Published in December 2006

Kayye's Krystal Ball—V.07
By Gary Kayye, CTS

The author reviews how he did last time—and what he sees for the future.

    It’s that time of year, again....
    Welcome to my eighth annual Krystal Ball feature, offering predictions for the upcoming year for commercial AV, and even some home AV technology, trends and products. If you’re a regular reader, you know that, each year, I start by reviewing my predictions from last year (see “Kayye’s Krystal Ball V.06,” December 2005, with my follow up in “Sight Lines,” June 2006).
    Why do I do it this way? Well, when I was a kid, I loved TV and always loved watching those TV psychics sell their predictions to viewers who called in with their credit card numbers. Every year, the psychics would reappear, selling the next year’s predictions. But, I could never remember what they predicted to see if they were right. I always wanted them to remind us of their predictions from the previous year so I could see if it was worth the price (I knew my dad’s credit card number).
    In this case, I’m free. You didn’t pay to read this, so keep that in perspective. But, if I may say so myself, over the past seven years, I’ve actually done a pretty good job—or been really lucky.
    So, on to the review of the 2006 predictions; and then I will jump into my predictions for next year.

2006 Review
    China, China, China, China, China: My first prediction was that China would be the big country impacting commercial AV more than any other. Although this wasn’t too much of a stretch because everyone seemed to see it coming, I actually was surprised how much of an impact China has had already. Last year, I focused specifically on the display market, explaining how China’s new pack of display manufacturers would not only bring prices down even further, but also flood the market with new products. All that occurred. You would be shocked at who’s manufacturing displays in China now: virtually every Japanese and Korean manufacturer, in fact!
    But, what surprised me was the impact China had on segments of the market that I didn’t see coming: the glue. Companies ranging from control system manufacturers, to interfacing, switching, routing and cabling are manufacturing much of their lines in China; it’s cheaper and the quality is equal to or better than what was coming from Mexico and the US before.
    In addition, China-based companies are now making an appearance on the market with their own branded products. For example, Teq Gear, Humax, Oley and Walcom certainly are not names that roll off our tongues at the water cooler when we’re talking systems design in the commercial AV market, but you actually use more of their products than you think. Although these companies have their own branded products, they also make products for four of the top seven projector and flat-panel display manufacturers on the US market today!
    And what’s impressing me, as well, is that we’re starting to see some original design coming from China. Watch for this trend to continue in 2007.

Market Consolidation
    • Projector market consolidation: I was dead wrong. I thought the sheer number of display manufacturers in the business would force market consolidation, but it didn’t. So far, everyone’s still in the market and still using the same name they were using at the beginning of the year.
    But, with InFocus hanging out a giant for sale sign, there’s bound to be consolidation in 2007—unless the company goes out of business (unlikely).
    • More content servers: Although content servers don’t dominate the landscape of the AV market, products such as AMX’s MAX and Crestron’s Adagio certainly are changing the way systems are designed and content is delivered.
    You’ll see more content servers coming in 2007, and they’ll deliver video, audio and PC content of more than adequate quality to be able to serve up virtually anywhere in most commercial AV systems, including boardrooms, classrooms, hotel and conference center signage, houses of worship, live content delivery, etc.
    • The service model: Just about every dealer I know is working on, or has already changed over to, a service model for making money. Although profit margins for selling AV gear, according to NSCA, went up a few percentage points in 2006, when you drill down in the report the group published, you find that most of this came from either audio gear or from the additional services that the integrators were offering, such as proactive service contracts. Kudos to those dealers! And, if you’re not already selling services such as systems design, installation and service contracts, please start! It’s more profitable than selling AV gear and the residual income is forever, if you do a good job with it.

HD videoconferencing finally works!

Small, Bright Projectors
    • Fricking small, bright projectors: Well, we did see the truly handheld projector debut in 2006 from a number of projector companies, following Mitsubishi’s lead. But, what’s amazing to me is what companies such as Epson are getting in light output from products such as the PowerLite 1715c (rated at 2700 lumens and really getting closer to 3000) and all in a three-pound, wireless-networkable package at around $2000—yes, $2000. If you’re not already putting this projector into your basic boardrooms, conference rooms and classrooms, you certainly should. It’s incredible!
    What we’re seeing now just simply amazes me: super-portable projectors, which are bright enough to be used in almost any ambient lighting conditions, that are all between 2500 and 3000 lumens in sub-five-pound packaging in both LCD and DLP formats. Certainly, the leaders here are companies such as Epson, Mitsubishi, Christie and Toshiba, but virtually every projector company has its version now, too.
    • Smart projectors: Not only is the new generation of projectors network- able (and most are wireless, in fact) but, also, they are capable of projecting (via the air) everything your computer can project—from PowerPoint, to Excel, to PDFs and even HD video! Yep, wireless video via a network! Could the truly wireless system be too far away?

Audio Art
    • Audio art: Everyone knows that the most profitable segment in commercial AV still is installation audio. While the typical InfoComm member integrator has been focused on the projected image in the room, the NSCA member integrator has been focused on the less glamorous audio segment. But, guess who’s more profitable?
    I predicted that 2006 would see a resurgence in the audio space and a refocusing of the typical AV dealer on the art of audio, and that’s exactly what’s happened. According to research we did for a major audio company that is nearing close to $4 billion a year in sales, the percentage of the gear in a typical AV system that was audio grew almost 10% from 2003 to 2005. Coincidentally, the audio-centric systems were also 6% more profitable than the video-centric systems.
    • Big time growth: Finally, I predicted that, in 2006, we would all experience growth like that we saw in the late 1990s. Well, I am excited to say, I was right. The market had a record year in 2006 and virtually every dealer is in hiring mode.
    In fact, I was at the NSCA Fall Business Conference in October and one dealer told me his problem with switching to a totally service model from a historically totally gear-selling model is people. He can’t find enough highly qualified people to move that way quickly enough.
    My response? Check out what Info- Comm and the new ESPA alliance from NSCA, CEDIA and CEA are doing. Both InfoComm and ESPA have certified educational programs that will take individuals directly out of high school and help them become installers or AV systems designers in less than a year, without any AV experience.
    I predict that education will determine the winners….

2007 Predictions
    • HD, HD, HD: This may not happen in 2007, but it will soon. Almost every projector manufacturer is telling me that they eventually will only make 1920x1080 (native HD format) front-screen projectors. Sure, there’ll be the 4K and 8K projectors for large staging venue applications as well as digital cinema, but the truth is that the future of all consumer displays is what’s known as 1080p (1920x1080 progressive scan) display technologies. In fact, the flat-panel LCD market is already there. And, that entire market will be there by 2008!
    The fact is, the projection technologies used in commercial AV come from the home AV market demand. That market is actually 23 times the size of the professional market. Simple economies of scale will determine the eventual output native resolution of every projector on the market—and it will be 1080p.
    So, what does that mean to you? Well, two things, really: 1) You have to consider the impact of 16:9 aspect ratio projection in the design of your clients’ rooms. Whether you like it or not, projected images are going to wide-screen imaging and that will change the room design; significantly, more often than not. You don’t want to force instructors to stand in the corner of the room to keep from being in the projected image light path, and you don’t want to have to eliminate the back of the room because they can’t see the projected image from so far away (remember, the image—and character—height will change).
    And, 2) HD imaging will drive HD audio and content, and all sorts of HD-capable gear and expertise. (Hey, just look at the new HD-VTC systems and you’ll see the impact that HD is having there; they finally work!) More on that later….

Simpler Control Systems
    • Simpler control systems: The ultimate irony of the control system market is that it developed as a way to simplify control over complicated AV systems. But, in many cases, these control systems don’t do that: How many poorly programmed touch- screens have you seen that were too complicated to use? Everyone, even most of the control system manufacturers, say that you shouldn’t have to touch a screen more than three times to perform any function. But that rule is hardly ever followed.
    A new generation of simpler control systems will have a huge impact on the commercial AV market in 2007. Logitech’s Harmony 1000 is a great example of that: a $500 touchscreen that can control virtually every function in any boardroom, conference room and training room, and be programmed to do that in less than two hours.
    Believe me, I have done it myself. Sure, the big control system manufacturers will bash this product all day long, but one of the two actually is currently negotiating with Logitech to OEM this product and expects to introduce its version of it by NSCA 2007. Hypocritical? Maybe not. What would you do if you were them?
    Also, many more manufacturers have jumped into the control system market. At CEDIA, I counted 22(!) manufacturers with control system products. Of course, half of those are Windows-based products, so I don’t really consider them viable (i.e., see Windows blue screen of death). Still, such entries into the market offer a whole new slew of options from which integrators can choose.
    But, back to simplicity: just look at products such as Extron’s MediaLink and Crestron’s QuickMedia, and what they have done to the commercial AV market. Super-simplification at its best! Watch for more of that in 2007—a lot more!

iPod Pro
    • iPod Pro: The iPod has become the most ubiquitous consumer product, ever. No one now disputes that. But, will it make an appearance in commercial AV in 2007? Yep. With the next-generation iPod, you’ll see the networkable player potentially become a tool in public address systems, in digital signage, in kiosk advertising and maybe even in control systems.
    Truth is, the form-factor will have to change a bit for all this to happen in 2007, but Apple’s watching this potential segment of the market as closely as it is the display segment.
    By the way, you should finally see Apple consumer/professional display products in 2007, too. Oh, and don’t forget iTV, Apple’s wireless content server for audio, video and HD stuff (all outputting signals from an HDMI port).
    • Blu-ray wins: I can’t believe that the industry’s DVD manufacturers didn’t learn this lesson with the Divx DVD debacle from the late 1990s. Divx DVD finally called it quits on June 16, 1999, and DVD player sales boomed in 2000 as a result, even though the technology floundered for three years prior, all because of the DVD vs. Divx battle.
    Well, I came out in favor of DVD and against Divx then, and this time I am taking a stand, too. Blu-ray will win and HD-DVD will lose. But, it might not all happen in 2007. I hope it does, however, because otherwise the acceptance of HD content on the DVD format and integration of HD-capable DVDs in computers will be slowed, as well.
    HD-DVD is a good format, but Blu-ray is better. I’ve even purchased a Blu-ray DVD player (early adopter) for my home theater. I don’t consider this taking a leap of faith.

HD Conferencing
    • HD conferencing boom: No question that HD videoconferencing (also known as TelePresence) works, and works well! Finally, VTC technology does what the manufacturers have been saying it would do for more than 10 years: work. I recently sat in a demo for the new Polycom HDX high-definition VTC system and the company’s VP of marketing for the product line spouted off why this system is the best thing out there and what it is going to do for the video- conferencing world.
    Ironically, it was exactly the same sales pitch I heard six years earlier. But, this time, the claim was true. It worked, worked well, worked often and worked consistently—and looked awesome.
    But, switching to HD conferencing quickly won’t be easy, because most commercial AV integrators have been burned with past VTC systems, and the league of AV design consultants will probably play it safe with this new technology. However, I say: Don’t play it safe! Do not slow this technological development down. Don’t stand in the way of something big here.
    One of the unique features of the new systems is that they can be used as a standard 384-style conferencing system, too. And the image quality is the best I have ever seen on a 384 or IP-to-IP call. So, spec it! Even if you’re not doing HD, spec it as an SD system and upgrade to HD when you’re ready. And, I am sure that the few that don’t offer this will add this feature, too.
    • Built-in projectors: I recently saw the first prototype of a laptop with a built-in projector. It’s a concept design, but it is from one of the top three computer manufacturers, and should garner a lot of attention. It can project on different colored surfaces, and it adjusted colorimetry accordingly to project a very nice 1500 lumen-plus image. It may not make it out in 2007, but you will start to see projectors integrated into other PC, AV, and IT tools and gear. You’re already starting to see it if you remember the day when the cell phone was just a cell phone.

Simplified control systems will become more the norm in 2007.

AV Security
    • AV security boom: As we start to see cameras appear everywhere, so will NOCs (Network Operations Centers), and plenty of AV gear. The US government and its local affiliates have purchased more network and sat-based cameras than all other camera buyers combined since 2002. Cameras are not just for traffic anymore. And, security and surveillance will drive the commercial AV market in 2007, much as the educational market did in the early 2000s. Remember that?
    If you’re not doing security and surveillance, you’d better start!
    • 802.Whatever: Speaking of security and cameras, 802.xx technology will explode all over the place in 2007. Sure, we have wireless internet in our homes, our coffee shops, our offices and, of course, our hotels. But, we’re about to have wireless towns, cities and states! And, AV manufacturers are in the process of leveraging it more and faster than ever.
    For now, all we have is wireless projection technology but, by the end of 2007, all displays will be capable of wireless (integrated or via third-party peripherals) and it won’t stop there. You’ll see wireless content delivery systems that go far beyond the computer (think iTunes in a PDA with the capability to drive audio, video, internet and PowerPoint, even in HD format and resolutions).
    For the consumer, it will bring us IP-based cell phones that work on any network, and stream video to watch TV. For the pros, it will mean that you’ll be able to sell 24-hour maintenance and security contracts to customers forever, and very profitably. Still don’t get it? Stay tuned, because 2007 will bring a few “Sight Lines” columns in which I will tell you, specifically, how to do this and make a ton of money!

More Mainstream
    • Cisco, Dell and Steelcase: Our market is about as close to mainstream as we have ever been. More people are carrying projectors on airplanes than were carrying laptops in 1995. The affordability and availability of AV gear, combined with the now proven and documented ability to yield higher retention for the attendees of a meeting, have driven the customer base from just the Early Adopter buyer and allowed us to finally sell to the Early Majority buyer (read Crossing the Chasm by Geoffrey Moore if you don’t have a clue what I just said).
    So now, Cisco, Dell and Steelcase are taking aim at the commercial AV market and integrating AV technology into office spaces. It doesn’t really matter how or what their products are; the point is, they’re here. And, they aren‘t the only ones: More are on their way (I know that because we’re consulting with many of them).
    But, this is all good news. As we head toward and appeal to the Early Majority buyers, we will find that they buy more, buy more quickly and at a higher profit margin. It’s true. If your logic tends otherwise, you are flat out wrong—W-R-O-N-G. Again, read Moore’s book and you’ll get a clue.
    The exposure these and other manufacturers will bring to the commercial AV market, AV technology and, better yet, AV as solutions to problems like information retention, security, creative advertising and marketing, virtual environments and all that other stuff, will translate into a boom for all of us—assuming we all know how to leverage the network.
    I say that in passing, but that’s the big message for 2007. Learn, leverage, manage and master the art of connecting and integrating technology to the network, the LAN, the WAN, the internet, etc. Or, your business will die! In fact, send someone from your company to Cisco training; become Cisco-certified. No, not to get into doing IP networks, but so you can use the network in your AV world. Or...
    Your business will die.
    See you in 2007 and have a Happy Holiday Season (or as Wal-Mart, the latest to sell, direct to the consumer, HD-based, sub-$2000 brands of plasma, DLP and LCD displays, would say now (as politically incorrect as it appears to be): Merry Christmas.
    Oh, by the way, the VP of marketing from Philips assured me that they wouldn’t sell the Philips brand in Home Depot. This was after I wrote about seeing a Magnavox plasma for sale there! Whew! Thank God they are only in Wal-Mart!
    Is anyone taking note of this?

 


Gary Kayye, CTS, a member of Sound & Communications’ Technical Council, is principal of Kayye Consulting. He was InfoComm International’s 2003 Educator of the Year. Send comments to him at gkayye@testa.com.

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