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AV and the Economy

Understanding we’re in a recession; two good indicators of when we exit are capital investment and lending. These (investment and borrowing) are the most common tools organizations use for growth. Today, both are quite slow. This doesn’t mean companies aren’t growing, or better, changing; it just means that lending and investment are less and stretched over longer periods.

A couple of examples:

The Gillett Fusion Razor, “5 Blades?; what is Gillett doing? They appear to be slowing the development (technology investment) of new razors. How is this identified? Notice Gillett’s latest marketing campaign; it’s promoting the “wear-out? of blades, in other words driving revenue with existing technology or protracted capital investment. This is outside Gillett’s business-model parameters. This change in advertising strategy is usually a good indicator of a shift in business strategy.

Apple’s iPad; is it a technology shift? The reviews are mixed, but generally suggest the iPad is a small functional ($$$) step forward from the iTouch. Its “introductory? pricing model also indicates a small step forward. I’m not a technology expert, but I did notice the substantial jump in technology and price differentiation of both the iPod and iPhone. The iPad appears capital controlled compared to Apple’s history of innovation; again outside historical parameters.

My understanding is that both Gillett and Apple are solid organizations and leaders in their respective fields. I mention these examples as noticeable (outside the trend) illustrations of slowed capital investment; or useful ways to “notice? shifts in business activity.

What does this economic environment mean to the AV Industry?

That’s a difficult question to answer. The short answer is that there’s less business and it is spread over longer periods. The longer, more difficult answer is that this recession could structurally change the Industry.

Shifts in mindset:

Is the AV “technology factor? still registering with the consumer? Do the “wow? and “dazzle? still register in terms of value? Has functionality / practicality shifted, and to where?

Next, has the system (flow) of revenue reaching the AV Company changed? Consider In-House AV; is the existing model (receiving revenue through the hotel) sustainable in an extended economic downturn? The economic constraints on the property itself (brand, shifting market position, cutbacks in operating expenses, debt, etc.), the in-house contract, and the pricing schedule are substantial hurdles to overcome. Also, being second, and in many cases third or fourth, “in line? gives in-house AV almost no leverage or position in the process.

Currently, there are large organizations making significant investments into this business model/segment. The original assumptions (timing and timeline, positioning, ROI) may have been wrong, but the opportunity to recreate this business model is amazing.

“Road Shows;? within the existing framework, are they just too expensive? It may just be economically unfeasible to contract “road shows? in the current model and pricing structure.

Gear Houses… Local AV…

Is the traditional/historical position of the AV Company in the marketplace going to continue to work? Is the existing business model going to endure?

Maybe this recession is one of the best opportunities the AV Industry has ever seen? The saturation, then cleansing process is difficult. There’s a lot of change, aka confusion. But clear understanding and precise decision-making can yield incredible results. This truly may be a time of opportunity.

Bo Klune
bo@klunecompany.com

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