Audio Visual reseller opinion: Convergence a blurry subject

I think a number of IT distributors look at the growing sector of CE and believe that it is the next step of evolution for their business.

Some of these organisations try to apply the same distribution models to the new channel however this approach has and will create further problems for the CE market.

The CE industry bares similar traits to the IT sector, only CE is still somewhat in its infancy and if you were to compare the two you would find that in the past, a number of businesses were burnt by IT vendors providing substandard product and service.

Now these organisations are careful about the selection of a vendor and are not focused solely on price. In fact the justification of price is coupled closely with reliability and return on investment.

Qualifications and certifications have greatly improved due to a plethora of IT training organisations and vendor certifications. This has created a skilled and resourceful workforce with good consumer education

Service rates are high ranging from $120 to several hundreds of dollars per hour. Labour recovery is generally high and service contracts are profitable.

Plenty of people are being burnt in the CE sector every day but the lesson hasn’t quite sunk in yet. Some of the largest companies delivering solutions are responsible for substandard product and service.

Consumers focus on price, features and quality generally in that order although enthusiasts tend to have more brand loyalty and focus more on quality and features rather than price.

Certification or qualifications are somewhat poor and on the mend however good formal qualifications and degrees could be some time away.

A new and growing industry has placed a demand on limited resources. This has attracted personnel from different sectors such as Telecommunications, IT and electrical to fill the gap however limited knowledge and experience is common.

This has been compounded by the advancements in technology especially in the connectivity area and is the very reason why IT believes they can deliver AV, purely because it plugs into a network.

Service rates are poor ranging from $60 to $90 per hour with poor labour recovery and wages are high yet consumers do not recognise that CE can also be specialised and needs to be charged accordingly.

CE has become important to business but not necessity and it is still somewhat a luxury in the residential market.

Distributors and manufacturers new to CE will have to be very careful with their focus.

Over the past five years I have watched a number of distributors, vendors and even manufacturers hit the wall yet in an industry that has had tremendous growth.

Manufacturers such as Sony and Pioneer have had to change their business models to survive and have suffered massive financial losses during the transition yet these organisations have been producing CE for more than half a century.

So how does a company with so much experience, expertise and vast resources get it wrong?

CE companies have been faced with dwindling margins, consumers have had too many brands to choose from and everyone is fighting for market share, or for a better word corporate greed.

Consumers are being attracted to gimmicks like a fish to a lure, ending up with something that is often be too good to be true.

Only six years ago an 87cm CRT TV cost $5,000 or more, now we are selling 107cm plasmas for $1,500 or less while competing in a world where petrol has almost doubled, the cost of groceries are now outrageous, and the real estate market is out of control.

More features and less price but increased business running costs means that something has to suffer and that is generally quality and / or poor level of service.

Products bursting into flames, repair agents backlogged with repairs and disgruntled consumers with the lack of service are a good indication of how the industry has been cheapened.

Our organisation functions as an integrator and focuses on the high end markets servicing both residential and corporate sectors but we have had to adapt to changing marketplaces.

We focus on providing a good quality product, a high level of service and return on investment however our organisation is only as good as the staff we employ, the products we sell and the backup support provided by our distributors.

With this in mind it will be hard work for any IT distributor to crack the integrated CE market.

Every time an integrator has an issue with a product a large amount of time and money is wasted which is not picked up by the customer nor the distributor or manufacturer. The integrator more often than not has to wear it.

By using manufacturers that are well established, distributors that know the product line extensively and brand names well known for quality product we reduce potential problems and can maximise profits.

An integrator looks for limited distribution, strong margins and a reliable product. Labour costs have to be subsidised by product margins and it is typically expected that you support the solution for 12 months without any further remuneration so these costs have to be absorbed somewhere.

Uptake on maintenance contracts can be difficult to procure and again with service rates being low, labour recovery must be very high to match or exceed outgoings.

It is exciting to work in an evolving industry and we welcome change and new people however it is important that people understand the complexity of it instead of focusing on the potential financial benefits.