AV Matters
The Stimson Group Newsletter
Combined Issue Oct 2007
In This Issue
Merger Mania
Digital Signage Thoughts
Your Questions
Reader Response
Book Review
LDI Show
About The Stimson Group
SI Quick Links
Thank-you for all your emails and phone calls of support. I will do my best to make each issue worthy of a few minutes of your time.

If you know someone who would enjoy or benefit from a monthly dose of AV Matters, please use the Forward link at the bottom of the page.

This over-sized issue combines my R&S and SI editions. If you use the Confirm link at the top of the page, you can manage which newsletter you receive in the future.
 
Sincerely,
 
Tom (TR) Stimson, CTS
My Direct Email
Website
R&S Quick Links
Download the Sep '07 R&S Trends Survey Report

Take the October R&S Trends Survey

Check out Tom's Seminar at LDI

Merger Mania?

I predicted a fair amount of merger and acquisition activity this year and for the most part I was right. The joining of AVI and SPL - the two biggest systems' integrators in North America - is almost mind-numbing in scale. On the Staging side we've seen Scharff-Weisberg and Video Applications create a joint ownership agreement - a merger by any other name. And as much as folks want to talk about it, no one really seems to know what either of these mergers will mean for our industry. Can these newly combined companies create wealth, market share, or efficiencies that they could not do alone? Or will they be eaten up by the huge differences in their respective cultures and market focus? Mergers imply that the two companies are essentially equals, but in the end something disappears and something remains.

Acquisitions on the other hand come in two flavors. We all notice purchases when one big name company buys another. We saw a lot of that in the late '90s when Caribiner and Harris Corporation were acquiring companies on what seemed like a weekly basis. The acquired company is eventually assimilated. The other kind of acquisition - which is quietly going on now - is private equity purchases. Large funds of independent money managed by M&A experts purchase strategically important companies. We don't always hear about these purchases, because the management rarely changes and financial backers do not tend to seek the spotlight. But, if these ventures meet their financial goals, the next step is usually towards consolidation - ie: assimilations.

The number of broker phone calls sniffing out acquisition prospects has skyrocketed in the past six months. I have received several myself and I have nothing to sell! There has been particular interest in companies that are not  focused on AV as we know it, but have market share that includes AV users. Computer rental firms are particularly interesting because not only do they interface with AV rental gear, they often work with the customer on an enterprise level.  It's easy to see adding a plasma rental to a laptop order. The next step is a long term lease leading to an equipment sale. How hard is it to imagine a permanent installation going to the same supplier?

The big difference I think we will see in this era of mergers and acquisitions is better overall strategy. It won't just be about reaching critical mass and going public. I expect the goals to be about the long term generation of wealth and not the short term build and flip strategy that ruined so many good companies ten years ago. One thing we can count on is that mergers and acquisitions create huge opportunities for companies who are not directly involved. Employees get displaced, customers get overlooked, and manufacturers get dropped. Be ready to pick up the pieces.

Tom Stimson, CTS
Comments?
 Where Does Digital Signage Fit In?

We all know digital signage is good. It's an efficient and versatile tool that works in a variety of environments. Customers and consumers seem to understand its value and want more of it. The potential contracts are huge. So, why aren't AV Integrators involved in more of these projects? There are two key issues that come to mind. One is markdigital signageet channel and the other is content. Digital signage has a different buyer from boardrooms and classrooms. What that buyer needs help with is content. The glue that connects these two items back to our core AV integration businesses is those profitable service contracts.

Large digital signage initiatives often start with the communication content specifiers and not with the hardware buyers. And because content delivery is not your customer's core business, this purchase influencer may be a sub-contractor and probably a designer. The missing link for most transactions is the integration of the creative concept into a software delivery system. Designers talk to software folks. If you want the hardware, service, and ongoing relationship - content delivery has to become part of your core business. Just because the design is finished, doesn't mean that the content never changes. Help your customer manage that content and you will have another profitable service agreement.

Designing content is a creative process that requires ongoing development support. It also sells through a different market channel. Marketing departments, ad agencies, and other communications groups need it to fulfill their needs. In general these folks simply do not care how technology works - they value the services of people who don't burden them with those details. As a result, they often don't want to talk to an integrator. They want to talk to creative directors who in turn talk to content developers who talk to hardware people. At the very least, AV integrators who want to sell digital signage installations need to partner with content creators.

Tom Stimson, CTS
Comments?
Q&A

Q: How do we choose rental inventory when faced with equal products from different manufacturers?

It is very rare to have two equal choices. You need to ask more questions. Here's some points to consider:
  • Complete cost of implementation: Calculate everything you need to buy in order to use that product. If the item is part of a system, does that product affect the overall cost for that system? Don't forget special cables and replacement parts. I have nixed products because they required a battery that was non-standard.
  • Cost of ownership for expected life of product: This sounds tedious but it's worth the effort. Ask the supplier's technical support what the recommended maintenance is for that product. Down time, parts, and service hours are real costs. And don't forget the cost of financing.
  • Access to training and tech support: Can you get your people trained and is there help available WHEN they need it? Your business is not M-F, 9-5. Who answers the phone at your supplier Sundays at 3am? For complex products, is training regularly available during your slow times?
  • Brand acceptance: The biggest mistake I see smaller stagers make is buying from an unknown manufacturer to save a few dollars. Sometimes these are great products that just haven't been recognized yet. More often, that 'good deal' just solidified your company's position as an also-ran.
For rental companies, the purchase price is just the start. Have a checklist to consider that will keep emotions in check.

Please email us your questions.
Reader Comments
Last month my featured article noted that technology is getting easier to apply and how that will affect AV companies. My old friend Philip Barrett sent me this insightful comment:

"We, as an industry, are trying to make magic out of items the client can do comfortably at home.  Video departments throw up their hands in horror when a client hands over a flash file on a thumb drive.  A1's roll their eyes when asked to do a simple audio edit.  Yet these are all tasks that any savvy client can perform on their laptop. it's no big deal to them. 

Will this trend increase?  Of course, computers are getting ever more powerful, web based apps are allowing more & more complex tasks without the need for installed software and the next crop of producers grew up on the computer & online.

I'm already seeing a trend towards client supplied video playback.  Case in point on a show last week, the video production crew hired by the producer showed up with not just the show tapes but a complete Media 100 HD based playback system and crew.  Total video personnel on the show was 9 but only 3 were supplied by the staging vendor!  Complete onsite editing was also sold to the client by the producer.  The Media 100 system they supplied had a total value (including the Macs & HD monitors) of less than $20K and I'm sure they recouped close to 50% of that on this one event.  The staging vendor supplied interfaces/switching/projection and certainly lost out big time on this one. 

Unless the staging companies want to become commodity based, big-box rental houses and trucking companies - they are going to have to address this head on and fast."

Philip Barrett is a reknowned freelance audio engineer.  Read Philip's Blog.
World is FlatAnother Must-Read Book
As I scan my shelves, one book in particular stands out as vitally important to the AV industry. Thomas Friedman's "The World is Flat: A Brief History of the 21st Century" is full of insights on how technology is changing our world on a daily basis. Originally published in 2005, it is already on its third edition - the author has updated it every year!  The subject matter is analytical economics, but Friedman's style is riveting. This is about history, and the history it tells is still unfolding around us. If you have school-age children and expect them to make a living on their own one day - read this book.

Order this book on Amazon
LDI Show in Orlando Nov 12-18
Lighting is the main topic at LDI, but audio, special effects, scenic technology, and rigging are all on exhibit when the floor opens Nov. 16-18. There are also education courses and manufacturing training that you won't find at any other trade show. On Saturday Nov. 17, I will be moderating a panel discussion on the service and technology expectations of the corporate sector. Please bring your corporate expertise and join the discussion.

For the first time, InfoComm's Rental & Staging Council will be hosting a reception at LDI for InfoComm Members and anyone interested in learning more about InfoComm. The reception will take place Rosen Center on Friday, November 16 from 5:30 pm - 7:30 pm in Salon 10. Please come by and say hello.
 
Art of SalesAbout Thomas R. Stimson, MBA, CTS

Tom Stimson is celebrating over twenty-five years in the communications technology industry.  As a Consultant, Tom helps companies build smoother operations, focus sales, and increase profit. For more information visit our website.

LinkedIn