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)