I'm curious as to what everyone's opinion is on this matter.

I llive in a county of about 250,000 people. There's at least a dozen companies in the county who's in the custom a/v business, and another two who's recently gone under.

Question is..........

Do you think that this industry has reached the end of the rapid growth phase? In other words, at what point to we start to see an adjustment caused by oversaturation followed by a backwards trend of people starting new businesses?

Have we reached the peak of the mountain yet?

If not, how soon untl we do?

Well, depends...

are the 250,000 people in your county of wealth or poverty? What is outside of your county? Where I am at in Sugar Land, TX or Fort Bend County we work about a half a dozen other counties and cities..

I feel the industry as we know it has reached the end of the rapid growth phase. There are many more avenues that keep coming up for making money though. There are a lot of threads here and a lot of wisdom passed around.

I for one have mourned the loss of the good old days here... only to be slapped around by the chameleons who reiterate that you have to change with the landscape. It also helps to be established. I live in the greater Seattle area and we have literally hundreds of companies... many are just one man shows. It's extremely easy to start up around here as AVAD only needs a pulse to sell you stuff and many are skirting the contractor laws by only doing retrofit or "designing" systems and having electricians pull prewires. Its hard to keep up with their pricing when they have no employees... pay no insurance or rent and don't pay the state any fees.

The advice here is constantly that you don't want their clients anyway... the problem is that more of the clients you definitely want (you know... just bought a 2.3 million dollar house... wants two theatres, multi-room and universal control) are finding "Low Profit Eddie" and its extremely rare around here to find any clients you aren't in a competitive situation with. Since we are in Microsoft land... they all talk. Word gets spread that "Newbie Audio & Video" will sell you that hot new projector for 10 points just to get in your door. It is basically a hunt and it helps me a lot to be able to walk away from the ones that just don't make sense and still keep the doors open. How long that will last... no one knows. It also helps that I haven't added a lot of people and vans... staying small has made it easier to weather the tough times and not lay people off. The big houses are really struggling with this.

Some on this forum have probably never experienced this kind of landscape. Some areas are still hot. I'm not saying that some people have just gotten lucky... many of the posters here are obviously great business people and have built a reputation that will keep them at the top even in areas like mine.

I still plug away a few dollars a week into my voluntary tax/early retirement fund (that would be Lotto) and I hate to say it...regardless of how fun this industry is... I'd probably move on if I no longer had to put so much of my life into this just to make ends meet.

Saturation level?

Probably reached it sometime ago.

I've received several phone calls over the last year from guys looking for a job since the company they were with is no longer. And these were companies that seemingly had a very good amount of business going on.

On the other hand, a lot of newbies have come up over this same period. Although the quality of the work, and the level of systems used, is much lower than those who've gone away.

Just recently lost a job to one of these bottom feeders, who is actually doing a lot of homes in one particular subdivision (has signs ALL over the sub).

I was working on the home next door, so i walked over to see if anything was happening on this job I quoted. Immediately saw that another company had done the work, since the wiring had already been done. Was just going to trun and leave, but being nosy, I wanted to see what the "competition" was doing.

God, a wiring nightmare! Sloppy work, cat5e stapled, etc, etc. Audio wiring for ABus only. No possibility of upgrade to better distributed system, since the 16x4 ended immediately at the volume controls.

Then I noticed the FR set up. I know the homeowner is figuring on a DLP HD TV in the FR yet there is nothing but coax run to that location, while the surround wiring (that nice Bodacious garbage from ADI) for the room was run back to the equipment closet. No wiring in place for IR control of equipment, no possibility of adding component, DVI or HDMI in the future due to finished lower level either.

Almost 11k for nothing but the pre-wire, and this is what the homeowner gets?

So yes, I think we've turned a corner. Excuse my rant.

well said RHM9, and similiar landscape here in Denver...

adapt and overcome, that's all we can do sometimes!

A good question and RHM9 has stated one valid view point - which I completely agree with. An other is that we in this business have never tapped its market potential. There are far more retro fit clients as there are new construction. The problem has been that retro fit has been very difficult to accomplish without some damage and many clients don't want to pay that price. If you could install a wireless solution you could reach a larger market.

802.15 may change that. Samsung, Sony and Sharp have brought wireless displays to market. Control 4 may make controlling these systems possible. It may also make the business model I work under very difficult. We may be heading to a high volume market where Tweeter, Best Buy and the very large custom houses have a real advantage. If you need 4-8 crews working every day installing 5k whole house automation systems to survive they may be better able to invest in the capital this model requires ( trucks, insurance, training, sales ). They may also have the credit such a model requires.

What has happened to custom is that it is viewed in much the same way as bricks and mortar were 10 years ago. It is no longer a specialized arm of the electronics industry but rather an other form of moving boxes. Thus any one who can move a box is allowed. Some lip service to exclucivity is still spoken of but this is not merely an exception to the rule in it is outdated. Lutron, Crestron AMX can be had by anyone willing to pay for an opening order and waster some few days in training. The rise of the rep/distributor has made this even worse. Exclusive lines that kept bricks and mortar specialty stores alive are suddenly given to large discount chains because they can place 10-20 million dollar orders. Distribution serving the small guy is the flip side of this story. ( Imagine the economies of scale if 3 or 4 small firms could combine and share talent, sales and buying power? )

What we need to do is form buying cooperatives and pool resources. It is kind of hard to accomplish given the lone wolf status most firms live by but perhaps worth the effort.

At any rate this business has changed but that may also mean that different markets are not available. This market may not value technology and technical superiority as much as price and convenience. High priced solutions like Crestron may be overkill. Any projector displaying a bright image may be good enough ( see the display market ) and any speaker with a inductor and capacitor as a crossover may be the speaker installed. But if you can change you can survive. Or you will have to stay very small with very little infrastructure and get by on fewer jobs.

This idea of the right client only works for a very few firms. There are not enough of the right clinets to keep us all in business.

Alan

We are in Cincinnati. Two years ago there were only 20 home theater companies, now there are around 70. Everyone that thinks they know something about this industry thinks they can make a business work. Most of these companies are one man shows that do not even have sowrooms. They sell out of catalogs. These "Fly-by-nights" have totally saturated the new construction market. I find myself being under bid by many of these companies. Since this saturations, we have focused more on retrofit. Not every Tom, Dick, and Harry can run wires and install product in house over 100 years old (Our business is in the oldest town in the city). We have an advantage because we do everything from pataching and painting the drywall to building our own custom cabinetry. Another thing to thin about is that once the booming new home business is over, where are these companies going to go. Once mortgage rates go up and it becaomes more expensive to buy a house there is going to be decline in the new construciton pre-wire business. We have aligned ourselves with other top cabinet makers, interior decorators, remodelers, and archetects to help feed us business. Without aligned us with these other trademen, we would have had a seriousdecline in reveune this year.

Speaking of this year, last year we were not this busy. Our busy season usually runs from october to febuary, then we pick up some springtime remodelings. This year we have been busy all year long. We have had not breaks and I have not seen a sign of a slow down let.

Mike

That's when those guys WILL go off to the next thing they think they can make a killing at. Leaving one major mess behind.


We have aligned ourselves

My company is also aligned with cabinet makers, interior decorators, remodelers and architects, as well as being aligned with some electrical companies.

I also have a close relationship with several building superintendents. Help the super out of a tight spot, and most won't forget it. And many of these guys will become builders down the road, so it's good to have them as friends.

These are all great responses.

I guess that every market has a much different set of circumstances.

Audible Solutions wrote:

"What we need to do is form buying cooperatives and pool resources. It is kind of hard to accomplish given the lone wolf status most firms live by but perhaps worth the effort. "

I have to admit that until now, I'd never thought about it, but done properly, a custom installers buyers group could possibly work.

chaps,

over here in england, the whole CI business is, in my opinion, somewhat of a new thing, i live in sheffield with approx 500,000 population and i can count on my hands and feet how many people have an automated home.

hopefully the market here is somewhat a different story. as our prospective clients become aware of whats available (what, music in more than one room at a time, and we dont have to turn the stereo up really loud ... wow...)

well, here's hoping to (optimistic) prospective times ahead.

a question for you guys; what would you say you're main focus of business is? is it cinema systems, lighting systems or automated homes?

just curious of what the 'big sellers' are accross the pond.

regards,
Jonathan

Hi Jon,

Cinema (aka home theater) systems are what's driving the business. Lighting and automation are things that are typically upsells that most customers don't know exist.

At least that's the way thit is around me.