John Sciacca Writes...
Random Thoughts (Blog)
Random Thoughts (Blog)
Random Thoughts (Blog)
|Posted on August 20, 2012 at 8:45 AM|
"Think different." – Apple
Whether you're a Mac or a PC (and, for the record, I'm a PC), you've got to hand it to Apple. They went from a company on the brink of total irrelevancy to a market dominating innovator on multiple fronts whose stock closed Friday with a market cap crossing the $600 billion mark. Apple is beloved by consumers, stands at the paragon of product hype and desirability, and can move the market and hold pricing in a retail environment that is increasingly cutthroat.
What can we learn from them?
At the 2011 CEDIA EXPO I sat next to Russound’s CEO, Charlie Porritt, at dinner one evening and he shared one of the more profound quotes I heard at the show. Charlie said that while Russound was meeting with Apple to implement AirPlay into a new media streamer, one of the Apple executives held up a key component and said, “This part costs $15 (at manufacture) right now. What would you do if it was $1? How would that change what you made? How would that change what you do?”
It’s a simple idea, but it’s also quite profound and illustrates the forward, look-ahead of Apple mind-think. Don’t get hung up on what IS right now; think about what it could be, what it should be, what it will be and then change, prepare and work towards getting it there.
Where Apple is big enough to push pricing downward, our businesses are subject to the pricing whims of outside factors. And we face the exact opposite issue; things we sell are continually dropping in price and in margin. Think about what you are selling today for $1000; what would you do if it was $100? How would that change what you do? While we can't move pricing, we have to anticipate the changes and adapt to them. Prepare and plan and then act accordingly.
If five years ago I had told you that Elite would be gone and that the displays that fueled your business and routinely sold for $5,000 would be selling for $1000 with a profit margin of around 5 points (before shipping costs) you’d likely have thought I’d gone mad. Or what if I’d forecast that the multi-thousand dollar touchscreens you sold and programmed would be replaced by a device that was cheaper, bigger, more powerful and – oh yeah – something you couldn't even sell?
But it happened. And many companies discovered how to change gears, modify practices, and get lean-and-mean to continue competing and surviving in this changed landscape when money no longer seemed to just walk in off the street and throw itself at the altar of dedicated media room installs.
But continue looking ahead. If there's one thing the past has shown us about tech it's that products will continue to get cheaper as they get better. Today we moan about $1000 50-inch flat panels. What if they drop to $500? Will your company survive?
Many companies supplement the no-margin-sets by selling expensive mounts, cables and installation labor. But mount and cable pricing are also plummeting. Walk through a Wal-Mart, Target or Costco and you’ll see mounts at prices that will likely scare you. Some of them even in specifically designed DIY and even “For Dummies” kits targeting the end user. Monoprice and other e-tailers have mostly put an end to the $50 HDMI cable and replaced with a $1.95 one.
Many installers still live and thrive in that custom install holy-of-holies, programming. “The end user will never be able to do this,” they haughtily claim, clutching a laptop filled with proprietary programs, customized graphics and personalized code. And while that is still mostly true, as devices become smarter and feature better App-based control, this sanctuary is also slowly being invaded. Play with the Sonos app (free), the Kaleidescape app (free), AirPlay (free) or the Lutron app ($19.95) and see how powerful a click-to-install experience can be. And that’s today.
The Network is another place where many have retreated. All that 192.168.1.1 and ipconfig and port forwarding stuff is confusing to customers. But pretty soon virtually everything will live on the network, and you can be assured that the Cisco’s, Access Network’s and Pakedge’s of the world will continue making it easier and more auto-configuring for the end user to have the most plug-and-play experience possible. WiFi will continue getting faster, more secure, and be all-reaching to the point where “wiring for a network” will be something that we’ll reminisce over.
Think about the Apple store. It's gleaming. It’s packed with every imaginable version of Apple tech. Tons of staff are on hand circling around ready to demonstrate or answer any Apple related question. The head techs are called Geniuses. People throng to the stores and wait for hours for the chance to buy premium priced products. Every Apple store I’ve ever visited has been a vibrant hub of energy and excitement. I didn’t even buy anything, but damn! It was a rush just going in and walking around.
Here’s a quote from my tribute to Steve Jobs: “Steve understood the fact that people aren’t buying tech; people aren’t buying specs; people aren’t buying features. Better than anyone else, Steve understood that ultimately, at the end of at all, people were buying an experience.”
Few companies know how to deliver that experience like Apple.
What can we take from this? What can we learn from the $600 billion giant to help model our businesses?
The answer comes in a quote from an unlikely source, golfing legend, Bobby Jones. Bobby once said (and I’m paraphrasing here) that the most important course was the five-and-a-half-inch space between your ears.
For custom installers today, the most important bit of real estate in our showrooms or offices is that same five-and-a-half-inch space.
Will our successful futures lie with energy conservation and management? Aging-in-place systems? Remote access and automation? Or maybe something new that we’ll discover at #CEDIA12? Truthfully, it doesn’t matter. Because we’ve already got the five-and-a-half-inch space to master whatever the next frontier may be.
New technologies will come and new factors will drive the market, but it’s our knowledge, our experience, our creativity, our expertise, our service and our problem solving skills that will always be the most valuable thing we have to offer. The thing that can never be packaged, hung on a slat wall and discounted at retail.
Apple has shown us that no matter what the rest of the market is doing, that there will always be people looking for a luxury brand, and willing to pay for a luxury experience. It’s up to us to make sure we deliver it.