Future profits lie in services as hardware profits plunge29 January 2013
The industry will need to look to services to make a profit in future, according to Duffy Wilbert, CTS, Senior Vice President of Membership, InfoComm International. “There is a downward pressure on profit margins on hardware, and the opportunity seems to lie in services, where I can better my profit margin,” he told the Daily after speaking at the InfoComm Future Trends Summit. This has been seen in the IT industry, and with AV and IT merging, he sees the same opportunity here, particularly in managed services, keeping systems running 24/7. “It’s the largest growth opportunity for everybody and the largest opportunity for a profit margin,” he said. According to the InfoComm 2012 Global Market Definition and Strategy Study, managed services is already the fastest growing segment worldwide, particularly in the US and Europe. It may require installers to think differently, perhaps taking less on hardware but making it up in services, or even bundling the service in with the product – “the service becomes the value add,” he said. The study found that the global AV business was worth about $78billion in 2012, with Europe accounting for about $16bn (which is expected to grow by 9.4% by 2015, compared to a predicted 16.6% for Asia, the fastest growing region). The largest hardware growth area is displays – screens (22%) and projectors (15%) are already the largest product category. The fastest growing marketplace in the US and (to a lesser extent) Europe is healthcare, which wasn’t even on the charts before, but there is wide regional variance around the world. Karaoke is one of the biggest market segments in Asia, while retail/distribution is a key area in Europe but small elsewhere.