Harman has been a mainstay of the pro audio world, but the AMX and SVSi deals has seen it shift focus in the past two years. Paul Milligan spoke to Erik Tarkiainen to see where the company is headed.
“I know somebody is developing a marketing plan right now for a bottle or water or a stapler, more power to them but I couldn’t do it if I wasn’t truly excited or passionate about the product. For so many of us in the pro-audio world we do it because we are fans of the technology, we don’t get it right all the time but we do it with passion and an authenticity. We are the market,” says Erik Tarkiainen, Harman Professional Solutions VP of marketing.
That attitude is commonplace in the audio community, in which Harman has been a stalwart for decades. However, two deals in the last two years, to buy AMX and SVSi, has seen Harman become a company capable of providing end-to-end AV systems for the first time.
Tarkiainen gives much credit for this transformation to previous exec VP Blake Augsberger (who left in May 2016), “He saw this was the way things are going, and saw it wouldn’t be enough to just being a provider of audio. He saw these things are all much more inter-connected and dependent on each other.”
2015 was a significant year for the company, because as a result of the AMX /SVSI deals, it had to find a home for the new brands. To do this it went through a re-organisation, and is organised by markets instead of brands. One unit looks after entertainment, under that sits tour audio, tour lighting, cinema, retail, portable PA etc. Another is focused on enterprise, within that are segments such as hospitality and large venues.
Re-focussing in this manner has allowed it to get to the core of what its customers want and need Tarkiainen says. “We have incredible people here, technologists, researchers with PHDs, they are looking for internal breakthroughs, and asking what can we do with transducer design or signal processing? What are the things that we can develop and provide to the market that people don’t currently know is possible? You can’t be so futuristic you lose touch with what customers need but if you are only delivering what they need and not investing in R&D you might not be able to prod demand, and you’ll always be playing catch-up.”
The re-organisation has also forced Harman to investigate how it can combine technologies in ways that harness the fact it now has lighting and control and audio capabilities. It’s all about balance says Tarkiainen. “We have to supply products that the customer needs right now, and sales teams tell us what they are, but in larger enterprise markets, where the project takes years to build (stadiums, cruise ships), we have to look further afield.
"If a client asks for Dante in a particular product, it’s our job to find out the why behind it. We can add Dante to a Crown amplifier, but what are they really trying to do? What is it they are trying to network? What are they trying to control and why do they want this? The answers to that will help us get ahead of the curve, so we can be proactively delivering solutions before they become feature requests.”
The re-organisation, from brands into markets, also affected how it deals with its R&D spend. Previously allocated to each brand, all R&D resources (and for a company the size of Harman the assumption is that the R&D budget is not an inconsiderable amount of money) have been combined under one technology group. “That gives us the scale we have but have never actualised. We spend more on R&D in a year than any of our competitors have in revenue. It allows us to be Darwinian; if we have 12 great ideas for video control we can put all of our resources on that. We can really shift, allocate and prioritise based on market demand and product direction.”
Now it has a bigger portfolio than ever before, what product or market areas is Harman focussing on right now? “We see opportunities across so many segments right now, especially on the enterprise side of things, hospitality, large venues, corporate etc. For us the enterprise market is a growth area, as we haven’t tapped out our potential there, we see those segments growing but also their need for integrated systems growing too.”
To help it become more of a regular feature in the enterprise world, Harman is looking to increase its IT and networking skills, as a way of providing complete systems to clients. “Anything that can help integrate hardware and turn products into solutions, and provide integrated control and transport is huge for us. Without those technologies they are just discrete boxes.”
Tarkiainen sites the SVSi deal as an example of Harman understanding how fundamental IT has become to the AV market. “Having the ability to multi-cast 4K video over standard internet protocols is crazy what that has enabled for our customers. It makes our market look much more of an IT segment than AV.”
As it proved with AMX and SVSi deals, Harman is no stranger to spending money to bring new AV/IT expertise into its business, and it did so again last year with the $750m purchase of Symphony Teleca. That purchase has formed the basis of a new department (called the connected services division) and added nearly 8,000 employees solely focused on IT and software development. So how does that division work alongside AMX and SVSi? “They are doing a lot of training and collaboration with us. At InfoComm we showed how we can incorporate IoT sensors with AMX scheduling so you can track occupancy and usage in meetings spaces.”
The M&A activity is all aimed towards Harman becoming a one provider for all AV needs future says Tarkiainen, the often talked about ‘one throat to choke’. “As systems are becoming more complex, they are looking for a single source for supports, either in specifying or post-install support. We are able to provide that, be it in amps, mics, mixers, speakers and now control and switching.”
The opportunity ahead says Tarkiainen is not just to solve immediate customer needs but to actually help to grow their business by enhancing the experience of their customers, “whether that’s a fan at a sporting event or a guest at a hotel or a student at a university, how can our industry develop solutions that don’t just meet the current AV needs? How can we go from being a capital expense to a customer to a way where they can deliver enhanced services to their customers and grow their business? If we can do that either as a company or as an industry that is how we can really grow.”