Seismic shifts shake AV distribution landscape

Harald Steindl, HST Consulting, recently walked away from Mocom, an Austrian distribution company he previously owned and managed. He now tells Tim Kridel about some seismic shifts set to change the AV industry as we know it.

TK: Will vendors do more direct sales? If so, why? And how could/should AV integrators and other resellers respond to that change?

HS: In all honesty there is a HUGE difference between “doing sales” as in visiting customers, suggesting systems, etc. and “invoicing” customers.

So manufacturers do already ramp up their outside sales massively. This is totally logical for a number of reasons:

a) More and more manufacturers (read “brands” or “conglomerates”) do offer the whole pie or at least a significant part of it. The only way of making sure to get spec’d in total and not because of their (currently best in class) product X, is to go out directly and present the brand as a whole.

b) The average installer, integrator or distributor on the other hand does have a portfolio. More often than not this portfolio consists of what used to be specialists. Nowadays they often do have multiple choices within their selected brands. But old wisdom is that you can sell a system only once.

So, distributors often combine multiple brands in order to keep every supplier happy, at least a little bit.

This is 100% against the big vendor, who claims “we can do it all”

Times have changed and the former “we do only loudspeakers” does also offer now amps, and the former DSP-platform now also offers mixing consoles.

Just look at the last 10 years.

Tannoy used to be a speaker only play. Under the TC group, they were married to Lab.gruppen amps, TC-Electronics but pretty much separated. Now under the Music Group it’s a huge company offering everything.

By the way: what happened to the old British Audio companies? Almost all gone or part of something way bigger. Soundcraft, BSS, Klark Teknik, etc…

Harman now also does stage light with Martin. To put this into perspective: they expect (totally understandably from their point of view), that the installer does not only sell JBL speakers, but go full Harman including Martin light as well as AMX control.

Crestron now offers Audio DSPs in addition to all other stuff like lighting control. In about 10 years the comapny evolved (interestingly without a single acquisition)  from control only to full blown “everything”: audio/video matrixing, transmission, streaming, building control (lights, shades,...), etc..

Biamp now does video after 40 years of audio only. 

QSC does only a fraction of their business with amps anymore. 

All these are seismic shifts in our industry.

TK: Are exclusive distribution deals becoming less common? 

HS: Exclusive distribution deals are indeed becoming less common, in my humble opinion.

Reason for this is that distributors do have a historic burden of multiple brands. What used to be highly welcomed by the vendors (ie: great to have a distributor with a strong speaker brand to go with our amp brand) is now a highly competitive situation. Matter of fact, distributors lose brands because some vendors challenge them with “you either skip them or we will kick you”.

So with more and more vendors going directly to end users and consultants, the role of the distributor has changed dramatically. Until recently a distributor was a mini-me of the (far away) vendor. Nowadays the vendor does take over more and more work (sales, marketing). 

So the ideal distributor is different than before. Now vendors look for perfect (as in cheap and big scale) operations with logistics, RMA, invoicing, financing, etc. This is the exact same model the IT industry has used for decades. So no wonder that the Tech Datas of this world do more and more in AV.

TK: What are some successful resellers and distributors? Why are they successful? What can their peers learn from their strategies?

HS: The old model mostly does not work anymore, so dealers must adapt. In my opinion, the old cherry picking of the traditional dealer is already ending. To think that every brand wants to work with you is a thing of the past. 

One way is to become a Vendor X poster boy, i.e. officially declaring to focus on (one) certain brand(s). As many IT system integrators declare to be a Cisco house or a Dell house. Nothing wrong with going down that route as vendors will push leads to these loyal resellers.

Another way is to be highly focused in specific vertical markets. If installer Z is THE guy to go to for medical systems or hotels or such, vendors will try to cooperate with them in order to be able to target these markets. 

TK: AV vendors are increasingly designing many of their products to be plug and play. Doesn’t this trend mean vendors will require even fewer resellers?

HS: Well, in my opinion there is a huge misconception in our industry about the term “integrating”. We tend to think, that integrating means, getting product 1 from brand X to play nicely with product 2 from brand Y. Totally wrong.

Integrating means literally integrating stuff into the existing infrastructure and organisation of the client.

Can installers really think, they are “allowed” to make money for combining two stubborn products, which have both been suggested, offered and sold by the same company? 

Customers are willing to pay for integrating into their existing work flow, their existing building structures, etc.

So what we call plug and play nowadays is simply removing obstacles and hindrances, which were still there for no good reason.

Case in point: Soldering a XLR takes absurdly long time compared to pretty much every other trade.

Long story short: Integrators must move from the “inside integration” to “outside integration”.

It is only natural, that vendors are working hard to make “inside integration” not eat up the majority of the project sum.

It might sound very harsh, but the vendors don’t think that they are responsible for job protection of all those installers. They want to move their very own product, which is mostly hardware. 

This new model does not need less resellers, but for sure bigger ones having different skills. Take the average IT integrator as a reference. Is the “black art” in knowing all the different cables and connectors? No, so why does our industry still glorify this kind of wisdom?

TK: Will these trends mean more integrator and distributor mergers, acquisitions and closures?   

HS: Yes, the rally will continue.

Many installers (as well as vendors) will not be able to get big enough to carry all the skills needed under one roof. Also the average “good” AV end users are big scale corporations and such. Big companies like to buy from big companies.

Just imagine Harman cutting a big deal with a big national (or even multinational) insurance company. Do we really think that both parties would like to be depending on a smaller integrator and its limited resources?

We can see that big scale integrators are getting more and more business. Not necessarily because of their cheap prices or perfect knowledge but simply because they are able to seriously quote and realise such a big roll out.

On the vendor side there is an ever bigger problem of access to technology and knowhow. Almost every player in our industry is considered small when you ask chip designers, manufacturers and the like. 

Excerpts from Tim Kridel’s Q&A with Harald Steindl will be published in a wider article on the topic in the September edition of InAVate EMEA when we hear some reasons to be cheerful for the future of AV distribution companies.

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More Q&As in the series:
Sam Taylor, Almo Professional A/V
Jon Sidwick, Maverick Europe

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