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Up-and-Coming Manufacturers Navigate Unique Challenges of The Custom Integration Channel

Everyone’s curious about the new kid on the block.

This project, called Fish Camp, was designed, engineered, built, landscaped, and even furnished by D’Asign Source with a Coastal Source patented plug-n- play lighting system. Everyone’s curious about the new kid on the block. This cliché is especially true in a relatively small world of custom integration, when new vendors promise unique business opportunities or claim to solve difficult technical challenges.

There were around 110 new exhibitors at CEDIA EXPO 2013. That’s up more than ever. Some of them could be doomed to the dusty relics of history, but others could be poised to change the AV industry as we know it. They are undoubtedly worthy of our curiosity, and hopefully, some of them serve as a source of inspiration and business growth.

So who are some of these fresh-faced manufacturers? Residential Systems reached out to a number of them to find out what drew them to custom installation, their biggest challenges in brand recognition, and what their outlook is for the future.

The majority of manufacturers queried had some sort of previous tie to the custom channel and saw a void that they felt could be filled with their own solutions.

Mike Anderson, president and CEO of TiO, said it best: “I’ve been in the channel in various capacities for more than 30 years. What else would I do?”

But of course it’s not about staying in the industry he’s spent his career in. Launching TiO, an amplified wireless audio streaming and distribution product, had a bigger purpose. “There are needs that are not yet being addressed, and TiO provides unique solutions. There is still a lot of opportunity in the channel,” Anderson said.

Coastal Source, a manufacturer of outdoor lighting and audio systems, sprung from a 35-yearold Florida custom integrator, D’Asign Source. “We developed a product line that responded to all the issues we had with existing outdoor products from a quality, reliability, ease of installation/ use perspective, and, last but not least, dealer profitability,” said Franco D’Ascanio, president, Coastal Source. “We understand the custom business and the pressures on the dealers and developed our products and business plan to be a natural and profitable additional revenue stream that is much needed in the CI industry.”

As a mid- to high-end custom integrator for many years, David Tshirpke, CEO of WASP Audio, found himself coming across “the same problem every other custom installer comes across on a daily basis. Sometimes you just can’t get wires from point A to point B,” he said. “I decided there’s got to be a better way, so I made a better mousetrap.”

That led to the company’s line of wireless audio products designed to solve the problems of conventional wired and wireless systems.

The introduction of the iPad was the moment that changed it all for Marc Hofer, founder of iRoom, who has since made the full transition from custom installer to manufacturer of stylish and lockable in-wall iPad docks. “[Hofer] saw an opportunity for a game-changing accessory aimed at residential and commercial integrators,” said industry veteran Chris Lehnen, who now serves as president of iRoom U.S. “Now, we offer an entire line of solutions. Custom installers are who we know and understand best.”

The C SEED 201 high-end outdoor TV features ground retractability and daylight compatibility. Although, Westone has been in business for 55 years with its hearing healthcare and pro audio products, the Colorado Springs-based company ventured into consumer audio only recently with custom in-ear monitor (IEM) earphones. John Lowrey, VP of the audio group at Westone has worked in the CI space for years.

“I see Westone’s custom IEM as the ideal complement to a client’s custom home theater solutions,” he said. “The clients that are serviced by the CI space are looking for unique custom solutions. There is nothing more custom for headphones than an IEM. They can be personally designed for each and every client just as their systems are.”

Of course, there are other paths to this industry for some of the newcomers. David Schanin, president of Hydraconnect, was renovating a new home and having a custom AV system installed when he realized his installer was limited by what was available to build an HDMI-based package. “There was no HDMI switching gear that was reliable and worked up to the standards that we needed at that time,” Schanin said. “That was frustrating because I purchased first-class quality equipment, but it had to be a component system, not HDMI.”

After Schanin and a partner looked at the problem, they said, “we could do this.” They decided to take a different tactic to develop solutions with a top-down, systems-oriented approach. The Hydraconnect HDMI switching systems offer remote access, a web interface, and cloud-based updates.

Some new manufacturers come from other technology fields entirely. Luxury outdoor TV supplier C SEED is an Austrian company with a background in LEDs. “We had the vision of bringing the same basic idea of big outdoor screens to a next level,” said Alexander Swatek, CEO. “This new level for us was to approach a private audience in a private setting with an overall extremely innovative and extremely sophisticated outdoor cinema solution.”

Fibaro’s home automation system integrates a multitude of devices with a robust user interface focused on lighting, shades, energy management, and various sensors for safety and security. A tech startup born from a few MIT grads (though not developed in any affiliation with the university), Sookbox was not looking to make a product for the custom channel; it just worked out that way. Its product is a software-based messaging system to connect and control all devices. “A natural application for it is media distribution and the ability to have a handheld device to send instructions to a media device and have it play media wherever you want,” said David Sukoff, principal.

Fibaro has already established itself internationally in 55 countries, but more recently, began rolling out its Intelligent Home solution in the U.S. market. The system focuses on lighting, shades, energy management, and various sensors for safety and security. The latest software update enables dealers to add multimedia devices with pre-installed drivers, available from brands like Samsung, Denon, Pioneer, Sonos, LG, and Sony.

OSD Audio has sold its outdoor rock speakers for some time direct to consumers, but has recently pivoted to target custom integrators for a flattering reason. “The CI channel is the largest remaining CE category that still values a product’s build quality and performance,” said Doug Turner, VP of marketing and sales. “Many of the CE industry segments now place a higher value on convenience and fashion.”

Your Own Worst Enemy?

Venturing into a new market will naturally lead to some speed bumps. Many of the new manufacturers cited the industry itself as a source of impediment.

For Prima Cinema, this is dealing with the “highly fragmented” nature of the CI channel in the U.S. “Prima Cinema is a new and growing company, and keeping all of our existing and new partners updated with product, content, and events is a big task when our goal is to always provide ‘white glove’ service to our dealers and clients,” said Jason Pang, founder and CEO.

HydraConnect’s HM-16X16BT matrix switching processor was designed to resolve problematic audio mode conflicts inherent to conventional HDMI matrix switching systems. Prima targets the upper echelon of clientele with its first-run film release private theater experience, Pang refers to as “the final jewel on the crown” for custom integrators.

Greg Brett, president of enerG, a home automation solution with a recurring monthly revenue plan, described a situation where the custom integrator is more or less their own worst enemy. “The pattern we see is that many suffer from what we call ‘the one-and-done syndrome,’ where they are waiting for referrals for their next job.” He feels that the integrator needs a new way of doing business.

And not all integrators are enthusiastic when it comes to change. Hidden Vision TV identified this issue as “the fear of the unknown,” said Karen Beshara, co-owner. The unique mounting products from Hidden Vision TV include a Flip-Out model, which is a bit out of the box from the typical TV mounts traditionally employed in a home.

Coastal Source’s D’Ascanio also cited how dealers are busy by their traditional business practices, finding that, “although very interested, they cannot take the time to embrace this opportunity to grow their business in a meaningful and profitable way.”

The Coastal Source dealers that have dedicated time and effort to adopting their outdoor lighting and audio systems “are reaping excellent returns on their investment,” D’Ascanio said. “Some have had their first sales exceed six figures.”

As the biggest outsider new to the industry, Sookbox’s Sukoff noted, “it seems like the space is in a lot of ways set in how they do things and with the brands that they use. It’s understandable,” he continued, “because the industry is driven by dealers installing in people’s houses. There’s a comfort level. Whereas, new technology brings a certain level of uncertainty.”

Sukoff also acknowledged the barrier of entry being higher with the steadfast nature of this industry, but he is not overly fazed by this challenge. “We believe the superior technology will be adopted. We believe in innovation.”

WASP’s Tshirpke finds that the CI is still too focused on new construction, a disadvantageous place to be stuck, he feels. CIs also need to be comfortable going after more mainstream customers, not remaining restricted exclusively to high-end customers. “We need to change the philosophy and the way that some CIs work,” he said.

Westone’s E-Series 10, 20, 30 and 50 were designed to provide the most discerning professionals and enthusiasts with the ultimate sound experience. They are cast, sculpted, and polished by hand from actual impressions of the individual’s ears. The WASP wireless audio system installs in less than an hour, he added. “From that perspective, they can make more money on more jobs.”

At the start, Tshirpke was faced with many challenges concerning wireless audio technology and its poor reputation for quality. After two years of technology development, wireless audio has improved by leaps and bounds.

For other young companies like iRoom, the ability to get out of the office and in front of dealers is a challenge. The company began tackling that issue head on in 2013. “We began hiring sales reps in the U.S. and a distributor in Canada,” Lehnen said. “In 2014, we will hit the road hard to demonstrate the line and sign new dealers.”

Resources are the big impediment for C SEED too. “With HQ and production facilities in a small country like Austria, it is sometimes challenging to conquer a global market,” Swatek said. “As we operate on more [or] less all continents, we need to make sure that everyone with whom we work [with] share, agree, and live the same appointed benchmarks with regard to quality, service, etc. that we have appointed for our business.”

The test for Hydraconnect is a basic matter of numbers and being one piece of a big picture. “We’re small and up and coming, and our challenge is to break out from the noise of all the other folks,” Schanin said.

The visibility factor, which includes supplying proper training and support, is also a key element to Fibaro’s future. “Showing everyone the solutions and possibilities we offer is our number one focus,” Bira said, “which translates into a great end-user experience.” Fibaro is rolling out some special programs for dealers over the next few months to help gain traction.

The Road Ahead

Most new manufacturers are highly optimistic for the future. OSD’s Turner, however, offered a cautionary stance. “I believe that there will be major turmoil within our industry over the next decade. I believe that as much as 50 percent of the hardware products found at the CEDIA and InfoComm shows this year will be replaced by apps.”

TiO’s Anderson also admitted the general industry challenges faced the past few years, but he sees bright days ahead. “We believe the market is coming back, and there is plenty of gold to be mined in the space, especially as smart devices become ubiquitous and manufacturers embrace wireless architectures that can be easily installed in existing homes.”

He also noted that marketing efforts by big corporations like AT&T, Comcast, and Google, “will create many new opportunities as they bring consumers into the market for our products. CEDIA dealers often fail to exploit these kinds of opportunities. It’s incumbent upon manufacturers to provide the tools to help these dealers take advantage of this rising tide.”

On the ultra lux side, there was even more optimism with the distinctiveness of the systems “Prima Cinema is very bullish on the custom home theater market as we witness increasing consumer demand for private home entertainment experiences,” Pang said. “We anticipate that our unique offering of first-run theatrical films will help consumers decide to build or update their existing theaters, and we’ve witnessed this in many of our clients.”

C SEED is banking on consumer demand for individuality, non-negotiable quality, and the desire to reward themselves with luxury technology. “[These] are strong values to stay,” Swatek said, “hence, we are not only convinced, but also highly motivated to move further with our development.”

Lindsey Adler is associate editor for Residential Systems, Systems Contractor News, and Healthcare AV.