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As videoconferencing goes mainstream and more and more solution providers tie video to broader unified communications and data center sales, video endpoints and infrastructure products inevitably become commoditzed. Where will solution providers with A/V expertise make their money going forward?
To AVI-SPL's management, there's no question about it: services are what will preserve the video channel. The $550 million integrator prides itself on having already made the leap toward substantial professional- and managed services-based revenue.
"The market is definitely going to services," said Mike Brandofino, executive vice president, video and unified communications, in an interview with CRN at AVI-SPL's recent national sales meeting in Tampa. "The IT guys can't keep up with all the technology out there, and if we can be that technology insurance provider for them -- because we know it and because we provide the services behind the scenes -- that's where the margin is. The endpoints are becoming commodities. They're going to keep going down. So where we differentiate ourselves is by connecting all those dots."
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About $40 million of AVI-SPL's revenue is in services, and growing fast. It's a trend that's only just catching on in the industry, notes AVI-SPL CEO John Zettel, who cited research from A/V industry association InfoComm that only about 3 percent of traditional A/V integrators are deriving roughly a third of their revenue from services.
Given AVI-SPL's status among the top ten national A/V integrators by overall revenue, Zettel likes his company's odds.
"With the acquisitions we've made and the focuses we have, I'll say without hesitation that we get to 33 percent in the next couple of years," Zettel said. "Services make video business-to-business. People don't view video as easy to use as a cell phone yet. It's too complex. Services take that complexity out and they pull through those commoditized endpoints, drive adoption and drive other services."
AVI-SPL has focused on services breadth as well as services depth, arming itself with everything from professional services -- including assessment, design and architecture -- to managed services, including full system support and hosted audio/video bridging.
"The greatest services opportunity falls on the back end," Zettel said. "That's the part that doesn't end -- it continues. But you have to have them all, which we do, and be credible in all of them."
The company's full-scale services embrace comes at a time when the videoconferencing market is flooded with vendors and solution providers touting video strategies. Many of the savvier solution providers -- including AVI-SPL, Dimension Data, IVCi and Yorktel -- have poured resources into services-centric businesses designed to create recurring revenue streams and place less emphasis on traditional A/V endpoint and infrastructure integration.
AVI-SPL ranked No. 48 on CRN's 2011 VAR500 listing, and has more than 1,500 employees in the U.S., Canada and Mexico. The company does business in 19 countries, partners with about 700 vendors, including all of the major and most of the minor videoconferencing and A/V players, and sells to about 86 percent of the Fortune 100. At least half of its more than 6,000 integration projects last year involved video, which accounts for more than $200 million in revenue.