As part of the AV News Awards Presentation, Edward Cooke, CEO of AVMI, was invited to present his vision of “The emergence of a new AV industry”, with emphasis on the changing role of the systems integrator. The address proved to be both informative and inspirational. What follows is a transcript of Ed’s address. If you prefer to watch it on video, you can find the full presentation here;
I’d like to start by thanking Bryan Denyer for inviting me to speak at this event. It’s a great honour; I’d also like to stay I’m delighted to be here as I’m sure most of you are who flew in last night to Schiphol Airport. It was a bit more exciting than we expected it to be. Just to give you an idea, it’s never a good sign when the captain comes over the intercom and says, “I’m sorry if that was a bit alarming”.
I suppose that’s just a little better than if he was to say: “Sorry, this might be alarming!”. But for any of you that have had an abortive landing it is quite an experience, so it’s nice to be here with you all today.
Just before I start, what I’m going to be talking about has very much got a business angle to it, sort of a finance and commercial angle. Can I possibly just see a show of hands as to who actually is a company owner or company director? Ah, we’ve got quite a lot here, great. In which case I can probably pretend to be highly technical and get away with it.
Very exciting! Right, just to explain who AVMI are as Bryan kindly said, possibly exaggerating just a little bit, we are quite a large AV Systems Integrator and Service provider. We’re based in the UK, although we do have offices overseas. We’re reasonably big for an AV integrator, though we’re still relatively small compared to other industries.
If some of you haven’t heard of AVMI, I thought it relevant to give you a little bit of our background. We started as just plain old AVM – Audio Visual Machines, we then made several acquisitions. The reason for this is that we’re a company in a hurry. You will see why when I come on to talk about the industry. The identities of some acquisition targets may be familiar to you. Back in 2005, We acquired the Video Meeting Company, which was Noel Edmond’s video conferencing company. We then bought Matrix Display Systems and Impact Marcom, to become AVM Impact Ltd now rebranded as AVMI [slide 1 – AVMI acquisitions]. We had several other acquisitions as well, but the ones mentioned are the ones you may have heard of.
That’s enough about us. What I really wanted to talk about is the way the industry is developing. Rather than just talking about how scary it is that IT is coming into our market, I want to give you a bit of a business angle and possibly something you haven’t heard many times before. The reason is that we as a company that is unusual in having as many acquisitions as we have. Being backed by private equity, and growing so much by ‘buy and build’ I wanted to explain why we’ve done that.
Firstly, the industry has reasonably humble beginnings. This is actually AVM’s first office when I joined in 2001, the very glamourous centre of the AV industry as it was in those days [slide 2 – AVMI’s original HQ]. What I thought was amusing when I walked through literally that door back in 2001, was that the then-owner of AVM reassured me that AVM was absolutely the centre of AV industry in the UK. He said that AVM was one the most significant players and we were a force to be reckoned with in the AV industry.
I must admit, at that time, I thought, possibly again, a bit of exaggeration was involved. Our turnover was just over the million-pound mark. I think we had 15 people and it didn’t seem that impressive to me. However, and I think this is very telling of our industry, the former owner wasn’t actually that wrong.
As I found out over the next year or two; Crestron was just across the river from us, we’re in the famous cosmopolitan of Hampton Wick, whereas Crestron were across the bridge in Kingston. We had Steljes up the road, we had a whole load of AV companies, suppliers, integrators literally within about 10 miles of where we were based.
So it was a very small industry at that time. Also, the nature of the industry was complete different from how it is today, and I think it’s worth just taking this on board. When I walked into AVM, I was like: “Great, tell me about it – get me excited about it”. And they right – “We have this client, and its BP.” I said: “Wow – really? BP?” One of the biggest companies in the world, and they were our client?
But, they were. In fact, they made up over half our revenue, which, as I say, wasn’t all that impressive at the time. But what had happened is, BP decided that they needed a projector and in those days, projectors weren’t connected to anything else. They looked in the yellow pages for a local AV company and rang us up.
And that’s how it started, with the projector, then the installation. Then they bought a few more. and away it went. That’s what could be done in the 1990s and the early 2000s. The people we were dealing with were facilities managers. What we were providing wasn’t connected to anything else, and so it was possible for clients to have a multitude of suppliers. They could just go out and find whoever they knew was local and employ them to do the job.
As I’m sure you know, that has changed very, very significantly. This is not just going to be a scaremongering talk, it is going to have some facts – but I think what would be useful, is to look at why it is changed.
First, the products have changed – very, very significantly. You wouldn’t have recognised these back when I joined in 2001 let alone with the fallout. But what I’d like to say to yourselves, as the AV industry, is that we need to determine just whose products they are. Are they IT? Are they telecoms company products or are they our products?
I think the iPad is a very good example. You can do video conferencing on the iPad, so the telcos might say, great, that’s sending traffic down our networks – marvellous, we want that, we could make phone calls or get text massages, all the drift from telco things. Is it a computer? Well, yes it is, it’s got chips in it, its running software it’s very much in the IT industry. But I would lay claim that actually this is interactive touch screen with a camera, with a microphone that can do video conferencing. This is something that should be in our industry, and my message today will be that we should go out and we should make a claim for it. Next I’ll come on to the state of the industry that we’re up against.
Continuing down the technology theme, this is a futuristic image of how people might work in the future [slide 3 – the future work space?]. I think the first reaction of everybody will be that’s a high tech IT kind of system the guy’s using. Secondly, he’s got a computer on his right, a laptop, that’s fair enough, but this device, the hologram, whose technologies are those? Again, I would say they’re ours. We’re the kind of people that invent this stuff and we need to be heard and lay claim to being the experts in the technology that people are going to use in the work place.
What is driving changes in technology? It’s the fact that everything is now connected. This is what has caused our industry to change entirely. I’m predominately talking about the corporate space, but in reality it’s very much true of government space as well, and education as well, so I think it applies to everyone. It’s because everything’s connected – if you put a projector into a meeting room these days, which itself is relatively rare, it will get connected to the network and so the people who are concerned about that are the IT department. They want to know what bandwidth its using; what quality of service; whether it is going to block out the network; is it going to let a virus onto their network? None of this is the domain of the facilities department, and it never will be again.
It is very much in the IT space, so my message will be, we need to know how to operate in this space. So I thought it would be interesting to see who we are partnering with – or who we are up against, depending on your point of view. This is the IT industry.
This is IBM first office in the UK. In 1924, they had already been going about 20 years The world’s most famous IT company has now been going for over 100 years. I like the similarity between this [slide 4 – IBM’s original UK office] and the images of the AVMI offices in Hampton Wick. I am sure there are people in the room today that started in the same way the IT industry started and developed in exactly the same way that we are developing.
When we forecast what is going to happen to our industry, it is not difficult to work it out by seeing what happened in IT – that is the way we are going. So IBM over 100 years ago had their own money making machine which obviously gave them a bit of an edge. Where are they now? Their turnover last year was 100 billion dollars. The AV industry as a whole had a combined turnover of over $100 billion dollars last year.
So to put our growth potential into prospective, the entire global AV industry is now the size of IBM. We are up against Apple at 187cbillion dollars. With other big players in our space including Microsoft at 93 billion dollars and Cisco at 49 billion dollars. In my space no single integrator or services provider in the AV industry nobody is close to these levels. So to put the industry totals in prospective here [slide 5 – relative sizes by industry sector] AV is in the middle of two giants – IT and telecoms.
With the IT industry at 3.8 trillion dollars and telecoms at 5.6 trillion we should be aware that these are the people that are now playing in our space But the message I won’t to give you today, is that I do not think that these two giants will squeeze us out. Quite the contrary. With the technology out there for the AV industry to expand very significantly, the AV industry can take chunks out of the telecoms and IT markets – and we are already doing that.
Partnership and integration
So to give you example, let’s use BP. Whereas once they would ring up the local AV supplier and install a projector, they soon realised that they should go out to tender and get a better deal. EDS won the tender in 2003, saying “we can do this” and “we can do that”, but actually they couldn’t. In the end, the work went to us went to us. BP realised that what they wanted was an AV function, so it went back to them directly. Since then, it went round again and went back out to tender Siemens won but it straight came back to us.
The big IT and telecoms companies simply do not have the expertise to deliver what the clients want. And we need to take advantage of that, but to provide the service to big corporate clients, we need to be global. Look at the OEMs, look at the distributors – these offer a pretty good sign of the way the integrators and resellers need to develop if they are to play a significant role in the market.
You can be a niche supplier dealing direct with a corporate client without needing a billion dollars go or buying half the world. There are several ways you can bring this about. We did ‘get into bed with the devil’, if you like. We are privately equity backed. We will probably look to acquire companies overseas. Another root is partnering. For example, GPA recently put a global help desk together, but one way or another you have to be able to say “we can deal with global requirements”.
A second approach is integration. This is tricky when you are dealing with big corporate clients. It’s a totally different game from 10 years you ago. You need to understand the world of telecoms and IT. What is Quality of Service? What does it mean? How does it affect you? You need to add these resources by partnering, acquiring or merger.
When you are dealing with a bank or similar, the technology is largely irrelevant. They are far more interested by procurement, marketing collateral and content to prove that you really a player on the global stage. You need a marketing team. legal expertise etc. all of which requires people. Your also need awareness, profile and
Everyone in this room is aware of AV companies. Unfortunately, if we were to go outside this room, or down the street, and ask anybody to name even one audio visual company they would almost certainly fail. What they will say is “Samsung “, “NEC” or “Cisco” because of the residential and consumer base products.
We need to do something about this: we are very good at talking to each other, but we need to talk to the outside world. The Ministry of Justice in the UK once used several different AV companies to supply the Courts. Then, one day, somebody high up said hold on – almost every Court has AV, so it needs to go out to tender. The contract was won by an IT start-up, Atos. They came to us. The reason they came to us was we were partnering with Vodafone. Vodafone still has the contract, albeit partnering with another AV company
The point is that the decision was taken out of our hands. We need to make a noise because the person in the Ministry of Justice could not think of a single AV company to approach. So what did they do? They went to an IT company. If we are to stop this happening, we need to make a noise. Beyond AV News, ISE are fine, bur we need to think bigger. We need to think global. The prize we are going for is huge, but we need to communicate through national and international media. That way, we will stand on the top level of the winner’s podium.
SET as a boxout:
Edward Cooke: Biography
Edward Cook has been the CEO of AVMI since 2001. During this time AVMI has completed numerous acquisitions, including The Video Meeting Company, Matrix Display Systems and Impact Marcom, and has grown to become one of the largest AV systems integrators and service providers in the world.
Edward left school in 1985 and joined his fledgling family business, Anthony Cook Associates. He spent the next 12 years helping to grow and run the company, which provided IT consultancy, training, recruitment and software development services. The company expanded across the UK and was sold successfully in 1997.
During the early internet boom, between 1998 and 2000, Edward was a director of an ecommerce consultancy, ICE Mobile Ltd, which acted as an incubator for several web start-ups.