CresNut, the issue isn’t that I don’t see what’s happening, it’s that I do see it and prefer to deal with it rather than stick my head in the sand and long for the “good old days”.

Years ago, the video rental business was full of small independents/Mom & Pop stores. Now Blockbuster Video and the like dominate the business and the independents can only survive in a market where Blockbuster doesn't exist.

The writing is on the wall for our industry as well and it's there for everyone to see. The A/V and home automation markets are growing exponentially, prices are dropping and we can stick our head in the sand and continue to think we are going to be able to operate our Ma & Pa video rental store like we always have or we can adapt and not only continue to make money but experience tremendous growth. Just as Home Depot now has armies of certified contractors installing everything from kitchens to carpet it is inevitable that that Best Buy and Tweeter are going to make huge pushes into the home A/V and automation markets. You will be able to go into a Best Buy and they will have a pre-selected 6 zone package with volume controls or Russound keypads or whatever. You will also find many of these companies marketing directly to builders. And security companies. And electricians. It's going to happen and you can protest and scream but it isn't going to make an iota of difference. There are market forces at work here that dwarf the SMALL market that CEDIA serves. We love to flatter ourselves but we are barely a blip on the radar. Why do you think Oxmoor is going to Crutchfields? Because they/we haven’t sold any of their crap product. So how would complaining to them matter? Did you sell 250K worth of Zon last year? I’ll bet you didn’t sell 25K. And you expect them to shake in their pants because you are going to drop their product?

And yes, there are going to be lots of people that go out of business. There ALWAYS are when an industry goes through big changes. Especially small RETAILERS focusing on low or mid-end. Just as independent video retailers have been put out of business by Blockbuster and just as hardware retailers have been put out of business by Home Depot. So if your focus is on making money from small equipment sales, and not labor and/or higher end products, YES, YOU SHOULD BE AFRAID. BE VERY AFRAID :).

But there will also be tons of potential here. You don't see many independent computer retailers out there any more but that hasn't stopped tons of people from making millions in and because of the PC industry. You can still be a small independent IT firm or a billion dollar one like Accenture or tons of others. So while there is little to no money to be made running a small computer retail shop there is huge money to be made in labor and consulting. Similarly I believe our industry (ESPECIALLY in the low to mid-end) is going to have to move to a model where the bulk of the profits come through labor/consulting.

And has Home Depot put high-end custom builders out of business? Or electricians? No, just the hardware retailers. The labor is still there. But more importantly, do people building 3 mil homes go to Home Depot to choose their kitchen? Of course not. So those who focus on higher end clients who do not do their shopping at Home Depot and then like will still be serving a profitable market. [I do expect the prices for "high-end" such as Crestron type solutions to continue to drop dramatically but that's a subject for another thread).

So the question is, do you have a business plan in place to deal with these changes or are you going to waste your energy in pursuit of the good old days. Are you targeting profitable (higher end) projects where you won’t be hit as hard? Are you making money on labor or considering it a loss leader in order to make money on it with the equipment sale? Because if you are going to adapt to this changing market you BETTER learn how to make money on labor. Are you selling “products” OR a “solution/experience”. I can tell you in all honesty that half of my customers couldn’t tell you the brands they are buying from me because I’m selling them on my company and the installations we do, NOT on a “product”. They don’t know Crestron or AMX from Adam. All they know is that they are getting this “cool touchscreen that makes things really easy to use” and this home theater that is “better than a movie theater”. I never focus discussions on manufacturers because what does that remotely have to do with the end result? NOTHING. We are like builders, you can put the same lumber in two builders hands and one builds a house that leaks and cracks and the other builds a house that brings the owners years of satisfaction.

And just as two different builders or electrical firms can experience massively different levels of success even though they are using the same materials, we need to learn to sell people on our skill sets rather than the “lumber”. Those who live by exclusives die by exclusives. Exclusives are going to become more and more a thing of the past. But the ONLY reason that is happening is because the market is growing and there’s more money to be made. And those of who adapt well will make a good profit and those of us who adapt poorly will not.

So are you ready for the future? Or longing for the good old days when the only place to buy a multi-room audio system was the three hi-fi shops in town?

This message was edited by QQQ on 09/06/04 09:42 ET.