Rep. The best way to get my point across is to put it into a time line that most in our industry are familiar with so I can use history to paint a clear picture and trend towards a future where most of our industry (dealers and manufacturers) are thriving. My first two posts will deal with a lot of history and the last two posts will make my point and give suggestions on going forward. I will post one every week and although I am open to comments on the first two, I know most of the comments will come from the last two. Please read them as a continuing story and thanks for riding my brainwaves in your spare time.           

I want to start by re-telling the story of the magician from his start to where he is today. To some reading this post, the early days of the magician will be foreign because you came into the industry during his hay day and did not know him in the beginning. So, bear with me while I re-hash his story.

April 1998 - This was the month that I first saw magic in the industry. I couldn’t believe my eyes. I was watching a TV that was so thin, clear and sharp that it looked alien to me. This was the first Pioneer 42 inch HD plasma screen to hit our store. What really surprised me, was when a few clients started asking when we could deliver one of "those new thin TVs" for $14,500.00 and didn’t try to haggle the cost in any way. Huge margin and high ticket items....what could be better for our fledgling industry? I didn’t sell a lot of them over the next year, but it created excitement and traffic. Those were great times, but well past us now.

May 1999 - A little over a year later, magic again appeared on my desk in the form of a little "touch screen" remote called the Marantz RC5000 (the Pronto in a different skin). Wow....this was the first customizable, touch screen remote that I’d ever seen. My mind started spinning on how I could use this new "tool" to differentiate myself from my competitors to the point that I had trouble sleeping at night because I was constantly thinking of different graphics and tricks that I could put into it to amaze my clients. These were the same clients that were buying my 10K to 20K flat panels TVs. They did not mind spending $1,200.00 (programmed) on a remote that had a gray-scale picture of their house or picture of their face on it to use as a button. I became the only person in my area that fully embraced and understood this new gadget that became a "deal closer" and validated me as someone that was a step above my competition. In essence, I had become the Magician in my clients’ eyes and my little remote became my wand! It became so fun to watch my clients’ faces as they pressed the CNN logo and "abracadabra" everything turned on and the TV tuned to CNN automatically. It was an "Ah-Ha" moment for them and a great time to be in the industry.

March 2001 - Skip ahead a couple of years and business is great in all categories (Audio, Video, Remotes). Even though my margins in flat panels had started to trend down a little, my volume was picking up. I had developed a great client base because of my realization of how important it was for my clients to "stand out" from their peers through options like my customized remote systems. To make things better for me, color versions of my touch screen remotes had hit the market and were double the cost of the gray-scale ones. Yippee!!

March 2002  - A funny thing started happening. I noticed that the most important item that came up in my client interviews was "ease of use" of the system. A couple of years back, they wanted an A/V system that was cutting edge and provided that "hair raising" experience you could only get with the latest surround sound / 2 Channel gear and the best video possible which meant high-end manufacturers with hefty margins for me. Before, they were okay with using multiple remotes to accomplish a task. Now, they demanded one easy to use remote and if they had to sacrifice a lot of their budget to programming to make it happen, that was okay. So, this was the beginning of the descent of the "Audio Experience" in lieu of the "Control Experience." I didn’t mind it that much because in my mind, it all worked out on my bottom line because now I was getting my margin in programming. Even though true sub-system automation (AMX / Crestron, etc.)  was starting to come of age at this time, I was oblivious to it because my store hadn’t grown to that level and we were satisfied with just doing fancy custom remotes that worked our AV systems and multi-room systems. In a couple of years, I would tap into full automation and discover this new "set of tools," but for now, in South Mississippi, I was still the magician.  

December 2002 - Clients are catching me off guard when they start asking me if we have this new music player called an "iPod." Supposedly, it came out Christmas of 2001, but only now am I getting requests for it. I try to quickly educate myself on what this crazy, new "little piece of audio crap" is so I can sell against it to my clients that are asking about it. No matter what I do, the inquiries keep growing and growing and I find myself in a daze being bombarded with clients’ questions and even outright defying their magician when they go out and buy one even after I tell them that it shouldn’t even be considered as a piece of audio gear! Oh, and now they want me to integrate it in their system and be able to control it with my precious touch panel remote! The Nerve!!! But, I cave into them and make it play nicely with their system and I still remain who they consider to be the Guru. However, all the while, my quality audio business starts to slip.