Economic growth warms northern climate.

Over the last half-decade, the Scandinavian nations have witnessed a transformation in their AV markets. In the first of 2007’s regional insights, InAVate explores the reasons behind this and the prospects for the future.

The economies of Finland, Sweden, Denmark, Norway and Iceland are some of the most sound and dynamic in the world. Indeed, the World Economic Forum’s Global Competitiveness Report for 2006-7 ranked them as five out of the top twenty most competitive countries in the world. Finland, Sweden and Denmark occupied positions two, three and four.
The WEF puts this down largely to well managed economies and solid national institutions, but other areas where all five countries score very highly are training and technological preparedness.
Finally, the five Scandinavian states benefit from low unemployment. All five are below the European average and the figures of 2.1% for Norway and Iceland put larger nations such as France, Germany or the UK in the shade. However, as we’ll see later on, this is having repercussions for employers looking for staff.

Alongside, or more likely because of, the recent strong performance in their economies, observers in the Scandinavian states report a general maturation of the AV market.

Sweden is the largest of the five countries. It’s population of around nine million is almost double that of Denmark, Finland or Norway who all sit around the five million mark.

Daniel Borg is the Sales and Marketing Manager for new set up Electrosonic AB, which was launched in Sweden in early 2006. The company initially has focused on the control room market, leveraging the parent company’s expertise in the sector, but Daniel along with other members of his team is a veteran of the Swedish AV market and has seen it develop over a period of years. His current view is very positive.

“There is an extreme amount of business at the moment. And you can tell this is the case because when public tenders are published, there are very few responses because companies simply don’t have time at the moment. It’s extremely hard to get manpower and we are outsourcing a lot of our installations. It’s really hard to recruit.”

The company has identified significant potential in the control room sector as Borg explains: “What’s particularly driving the market is a much greater acceptance of surveillance. A couple of years ago it was really hard just to get permission to install a camera, now we see the potential for huge roll outs. This is a social as well as a legislative thing. The population is coming to accept that cameras are good.”

Also working in Sweden is Marcus Haraldson Boij of InformationsTechnik. He works as a project manager and systems designer.
“We have had two fantastic years, especially 2006. There is an economic boom in Sweden. All the major companies are making good profits so there is budget available for full AV systems without the need for cost cutting.”

Boij has identified a definite increase in the level of expectation and technical knowledge of clients. “Before, people would ask, does this thing work. Now they want a full system solution. We are long past box shifting in Sweden now. Five years ago we were essentially a dealer in projection and discussion equipment, now we identify ourselves as a solutions provider for communications systems.”

InformationsTechnik actively shies away from the term AV: “The AV business is tarnished by poor reputation. In the past it has meant a small, one-man company installing a projector and control system that didn’t work. A transformation has occurred in the last two or three years, but people are still wary of the term AV.”

Fortunately the company is in the position of having time to train staff from outside the AV industry. Although given the recruitment issues expressed by Electrosonic’s Borg, they have little choice.

Both Boij and Borg are optimistic for the future. Boij expects to hire yet more staff, sourcing them from the ranks of Civil Engineers and retraining them, whilst also hoping to develop the IT expertise of InformationsTechnik. Borg believes his success this year will largely derive from strong foundations laid for the new company during 2006: “We put a lot of orders on the book in 2006 that will be completed in 2007.”

Based in Denmark, is Bjorn Renemo-Henrikson, Sales Director of the newly established Sennheiser Nordic office. The company is in the process of taking back in house all of the Sennheiser national distribution deals in the Nordic region, an indicator in itself of the importance that Sennheiser attaches to this market.

Henrikson has been involved in the region’s AV market for a considerable time and he too has noticed a change in attitude: “There is generally a greater understanding of the value of a good audio system in a meeting or other event. Especially in a globalising market where people are doing business in a second language like English, comprehension is very important.” He also identifies some key peculiarities of the region in terms of the relationship between customer and supplier: “In Sweden and Norway there is a great sense of loyalty to the local guy - the geography of both countries forces that. If something breaks having a guy one hundred kilometers away is no use. Denmark is smaller so this is less of an issue. Also, if you’re talking to a Scandinavia, they will want to know that you can provide a complete solution not just a single product.”

In this maturation Henrikson also sees a subtler trend that Sennheiser is having to adapt to. “When we deal with audio companies they are interested in the detail of products. They want to know how many channels it supports and the tiniest specifications. They are audio geeks. However, when we deal with AV integration firms they aren’t interested in that kind of detail. They want to know what it can do for them.”

Henrikson is another who sees a general surplus of work, with public tenders simply not being responded to.

Peter Sperling is MD of AVIT Systems a Danish based integrator who operate throughout the region. Whilst admitting to being an eternal optimist Peter still thinks the prospects are very good. “Business is good all over the region and I think our prospects for 2007 are very strong. We operate a lot in the studio and studio control markets and all the major broadcasters seem to have cash on hand for new projects.”

Norway has long relied largely on its natural resources to provide much of its national wealth. Exploitation of the country’s North Sea Oil and Gas reserves accounts for much of the business for systems integrators as it does for other companies. Recent instabilities in other oil producing nations and increased pricing have contribute to a continued bouyancy in the country’s economy and unemployment figures of around 2%.

High-end projector manufacturer Projection Design’s Anders Lokke describes the country’s AV market as “a bit of a bloodbath.” Whilst Projection Design sells around the world, Lokke’s strongest purview is in Denmark He says: “Speaking to our distributors and partners it’s very good here. People have money, businesses have money as well. There is quiet a bit of competition in the region, especially at the low end. Prices are being cut. I don’t see how anyone can make money supplying projectors to the IT companies. We’re out of that though because we only really deal in the higher end products.

Medialon’s Mikel Toksvart is also based in Norway as the Scandinavian area Sales Manager. The regional sales force has been established for four or five years and Mikel reports a continued growth in business, particularly over the last twelve months. “We’ve been involved in a huge number of projects in the past year, with great variety amongst them; show rooms for Volvo in Sweden, a stage management system for a theatre in Norway and a show room for the Finnish government. The difference to previous years is the scale of the projects. I don’t see any reason why next year shouldn’t be better again either.”

With a population of around only around 300,000 one might not expect Iceland to be a hot bed of AV activity. However, the island has a strong knowledge based economy, greatly enhanced by the recent addition of a second high speed internet link to mainland Scotland. Like Norway, Iceland enjoys incredibly low unemployment around the 2% mark.

Based in the capital city, Reykjavik, Exton is a national distributor for Meyer Sound and Electro Voice and offers the full range of AV services from rental and staging to AV installation. Kristján Magnússon from the company’s integration team painted a rosy picture of the market there.

“In the last four years the market has changed completely. It used to be that we could not sell a good system, everything was just bare bones. In particular video conference equipment has really taken off especially since the new fibre optic link was put in connecting us with Scotland.”

Iceland itself is investing. A number of public-private partnerships are springing up, the most significant of which, from Magnússon’s point of view, is a new dedicate concert and conference centre – the largest of its kind the island has seen.

The AV markets of Scandinavia, therefore, are far from similar to their chilly climates. In the last four years the whole region has enjoyed a significant economic upturn and this has been mirrored by an increase in AV integration business. However, there has not just been a growth in units shifted. Several of those interviewed described a maturating of the customer base – a definite move away from box buying, and therefore box shifting, towards a demand for total solution provision. Coupled with the fact that, as in many other territories, simple unit selling is no longer particularly profitable, this means that systems integration in the region is both in demand and making money for those involved.

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