Pro AV Logo Originally published as a Consultant's Connection
column in Pro AV Magazine
  April 2003

Analyzing the Industry with New Math

Recent survey data may not have all the answers, but there are some interesting inferences we can make from the numbers we have.

By Tim Cape, CTS-D

In 2001, the ICIA Independent Consultants in Audiovisual Technologies conducted a survey to try to figure out how much influence the AV system consultants actually have over the Pro AV market. Based on the survey and information gathered from industry manufacturers, the council estimated that 25 to 35 percent of integrated AV systems are designed by consultants, with the rest being designed by integrators. The final numbers were in the range of $4 billion for the total integrated market (not including box sales) with over $1 billion designed by consultants.

While more data would be helpful, based on these numbers we can do some “new math” to make some interesting observations about our industry. I’m not an economist or a financial expert, and I make the disclaimer now that the graphs and statements I am presenting here are not based on hard numbers. But after more than 20 years in the industry and having gathered anecdotal evidence from integrators, manufacturers and other consultants in the past couple of years, I think there are some interesting hypotheses to be made nevertheless.

One of the comments I’ve heard from other consultants, traveling reps and integrators in the past two or three years is that most consultants seem to be remarkably busy, while the integrators are almost universally feeling the pain of the current bear market. As a result, many consultants have been hearing from integrators who haven’t been interested in bid work since the last decade and our bidders’ lists seem to be getting longer.

These are generalizations of course, and there are exceptions. Consultants and integrators alike who work in institutional markets such as education, health care and government, particularly on larger projects, have continued to do quite well in recent years. Meanwhile, firms who have concentrated more on the corporate, convention center, and hospitality markets, aren’t faring as well.

In trying to milk the numbers we have, there are some commonsense assumptions that I think ring true in our industry. One of these basic ideas is that smaller integrated AV applications are probably dominated by integrator-designed and built systems, while the larger projects are dominated by the consultant-led, design-bid-build process. I've taken some liberties to create the graphic in Figure 1 to illustrate this general trend based on some arbitrary categories of job size.

Graph showing that larger projects tend to be designed by independent consultants.

Figure 1.

Though consultants and integrators work on projects of various size, larger projects are more likely to be designed by a consultant, while integrators begin to dominate the market as projects become smaller.

One aspect of larger projects that make them more compatible with consultants is the time period of the job. Figure 2 shows what is probably the average overall schedule ranges for integrated AV projects in various budget categories. As you would expect, larger projects take longer to execute than smaller projects. However, what makes projects that cost $1 million and up generally even lengthier is not necessarily the installation phase, though it is typically longer. Rather, a project this size will most often be associated with an architectural design and build process that will be heavily influenced by technology. Therefore, if these projects go as they should, the designer is involved early in the building design process to assist with infrastructure; and the electronics assembly and installation may occur two to four years after the project gets started. These long gestation periods are something consulting firms are generally geared for.

Graph showing increase in design time for longer term projects

Figure 2.

The time it takes to complete a project is generally proportional to its cost. The design time, however, is more elastic because it depends on the base building and infrastructure, as well as the installation schedule.

On the other side of the spectrum, the typical corporate or university training room or boardroom may need to be completed in a hurry. These projects are typically lower in cost. Integrators are well-equipped to meet the client's needs in these cases where consultant involvement may not be necessary. It's the projects in the middle of the budget and time continuum where consultants and integrators are likely to be after the same prey.

An even more anecdotal theory about the current state of the pro AV economy has to do with the distribution of projects within the budget ranges that I've picked for the graphs. Figure 3 represents what I think is the probable distribution of the total number or budget (take your pick) of integrated projects in the entire AV market. Based on conversations with integrators that I work with, their bread and butter projects are in the $80,000 to $300,000 range, depending on the size of the integrator. Projects in this price range probably represent the bulk of the projects in our industry; and most of them are probably integrator design-build rather than consultant-led design-bid-build.

Going further out on a limb, Figure 3 shows that the bell curve of the 1990s seems to have been cut flat in the last three years, with a lot of projects disappearing in the integrator's sweet spot. Some of these midsized projects may have moved into a lower category due to budget cuts, but many just disappeared (at least for a while). In the upper category, however, project starts don't seem to have slowed down that much. And because these projects are longer in duration, they tend to hang over into the downturns and help some firms prosper while others may slow down.

Graph showing changes in average project size between 1999 and 2003

Figure 3.

The distribution of projects in the late 1990s looked like a bell curve. But in 2003 it seems more like a top hat, with most of the contraction taking place among the midsized projects.

Note: Charts are based on industry observation by the author and are intended only to illustrate the points of this article.

That’s all the speculation I have space for here. Though these are interesting talking points, we need better numbers. The more research we have in the pro AV industry, the better off we’ll be. As our industry matures, we should all support the current and future research efforts by both the ICIA and the NSCA. These groups could bring some real numbers to these notions and make the math a little less fuzzy than it has to be for the moment.



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