I can’t help but think that CO vNet is the Bear Stearns of this group…a seemingly material casualty that pales in comparison to the dominoes yet to fall. Things to think of:
- On the capital availability side, both consumer and business credit remain tight and will likely continue to be tight for at least 9 more months (I’d guess 15-18).
- On the company liquidity side, most companies (mfrs and CI) set the goal in late ‘08 and early ‘09 to just make it through calendar 2009 ...that they had to do whatever it took to make their cash last through flat-to-negative sales growth. Some assumed NO new sales. But the model was about lasting through 2009. 2010 is about to hit and nothing’s really changed since 1/09 except 12 additional months of cash burn.
- On the consumer spending side, the savings rate has skyrocketed. There’s a fair argument that the recession has spawned a once-in-a-century change in spending habits (like the great depression). It will be a long time before homeowners buy as faithfully into the religion that home prices only go up and home equity loans are easy cash. (That won’t happen until long after that credit loosens again).
- The stock market recovery since March has been essentially a jobless recovery and appears to be somewhat unsustainable. Many are looking at a 10,000 DJIA level as a trigger for widespread profit-taking and a hair-trigger for a big slump on any bad news. Regardless of whether that’s legit, it will keep checkbooks dusty for a while on discretionary purchases.
- On the consumer behavior side, consumers love mobile gadgets—and they’re increasingly sacrificing quality for convenience and features. The gadgets are becoming increasingly sophisticated and extensible without the aid of a professional. They’re ubiquitous, interoperable, intuitive and highly functional. Who needs a whole-home audio system when you can just buy a few ipod docks. I know the response to that question, but it’s a harder and harder case to make—regardless of the economic environment.
So that’s the question: does the pace of pocket/mobile technology and the reticence of homeowners to invest in in-the-wall solutions indicate a non-cyclical contraction of the business?
I’d love to hear thoughtful responses (beyond the typical anecdotes and “Costco will never replace us” rhetoric). And I acknowledge that there are counter-arguments about certain consumers appreciating what we offer and our solutions being robust and time-tested. But that seems a bit defensive and in denial.
This business can always survive as a boutique business…but that can be said of nearly ANY business. The question is whether there is any sustainable scale left for custom over the next five years. If so, what does that scale business look like. If not, is there any role for CI guys in a pocket/mobile CE (or any other growing) ecosystem?
I truly don’t think CI biz is hitting a wall. We’re simply going through hard times like everyone is. Where I see a problem is that CIs are stuck in some old habits when the past year or so has dramatically changed the technological landscape.
iPods: Embrace it. That’s what consumers want so wrap a business model around it
Sonos: Ditto. Even DIY products like these can be profitable with labor and attachment sales
Digital Content: How are you conveying Netflix, Pandora, Vudu and other services to your clients?
Lower-cost systems: Even high-end dealers are finally catching on to the cookie-cutter biz models
DIYers: Again, embrace them. They are the enthusiasts that want the great stuff and they don’t necessarily want to go it alone
Retrofits: That’s where the action is, obviously
TVs: Let customers BYOTVs if they want because you don’t make money on them, especially if you’re stuck with the liabilities when something goes wrong. Let Geek Squad or Amazon deliver the TV for $100. You’ll save $200 in inventory holding costs and headaches
And so on ...
To be sure, the economy is dragging us down, as with most industries, but it will pick up (if someone doesn’t keep raising taxes on businesses and consumers)
I think there are two pieces to this. First is the capitalization piece, and the question there is whether a manfucturer (or dealer) can bring in enough cash over a given period to stay in the game. Note that this captial can come organically through operations or through investment.
The second piece addesses cunsumer spending on CI. This can further break down to spending on current offerings and spending on newly developed offerings to adapt to a changing market.
So, let’s summarize this as:
I is the amount of money in from funding from Investors
C1 is cash in on legacy items (the mainstays of yesterday that may not have a place tomorrow)
C2 is cash in on newly developed adaptive offerings
Now we can roughly say that a manufacturer will stay in business over a time if:
( I + C1 + C2 ) of the forward looking period exceeds cash out.
In the case of Colorado vNet, the main gottcha was simply knocking down I. The forward plan counted on investment funds that wont be there. Why not? Maybe the investors aren’t sanguine on automation. Maybe they’re not saguine about vNet’s management. We don’t know. We also don’t know that vNet was hurting in terms of C1 and C2. In fact, I heard they were having records sales in recent quarters. So, I’m not sure vNet was a smuch a victum of the economy as of other factors addressed, perhaps, only behind closed board room doors.
Anyway, lets try looking at Contro4 the same way.
At around 200+ employess, this R&D;shop must have an annual spend of something lilke $30-50 million. I’m gonna guess they can’t cover that nut just on operational cash by a non-trivial margin. However, I’m also going to say that:
1. Recession or no recession, there is money out there for investment
2. Both C1 and C2 look very good for C4
So, I’d find it very hard to believe that between those two factors, Control4 would get washed out.
I’d say Lutron is likely looking good with both C1 and C2, and should they need credit or a cash infusion, they’d get it.
I’m not sure about HAI, Life|ware, ELAN, Legrand, Vantage, Savant, etc. look through this framework. I conceed that the framework is rather light and misses lots of pieces, but when layering it over the original post I see some good discusses coming out.
The argument that “we’re just going through hard times” suggests a cyclical shock. I think in ALL economic climates, CI guys have to be responsive to consumer & technological shifts, but it’s in tough climates that you can get run out of business by those who adapt better (what’s the quote? “you don’t know who’s swimming naked until the tide goes out”)
If you’re right then folks just need to hunker down, keep their powder dry and adapt incrementally.
I think the C4 and Vnet discussion is more instructive. The bottom line for both companies is that if you have cash, you live another day. And if you are profitable, you control your destiny. Neither are profitable. Vnet couldn’t cover its nut so it went under when the capital markets said “no.”
C4 is a different and unique story—it’s venture-backed by Foundation Capital. There’s no way C4 would be funded today as a fresh start-up. Which suggests they have very limited capacity for raising further funding. They’re lucky that they raised when they did. They’re also lucky that Foundation isn’t having problems with limited partners…they actually can fund follow-on as long as they like C4.
But C4 doesn’t really control their destiny anymore than Vnet did. Their board is institutional money, which can move for a sale, retrench or wind-down anytime based on other uses of capital and the firm’s target IRR. That’s very different than Lutron which is totally private and AMX which is in a strat holding company. Take a look at Foundation’s portfolio. There’s nothing strategic to them about having C4 in the hopper. So every single quarter, C4 faces the same uncomfortable conversation that Vnet did. Which I would guess is why they’re tap-dancing around the Best-Buy/Magnolia thing. Their investors want scale & penetration, but their current distribution channel wants selectivity.
But in my mind, RM’s analysis misses the point a tad on C1 & C2. If C1 isn’t profitable yet, it will never be so. It should be a cash cow, though device markets (per Julie’s post) are more competitive and progressively less lucrative to CI. C2 could be promising. But in an overall economy showing a protracted U-shape recovery, it comes down to cash management and re-inventing yourself (again per Julie) to the new digital media & control ecosystem. When we come out on the other side, I think custom install looks very different. I don’t think it’s a “times are tough but we’ve been through this before” thing. It’s a reinvention of our brand of personal and residential services.
If this is like the emergence of the 1980s PC-based ecosystem, you don’t want to be the guy installing & servicing Wang word processors or DEC mini-computers.
PVBill, I like what you have to say. I admit to not fully understanding the emphasis on how C1 must be a cash cow. If I and C2 (along with whatever C1 does contribute) will carry the day, why isn’t that enough? (I’m not disagreeing - I genuinely am trying to grasp the perspective.)
I’m taking your definition of C1 as legacy items that may well diminish over time. So they’re nice and maybe good enough, but not a growth play. C2 is the growth play, but it’s less tailored to the custom install biz as it’s currently defined. I would say:
I is more expensive, less accessible and less patient than ever
C1 is reliable and can give you runway
C2 is promising but not optimized from a margin-support standpoint (the way C1 was)
- if you’re profitable with C2 - you’re the king. You don’t need I and the technology and consumer trends will serve you well and eliminate your weaker competitors
- If you’re profitable with C1 & C2, you’re in good shape.
- If you’re profitable with C1, that’s good, but you have to watch sales trends and run like hell to integrate C2.
- If you’re not profitable with any combination of C1 & C2, the only “I” there is is whatever you’ve already got. It’s not venture-backable. Bank lines are hard to come by. Family & friends or home equity might work. But non-strategic capital (i.e., externally-sourced from non-related investors) has become hostile and will remain so for a while. The only cash runway you can count on is what you already have banked. If you’re not breakeven now, it’s unlikely you’ll survive independently, no matter how good you are at everything else. Think of Tesla without Elon Musk.
On the OEM side, look for some M&A;. On the CI side, you’d normally look for rollups and mergers, however the volatile consumer/device picture muddies the water a lot. It’s not enough to combine two well-executing shops…you have to find two well-executing shops that both have a legit story to tell about how they fit in the emerging ecosystem…both from a consumer-facing proposition as well as internal operating leverage. That’s a pretty tall order on top of the typical synergy fit. So with fewer M&A;possibilities, it seems inescapable that the winnowing will be somewhat severe.
I hate to be such a downer, so here’s what makes sense:
- Cut your cash burn like a maniac. Get better lease terms, cheaper office supplies, more outsourcing, less travel, deferred training. Check out this 2008 ppt from a leading VC firm: http://www.slideshare.net/eldon/sequoia-capital-on-startups-and-the-economic-downturn-presentation
- Focus on sales above all else.
- Look for M&A;opportunities aggressively and early.
- Be extremely judicious about where you invest in your biz. Everything should be evaluated not as an operator, but as a prospective acquirer of or lender to your business. Is the new thing proprietary? Does it materially increase margin or access new markets? How fast will it be online? What’s the risk of mis-execution?
- Related (though seemingly contradictory) to the above, learn some new stuff. Be the absolute expert in your territory on digital media integration. Become an energy consumption/monitoring/generation expert. But do all of that on the cheap. No big travel expenses or seminars. The web and your phone are your friend. Your credit card is the enemy.
- Pare you line of suppliers. Have good relationships and make the most of trade credit.
- Make sure you’re not relying on anyone who doesn’t control their own destiny (i.e. has some liquidity risk over the next 18 months)
Thanks cm. I don’t know all their financials so I can’t comment. If you’re considering investing in a relationship that requires investment in demo gear and training, I’d act paranoid and think defensively:
PRODUCT
- Product development cycle - how quickly they can get products going indicates how nimble they are
- How well they play with others…do they have good interoperability
COMPANY HEALTH
- Are they profitable—how long have they been so [no excuses about reinvesting in the business…the question is about cash]
- How they’re funded: bank vs private investor vs venture vs parent
- How long before their next fund-raising (or how much $ is in the bank and what’s their monthly burn)
- Have they had any credit yanked by banks or suppliers? Are they current on all obligations?
- What their credit terms are for you
Some vendors may see these as obnoxious questions, but you can damage your company by not asking them. Imagine if you sent 2 guys to Vnet training 3 months ago and have inventory in your warehouse and 3 projects spec’d with Vnet gear. There’s a material cost to turning the ship around, especially when times are tight.
Things that can be neutral
- Breadth of product line - might be neutral to you and distracting to them…or it could be good (who needs Crestron lighting panels in a world with Lutron et al)
- Investment in new product slate - that can be a hail mary that bleeds them of cash and cuts their runway (like the Palm Pre)
I’m interested in hearing the thought & suggestions of others on that question in particular.
I’d also be interested in general economic sentiment. I like what Julie says re dealers adapting to digital media devices and DIY/warehouses. But I disagree with a general reassurance that the economy will pick up. There’s the very broad notion that economies are cyclical, which isn’t particularly insightful. I’m guessing you meant that it’ll pick up in a meaningful near-term timeframe—what do you mean? Q4? 6 months? 12? 18? Do you see it returning to 2005 levels? 2002?
I’d also be interested in general economic sentiment. I like what Julie says re dealers adapting to digital media devices and DIY/warehouses. But I disagree with a general reassurance that the economy will pick up. There’s the very broad notion that economies are cyclical, which isn’t particularly insightful. I’m guessing you meant that it’ll pick up in a meaningful near-term timeframe—what do you mean? Q4? 6 months? 12? 18? Do you see it returning to 2005 levels? 2002?
6 months? No way. Q3 or Q4 2010 is my guess for a return to normalcy. Then some good rebounding in 2011.
To the original question, “Is the Resi CI Business hitting a wall?”
I would say yes. Yes in the same way that most every industry has hit a wall. I re-iterate what has already been said, if you don’t adapt, you’ll be out of business. But like a very lush landscape that finally sees another season of fires, new growth will emerge (analogy appropriate for my southern california perspective). But while these times afford many an opportunity to step into a market that is seeing service providers and manufacturers drop, it is not for the faint of heart. More specifically, it is still very lean and therefor the most important skills for survival right now are not related to the technology we use, but to the sales, marketing and accounting savvy that will keep an organization from shutting down. The premise that wireless, or iPods/ MP3 players, or cell phones, or whatever will somehow contract the CI industry just doesn’t connect for me. I have been asked many times “aren’t you concerned now that everything is going wireless?” We pull more wire now than ever. Bring on wireless, iPods, cell phones I say! While those things chip away at an area of CI, there are LEEDS and the consideration of energy consumption that are more than making up for it. Not to mention HDMI and copyright protection.
More and more DIYers will be able to play in the CI space - but again, I see this as a benefit. Our industry will become more accepted and considered standard or even necessary. So the minute someone wants to go beyond the basics, bring in the CI Pro! Or CE Pro.
My basic research over the last 10 years were that yes we have hit the wall without question.
When I first started I had a choice to Crestron or not to Crestron. I already new how to code, but something deep in my engineering and technology soul was vehemently against charging people $10K for a touchscreen that had a build of materials cost close to $500 dollars. But many of the integrators that glamorized the cover of CEPRO over the last 10 years were HIGH END dealers that sold a ton of CRESTRON or its competitors.
We chose to use cookie cutter scalable, affordable systems. While we could out bid any HIGH END Crestron type system from a cost and dollar value, we were still targeting the same customer base. $1M homes or above, or the top 1% of the market. We did many athletes, entertainers and successful entrepreneurs, but in the end the business was very difficult to scale, and was never as cookie cutter as it should be. Considerable time went into support, training staff, and troubleshooting. Integrations was 90%, but the last 10% as because in the “open source world” or cookie cutter world there are still API’s or other things missing for numerous people (SONOS for example: Great product, but it is still an island). We were very very early adopters of Sonos, CI dealer no 8; and they are very good friends of mine. But when you ask a company who is doing extremely well why they are still an island? they say its all in the numbers. Only 1% of homes get connected systems, and the cost and support structure doesn’t justify it.
I thought surely with the advent of broadband and WIFI and structured wiring that the playing field would ultimately become leveled. That a WYSIWYG type cookie cutter system would clean the Crestron type High END overpriced proprietary model away. But it hasn’t, and instead the market dynamics have shifted quite a bit.
What has happened?
1) CE manufacturers have undergone serious price erosion. Erosion so fast that even distributors to the CI channel can’t compete with the big box or Costco’s. Display technology and its HT integration was a mainstay of the CI business. The margins on LCD’s, plasma’s and PJ’s have shrunk so much that Julie’s statement about BYOB (which has issues) really makes sense. But now BBuy is in the integration business, they want to get the CI margins, because they are higher than the margins on the product.
2) CE manufacturers never play nice with each other or pay attention to integration. I remember the Z-wave launch at EH about 8-9 yrs ago, but how different are they now. Siginificant patent issues with Lutron, and no true CE products ever adopted. Zigbee is getting the press now, but I have zero faith in the software stack, and fundamentally disagree with the need of a mesh network. RC4E and others are edging in. But unlike the commercial world who uses BACnet we have no standard, and no reason for them to aspire to the connected world. Device manufacturers sell boxes manufactured at the lowest price and sold through the most viable distribution models.
3) No driving force for the connected home? We thought media would do it, but DRM shut alot of that down. Wifi argues against structured wiring, and Service Providers (Comcast etc) haven’t embraced CI, its need or connectivity. The motorolla HDTV boxes have Ethernet with no control functionality, and they aren’t even on or working?
Hopefully the Green mandate by the govt will put the incentive back in the connected home, and will be embraced by builders when construction picks back up. But it has taken years for us to build the relationships with the $1M custom home builders, we have never been successfull outside of security selling into the larger $250K-400K home space due to costs. Structured wiring is expensive, as is CI. people want all this stuff but in the end they are more concerned about just getting into their home. Most will sacrifice without MZ audio or other upgrades to get Hardwood floors or better windows, or granite countertops. The Structured wiring usually is contracted early in these subdivisions to electrical contractors who know zero about integration, but how hard is it to pull wire? (trimming it out is a different argument ... lol as the cable guy can tell you). But the fundamental cost barriers into the mass 99% of the market is difficult to overcome, and builders are not savvy enough to catch on.
4) Stuff hasn’t changed. Since the end of the .com boom, or post 9/11 what technology or products have really really changed our industry at its core. What products have really just been so ahead of the pack, and provide real mass market value to the customer. Outside of Sonos, which is an island and ELK (they are stagnant now, but a great value), who has done it? I thought C4 had a great opportunity, but their product models were flawed along with their ability to attract a dealer base. They went after the retail showrooms first (which based on price erosion and depending on your market size; typically these are only effective in smaller cities since they don’t have to compete against the numerous big boxes) and not hardcore integrators. Now they are in pilots with Bbuy and HD. The numbers say the following: Outside of basic HT stacks (Flat panel, surround), CI is not a necessity, but a luxury; hence why we hit the wall. But we can’t make money on hanging TV’s anymore, and that has been the driving force for our industry without question. CI has been a luxury business and is a luxury business at its core. Integration is what we all want, but the costs are too high for the mass market, so its impossible to scale the business. Successful dealers embraced tight niches (security monitoring etc) that provide tremendous passive revenues and upside. True integrators are “starving artists” while the housing market recovers and the top 1% have cut expenses to offset losses due to the recession.
I’m inclined to agree w Docauto. I think we have a non-cyclical contraction that’s unrelated to the standard rah-rah rhetoric: “we’ve been through this before,” “everyone else is hurting too,” “ride out the storm,” “adapt to survive,” “we’ll always add value and be better than the alternatives.” All that’s true. But it seems both superficial and self-serving…some faux-savvy denial. I suspect ComputerLand and other PC VARs reassured themselves with those same chestnuts 20 years ago.
-On the economy, the Wall St Journal is showing jobs picking up in 2012. That’s a long time and entirely plausible. Then expect a further lag before luxury discretionary picks back up.
-Housing market is in equally protracted doldrums. Investing in homes and home technologies are no longer a no-brainer among the shrinking affluent.
-On the device front, the gap between “accessible consumer”/“low-end CI” and “high-end CI” is shrinking. Look at the difference between the offerings from RC OEMs and Crestron/AMX 8 years ago. Then look at the delta today. There’s still an appreciable difference, but it’s shrinking dramatically. Back then, if you wanted a sexy, extensible UI device, you had very few choices. Not so much anymore.
You can’t swing a dead cat at CEDIA without hitting a touchpad. HAI’s making media servers. Pronto’s got two-way. Universal has in-wall. Plus everyone and his cousin has an iPod/iPhone app on a cheap hardware platform that would cost $2000 if sourced through a CI OEM.
That kind of product feature compression brings margin compression as well. So the most defensible niche for high-end CI is ultra high-end installs that require the customization and flexibility you can only get with AMX/Crestron, their evolved platforms and their investment in interoperability. That’s a tiny market. Like docauto suggests, there’s no reason Sonos et al can’t become a part of that ecosystem and further disrupt high-end….it’s just that the shrinking market is too tiny for them to bother. [I’m not of the belief that you can get away w/ flash and open systems…AMX/Crestron are optimized for their use case and that’s a big deal. But you still need to sell that premium to the consumer. That’s hard to do, esp if you can get away with a simpler UI device from one of the newer-to-2way-touch OEMs.]
Which gets back to the issue of scale. Ultra high end was never a scale biz for anyone…and it was typically difficult with tough margin risk. We all worked to upsell mid-tier and upper-tier homes which appeared to have some nice potential. Now there are no growth markets. And when they return, the only growth market that requires high-end CI talent will be that ultra high end gig. Everything else will be more like the alarm business: market aggressively, bid smartly, don’t make a mess and be nice. The end-result between an excellent CI and a merely competent one will be indistinguishable. [That’s what the OEMs have been work toward.]
This means it’s a polarizing business. Fewer very-high-end gigs that truly needs the secret sauce that we all claim as our key differentiation. Larger middle-section-through-high-end that consumers can satisfy via DIY or BB or less evolved CI guys (alarms, speakers). All the while, OEMs across-the-board will continue making the tools easier and the hardware better that continue the polarization at the expense of the high end.
For me, that’s the core of the non-cyclical adjustment here. It’s device-based; it doesn’t change when the economy rebounds. And it doesn’t necessarily have room for the current population of CI guys, regardless of how savvy they are or how readily they adapt to sonos/ipod/roku/boxee.
1. We may never see the volume of business we saw before - it was a perfect storm in which we all rode the wave (all the way to the bank)
2. Sell yourself as an AV consultant - Focus more on your knowledge and expertise and CHARGE FOR IT, instead of on equipment profit margins. The fat margins we are used to are going away. Julie brings up several good points in wrapping your business around consumer based products (iPods, Sonos, etc.), But it’s more than that - The IP av movement is fundamentally changing how we do business. The days of large racks of equipment wired up in the closet will be the minority. This ultra high-end business will still be around, again, just not like before.
3. Diversify, Diversify, Diversify - If you don’t your business will die, that’s all there is to it. Personally I would remove the word “Home” from my company name if it’s there. Go after digital signage, restaurants, hotels, corporations and government. Learn about Pro Audio systems if you don’t already and start selling to houses of worship and performance halls. Here’s what we CAN do. Home systems are sexy. Commercial systems typically are not very sexy at all. We can bring the “slick” factor over to the commercial world!
4. The sky is not falling… unless you want the glory days of the 2000’s to come back. Business as we know it has changed, and we must change with it. Which is really the same as it has always been - the only constant is CHANGE.
Exactly.. I think that there is a mechanism to scale the business in the middle.. but nobody has come up with the right product offering or profitability model. C4 is the closest, but also the farthest away.
This business is moving to the middle; where the real value is.. as it gets more WYSIWYG, and retail (like routers), moving to one cable “idiot proof” setups (HDMI); this market will continue to contract.
I cant tell you how refreshing it is to find someone who actually has applied the concepts of “disruptive business forces” in trying to explain what is happening and will happen to the CI industry long term. I couldnt agree more with most of what you have already stated. I recently came to the same conclusion while reading business books regarding other industries. It dawned on me then that not only is this downturn economy related, but there is currently a permanent change/shift in the fundamentals that make up CI as we all know it. The parallels of what i read and what i currently see in CI could not be more startling. A glaring example illustrated in this book details how technology driven “disruptive business forces” always remake industries over a given period of time:
“There is a clear pattern in the long and arduous process by which an industry eventually transforms the body of knowledge upon which it is built from an art into a science. In the earliest stages of most industries, the extent of understanding is little more than an assortment of observations collected over many generations. With so many unknowns, the work to be done is complex and intuitive, and the outcomes are relatively unpredictable. Only skilled experts are able to cobble together adequate solutions, and their work proceeds through intuitive trial-and-error experimentation. This type of problem solving process can be costly and time consuming, but there is little alternative when the state of knowledge is still in its infancy. Over time, however, patterns emerge from these intuitive experiments. Defining these patterns that correlate actions with the outcomes of interest make it much easier to teach people how to solve the problems.There is as yet no cookbook that can guarantee success every time, but the scientist can often state the probability of an outcome, given the actions that have been taken. Ultimately these patterns of correlation are supplanted with an understanding of causality, which makes the result of given actions highly predictable. Work that was once intuitive and complex becomes routine, and specific rules are eventually developed to handle the steps in the process. Abilities that previously resided in the intuition of a select group of experts ultimately become so explicitly teachable that rules based work can be performed by people with much less experience and training.”
This certainly applies to CI and i see this playing out the following way—most of which we already see happening:
(in no particular order)
1) As quoted from theories of “disruptive business forces”, the intuitive nature of new technology in CE products will require less and less specialized skill sets. This will begin as a reduction in “specialists” within CI firms and ultimately will wind up phasing out the CI firm itself as the customer either no longer needs specialty services or wont find a value in paying for them.
2) Current CE market disruptors such as BB or online retailers will begin to gobble up the market segments of CI that kept it from being a niche of a niche of a niche industry. Geek squads and the like will reduce labor, design, etc. enough to price out almost any specialty shop, that is until technology ultimately makes the end user the CI.
3) CI will still exist, but as mentioned before it will remain as a concierge platinum service for the ultra wealthy—as is any business that caters to that segment.
4) The current scheme of how CE manufacturers do business with dealers will change quite a bit. The “Direct Dealer” model will be substituted for by the Large distributor model for the most part (see B&K;and Martin Logan). Manufacturers (CI Types) will either be consumed by large entities to serve the mass market segment (Vnet), adjust focus and compete in the ultra high end segment, or disappear all together.
Is Specialty Retail’s Future ‘Extremely Lean’?
