I originally started this post not because I was upset over Zon's decision go sell through Crutchfield (I'm not a Zon dealer & could care less) , but rather the contradiction to their stated policy. If I had HAD bought into and made an investment into their product, I'd probably be pretty PO'd right now.

Historically, Crutchfield has served as a stepping stone for manufacturers to use to test the mass merchandising waters. 15 years ago, I never would have imagined the day that Mitsubishi, Klipsch, Yamaha & Rockford Fosgate would be in Best Buy, when Sony XBR would be in Circuit, when Denon would be in Sears, but guess what?

Jump ahead year 2004. Where have all the specialty A/V stores gone? What happened to the day when people would walk into your store, buy a truckload of stuff and leave happy campers?

The perceived answer is "well gosh, people want to have trained professionals designing and installing their gear these days."

Yeah, a lot of them do. Those would be commonly known as "our customers".

However, I'd challenge anyone to spend a Saturday afternoon at the local Best Buy and watch the hundreds of thousands of dollars of audio/video gear that leaves those stores on a daily basis.

Take a look at the customers who are buying stuff there. They're not exactly all mobile home dwellers. I see an awful lot of upper income people shopping at those places? A lot of people who are driving $50K plus automobiles. A lot of people who are putting their new gear into their 5000 sq ft homes.

Remember them? They USED to be our customers too.

Fortunately for us, Best Buy's not going to be installing Crestron systems anytime soon, but they do have their sights set on our business. So does Sears, Crutchfield, Microsoft, and a million or so online retailers.

Yes I also don't mind about any of the box movers in the market, we do want people in all tax brackets to enjoy the fruits of our industry.

No matter how good you are or how good your service is or even how well planned your business is. I will guarantee you that if all the products that you currently sell are suddenly all available from mail order, online, and the local BB It WILL change how you run your business.

Many of the guys on here and many of the dealers in our industry already understand that this IS a SERVICE industry. Who are the people that can afford to pay for our services? Think about that for a second. Only the wealthy can afford our services.

So while I agree that the customer who is purchasing the system right now from crutchfeild would not be a client of ours anyway due to the fact that they could not afford our services nor the high priced systems, that in of itself is not the problem.

The problem is more like a virus. The BB/Tweeter and online dealer does not sell the same way we do, meaning they usually ONLY sell on price. They have a larger marketing budget that all of the CEDIA dealers combined so they have the ability to get the prices out there in front of people. They are in the paper every Sunday.

How this does is changes the environment. There was a day when you could sell DSS units for over $1000.
You could charge anywhere from 2k-5k on the installation. I have sold 60" RPTV product for over 10k and some up to 20K. A 100 disc CD changer was around 6k, plus 4-5k for programming (remember NSM) a single DVD player was $2k-5k. A good projector was 40-50K easy. A good Dolby processor was always over $5-7k.
Try to get the same margin levels now with the prices on all these units no where near those levels.

So if you sell a infocus projector for 5K that 2 years ago you sold a SONY or Runco projector for 50k what is the profit differential?
How about the amount of work required? While you may not need to converge you still have the same type of installation procedures for either projector, but now your profit opportunity is greatly reduced. This one fact alone is why so many CEDIA dealers have failed in the last 2-3 years.

So if you take all the other systems we install and start letting them go the way of projectors, plasmas, dss, and we let the BB/Tweeter take on the Crestron and AMX jobs I do fear for what that will do to the environment.

I agree that you are selling yourself, but it makes it much harder when you can no longer make the margins on the equipment.

And to TONY who sent me a personal message about how prices on Crestron, AMX and Netstreams are too high. Let me tell you brother, in my opinion they are not high enough. (smile) I was in training with some other dealers and the guy from Netstreams told us what the pricing was and how they have no MSRP. Some of the other dealers were very upset about it, I am not I said GREAT!

Like many of you in this forum I love it when a manufacture has the respect for the custom dealer and will protect the territory by not signing on every tom, dick, and harry, and by putting some silly MSRP. How do they do that anyway when my cost of doing business is different that yours, my overhead may be different than yours, my workforce cost may be different than yours, but yet we all have to sell the equipment for the same MSRP???? That just does not make sense so I applaud manufactures that leave the retail OPEN. Niles does on many of the amplifiers, Crestron did this for the residential market for about 3 years and Netstreams does it across the board on all of their products. Elliott from Innovative in NYC complained because he said "I can't charge more than the MSRP" So he was upset that they had no MSRP, and he did not know what to charge. Well Elliott I say good I don't want them to put an MSRP on the product I want to control the margins in my company not some suit in an office somewhere.

I heard complaints in the training with both Crestron and Netstreams because they require the dealers to purchase systems and send techs to training. Why complain, hell to me this keeps the trunk slammers and the Wesley Mullings of the world who can't afford to buy a system at bay, I don't complain I tell them keep that policy in place.

I heard dealers complain that Crestron has put on to many dealers, this part I have also witnessed and not that I am happy about that but I really don't run into to many other bids with Crestron anyway. If you do a good enough job for your client, and your client trusts you and is happy with your work then other bids won't matter to your business.


(Stepping down from soap box) anyway I do wish you all the best of luck, and I think the EXPO is going to be terrific this year.

Best Regards to all!

While it is true that the BB's, Tweeter's ect will increase market awareness they will also drive down the average prices. Just look at other luxury idems.

automatic door openers, security systems and next home theater and multi room music systems.

Residential security used to be a place to make $ untill the large corperations came in and lowered priceing to increase the penetration.

Add to the list of people to worry about.

Honeywell, Brinks, ADT, Home Depot Expo and possibly the phone or Cable companies.

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.

Could not agree any stronger.


Sadly I also agree, and hense this is the main problem.



While BB does not yet have the technical ability to execute the typical Crestron system, they are testing the water, and they are preparing to go in this direction. I read a quote from the CEO of Tweeter who said that 60-80% of all the profits from last year came from the installation side. With the margin on equipment they sell at all time lows, they are looking to other profit centers.
This forces us to change our strategy, and many of the CEDIA dealers have done so. They have changed to more like the architectural model.


Good post AHEM, I hear ya, and I agree 100%

Agreed, however Blockbusters days are over as well. Kind of interesting how they want to start selling hardware now as well. :)


I am not a Zon dealer, nor would I want to be, the point was not to support companies that distribute product this way. In other words you can't have it both ways (no double dipping) Don't sell direct to end users AND then expect a warm reception from the Custom AV crowd.


Very strongly agree, so I do hope that dealers far and wide hear this message loud and clear.



Very well said QQQ, I think we agree more than disagree, I would add do not support companies who sell direct. It is very simple, specify OTHER equipment. As QQQ said people dont know AMX or Crestron or Oxmoor. My point is don't spec in companies that change the distribution model.

AMX once changed the entire distribution strategy from a dealer direct to a direct end user sell model. You don't remember MYPANJA.com?
What happened? The dealers went ballistic, people got mad, many of the loyal AMX dealers (some of them reluctantly) went over to Crestron. For god sakes what would make a loyal AMX dealer convert to Crestron?

It is true I love the CEDIA market, and it is small this I admit, but will also say if we stick together and we stand up and for what is right we can change things.

AMX almost imploded, I am very glad they did not, imagine if the AMX dealers would have just said oh ok, the home owners will just go online and buy all the equipment and Panja will provide all the programming and a very nice connection sheet that then they can call me up and I will roll a truck over to hook up the relays to the doorbell. (Don't laugh, this was a real scenario I had with them) So they buy all the source equipment from BB, then buy the wireless touch panel and control rack and all emitters and sensors and all the programming from mypanja.com and then if I am in the same zip code *Maybe* I would be *Lucky* enough for Panja to give the end user my number so I can hook up some relays.

So what I said, and what many (if not all) AMX dealers said was F U. If we would not have done this in droves then they very well may have ruined one of the best CEDIA companies.

So today you may or may not be a Oxmoor dealer (Just so there is no confusion I am not an Oxmoor dealer, but I do feel their pain) But please support them in the same way the AMX dealers had to do, TELL THEM!
If they don't change, then YOU change! Sell another brand distributed audio system period end of story.

CresNut,
My company is in need of installers. We are growing by leaps and bounds. If you know of any installers who wish to work in Florida, send them on down. Of course, we have a business plan, and we are picky about who we hire. I can be reached at [email protected].

The bottom line on this argument seems to be along the lines of if we in the custom industry band together and refuse to sell a particular product line, the manufacturer will somehow "see the light".

Sorry, I don't see this working.

Three very distinct reasons for it not working.

First and foremost, you can't get all the various custom installers to agree on anything, so I don't see a united effort ever happening. There will always be those who are afraid to be cut off, from that one lousy company that they buy from, so they'll continue on with their business as usual until they go under.

Secondly, the manufacturers know this.

And lastly, the manufacturer is driven by the volume numbers, and the manufacturer will always be willing to whore itself out to make those numbers.

Think of Velodyne, Nakamichi, etc. etc. etc.

How about THX certifcation? Doesn't REALLY mean diddly these days, does it? Just a bastardization of the true standard that it once was. Now you have levels? Sort of like a Sear's promo. Good, better, best....lol

The other day, as I was driving through a small suburban town, I caught a glimpse of a building that had cracked concrete, four foot tall overgrown grass in front of it, and obviously hadn't been occupied in a number of years. The sign on the front read "Ed's Radio & Magnavox Television". As I drove past, I thought about this post and thought it pretty scary that at one time, people like Ed was so deeply partnered with companies like Magnavox that they saw fit to include it into their business names. I wondered how long it took Ed to see the writing on the wall that his products were heading to Kmart.

I've found this thread to be actually very entertaining, particularly the last page or so. I can see both sides of this debate, and it's made for a good read particularly Cresnut's and QQQ's last few posts. While both sides are ideologically different, you're both 100% correct.

A couple of statements seem particularly poignant:

Impaqt: "Go ahead and build a Tweater across the street from my shop, Hell, throw a Frys up down the street, and pop up a Best buy in my back yard. All thats going to do is drive market awareness"

I Agree that it drives up market awareness, but it also slices up the pie into more pieces.

Cresnut: "No matter how good you are or how good your service is or even how well planned your business is. I will guarantee you that if all the products that you currently sell are suddenly all available from mail order, online, and the local BB It WILL change how you run your business."

I agree 100%. Great post.

QQQ: "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”.

Come to think of it, the good old days weren't all that great were they? LOL, I don't really miss the grumpy old lady who handed me my Beta rental tapes.

I can't speak for Cresnut, but my reference to days gone by wasn't a harkening for the way that things used to be, but rather a warning of what the future holds. Remember the past or be certain to repeat it right?

and from Trunk Slammer: "The bottom line on this argument seems to be along the lines of if we in the custom industry band together and refuse to sell a particular product line, the manufacturer will somehow "see the light". Sorry, I don't see this working."

It won't work, but with all due respect, that's like saying "why should I vote. My vote doesn't count"

My bottom line is that whenever possible, I'm going to side with companies who don't have their products on every street corner. QQQ will argue that eventually all of them will, and he's right, but for now, why support them if there's more deserving companies out there?

There was a time when nobody ever heard of Directv, home theater or in-wall speakers. Now they're household names. All of those products were originally sold and brought to market by specialty retailers. The manufacturers do need people like us and they need us in a big way.

Boy, let's NOT open THAT particular can of worms....



Until such time that "they" (the suits, bean counters or who?) determine that we're no longer needed to support the product.

Witness DirecTV dropping thousands of small dealers, which by the way saved DirecTV thousand of dollars in commissions.

Or Beam (of central vacuums), who terminated ALL the independant reps after the reps built the line, thereby saving themselves a huge amount of commission dollars.

Sorry, these companies don't NEED us. At least not after we, or the reps, do the work getting the product market recognition.

Now when talking of product recognition.

When you talk of Creston, AMX, (even Lutron) and so may others, you need to bear in mind that these are far from household names. Ask the average person if they have heard of the line, and you'll most likely get a "huh?".

Of course ZON is far from a household name too, so I have no idea just what the he** they are thinking that putting the product on the net will do to help them.

Maybe sales were just so bad that some suit, or beancounter, decided it was time to take a shot at some other method of moving the line?

Just when I think that the subject is dead along comes the September 2004 issue of CE Pro with a "guest editorial" from Oxmoor CEO Lynn McCroskey defending the Crutchfield deal and entitled "Oxmoor Deal Boosts Distributed Audio Exposure".

Everyone really should read this article/advertisement. It's condescending to Oxmoor's dealers to the point where I nearly fell off of my chair.

Here's some of McCroskey's key points:

#1 (Paraphrasing) Consumers go to Home Depot to buy nails but while they're there, they see all of the cool roofing shingles and French doors. They're not going to buy the shingles from Home Depot, but instead they'll hire a qualified contractor to do the job.

He's trying to use this analogy to represent Oxmoor's deal with Crutchfield. Apparently, Crutchfield isn't really going to be selling very much of the product. It's basically just there to increase brand awareness

#2 "Yet when we announced that the ZON Whole House Audio System would be available as a do it yourself (DIY) kit from Crutchfield, some dealers were afraid the sky was falling"

Well Mr. McCroskey, when you take into consideration the fact that YOUR company policy states that "Qualified ZON dealers must maintain a showroom system in an environment regularly displayed to potential customers" (source: Oxmoors site [Link: zonaudio.com]) , what in the world did you expect their reaction to be?

#3 "We have a simple, insidious plan: Make ZON a household word."

That IS an insidious plan

#4 We would never do anything to hurt that" (their dealer) "network."

Seems like you maybe just did

#5 Subheading "Wake up and Smell the Coffee"

That's a pretty insulting thing to say to your dealers

I finished reading this article and sat in utter amazement. My take is that apparently, there's more then just a few upset Zon dealers out there; at least enough to justify writing a defense in a major trade mag, and Zon's response to those people is "It's time for our industry to stop sticking its head in the sand...." and "Wake up and Smell the Coffee".

Man, oh man, oh man

We will have trouble competing with the big boys. I just lost a job because I was unwilling to offer the Tweeter deal of 18 months same as cash. The customer got Sapphire instead of Definitive Tech and a hack install instead of a clean install but they did get a popcorn maker. My price was exactly the same as Tweeter's with the exception of mine included a new quad shield to the cable box instead of splicing the old rg59 and I included a dedicated 20 amp receptacle. He's sorry but was VERY INFORMED of the differences and quality in advance and said he was willing to take the risk. TO BAD for him but I still lost the sale.

No, he lost you :-). You didn't lose anything :-). At least that's the way I would choose to look at it.

I suspect that within 5 years most of us will be out of business, working for someone else in this field ( managing custom installations for Bust Buy?) or in something entirely different. You can plan all you want but there are only so many wealthy clients and not every firm will be able to avail themselves of the smaller pool of opportunities.

The business model whereby you sold high profit/low volume goods is going, going, going. Pete Peterson ( Secretary Commerce Nixon administration and Wall Street guru ) was on public radio today warning that if neither political party addresses certain fundementals foreign credit-whcih as been financing our excesses to the tune of 2 million/day- will not be available and then we will be in for what he called a "hard or crash landing." This is called a monetary crisis where the supply of money dries up so interest rites skyrocket, and the economy crashes to a halt. ( By the way, although he is an old fashioned economic conservative Republican Peterson was as harsh on current Republican policies as on Democratic. The fact is that we are running a serious deficit and if not corrected luxury spending will eventually get hit ).

If that occurs-and no one said it is guaranteed but just very likely to occur- than the resulting pool of jobs available will be very much curtailed. But even if Peterson is Chicken Little, the pool of clients is changing to what some have called "early majority" types. These folks want reliability and value and could care less about sound or video quality. Model X over model Y due to superior programming possibilities is irrelivant to this type. Bose will be good enough - and priced correctly- for this client. Manufacturers want to move boxes and are lusting to be rid of us. Lutron was merely the first to go this route. We are too small and sell to few products. Sell 200k of Crestron? That is less than the discount retailer sell in an hour. We do not count. There will be specialty cleints. But the multitude of clients we have feasted on, many of whom were techophiles , do not exist in large numbers. The client that do are being served by the large discounters. Price and crap. Price and crap.

Although we have a ways to go, UPP is coming. How many here have boned up on their networking skills? How many know how to write or edit drivers in Notepad. Propritary programming languages are going the way of Latin and ancient Greek. How many Java programmers have either become independant programmers or have moved to other industires. My buddy the Unix programmer was offered 125k at the height of the dot com boom. He is lucky to have a job now earning 65k.

2 way touch panels will soon be obsolete, replaced by web tablets that do more on a standard 801.11 protocol. You very well might be better off with propritary gateways running on less crowded spectrum but cost, cost cost. Remember, early majority types want value ( read cheap ). They do not want custom programming save if you do it for free. The future business model, I predict, will see us become more like plumbers who do not sell any equipment ( save pipe or in our case wire ) but get paid a lot of money per hour to work. Or we will morph into techology consultants and try to sell design services. The bottom line is you had better have serious networking skills so get ready for those useless 2-4 hour CEDIA classes that wet your lips but do not quench anyone's thirst. The fact is that few systems are especially complicated to wire or install. Program and trouble shoot is an other story.

So business plan away. The future will be in labor, networking and server setup and maintainence, and/or in pretty CAD drawings and graphics. If you are not as skilled at sales as QQQ learn to play Taps.

Alan

Ok, I just had to dig this one up out of the gutter one more time (I was hoping someone else would mention it).

Klipsch is "in the Zon"

I guess that pretty much explains everything doesn't it?