From schools to police to municipal councils, government spending on pro AV has weathered the recession relatively well. Tim Kridel looks at the trends and what it takes to win public-sector business.
It was bad, but it's getting better. That's one way to sum up the government market for pro AV gear in APAC and EMEA. Like consumers and businesses, governments at every level abruptly reined in spending when the global recession began. The pullback included projects already funded.
"When the Icelandic banks went bust and all of that was going on, more or less overnight a million pounds worth of projects were pulled," says Jon Hunnisett, whose firm, Sound Advice, targets UK municipal councils. "That was 16 to 20 fairly major projects that just disappeared. Most of it was a knee-jerk reaction, 1 think." In some cases, the recession stung even more simply because AV often takes a back seat to IT.
"Public officials responsible for IT tend to prioritise information technologies and decision-making support systems when it comes to the allocation of funds, while expenditures on AV systems are either decreased or cancelled," says Mikhail Petrov, general manager of DeLight 2000, an integrator that specialises in the Russian, Kazakhstan and Uzbekistan markets.
But even in the hardest-hit countries, schools and universities still needed projectors, police still needed surveillance systems and defence departments still needed control rooms. Those needs, combined with new funding sources, have helped offset cuts and prop up the market in many countries.
"In Qatar, since the year 2006 up to 2011, government spending [on] pro AV, building controls and security systems has significantly increased"
Amjad Hamaideh, Techno Q
"In education, for example, there is growth in AV investment as new government initiatives provide central funding directly to educational establishments rather than using local authorities," says Sotos Mandalos, Samsung's UK technical product manager. "This released extra funding that schools are able to manage themselves." That's helping as the globally economy struggles to recover.
"We're not back to the heyday of four or five years ago, but we're certainly not going to go hungry," Hunnisett says. "1 think that the number of projects we get to look at are probably approaching three-quarters of what they were three years ago. So we're coming back up."
Education and security top priorities
As in flush times, the government AV market opportunity today varies dramatically from country to country and by product type.
"The institutional market (government and education) is one of the fastest growing vertical markets within EMEA when it comes to (ultra) short projectors and interactive whiteboards," says Peter van Dijk, Mitsubishi Elcctric's business development manager for visual information systems in EMEA.
Infrastructure spending is an important barometer. For example, upgrades to railway stations and highways often include AV components such as signage and surveillance. That's one reason why some developing countries are hot AV markets.
"Generally speaking, government spending in developed Asian economies such as Japan and Korea has remained fairly flat," says Toshihiro Takaichi, overseas marketing manager for Mitsubishi Electric's display wall products. "In developing economies such as China, spending on large infrastructure projects is increasing." Video surveillance, projection systems for сommand-and-control rooms and other security-related products remain relatively strong because governments continue to make anti-terrorism a top priority.
"Education and security spheres have been receiving increasingly higher budget financing," says DeLight 2000's Petrov. "Those spheres have a substantial social and political weight and act as a public stabiliser. The rise in security expenditures is a global trend caused by an increased number of terrorist acts, youth disorder, international conflicts and industrial disasters. The Russian security market has been growing quickly including AV systems expenditures." In the Middle East, oil revenue continues to spur public AV budgets.
"In Qatar, since the year 2006 up to 2011, government spending [on] pro AV, building controls and security systems has significantly increased," says Amjad Hamaideh, manager, systems consultant, at Techno Q, an integrator. "Most government offices have added at least one fully equipped meeting room and/or training room. Ninety percent of all government educational institutions are equipped with newly installed latest pro AV technologies. The momentum is set to continue for years to come due to spending on new infrastructure." Other regions have their share of bright spots, too.
"Russia, India, China and South Africa definitely stand out," says Mukul Krishna, global director for digital media at Frost ft Sullivan, an analyst firm. "Malaysia, Thailand, Indonesia are all good markets to tap. Their economies are pretty sound and have a lot of potential. Infrastructure enhancements are going on all the time. Those would be the countries 1 would expect to be the first in that geographic region to start moving, apart from the established economies such as Japan and South Korea."
Spending varies by government level
In many countires, AV spending varies dramatically by government level. Russia is a case in point.
"[The] local level has seen the most dramatic changes," says DeLight 2000's Petrov. "The public officials at the local level either don't spend any money on AV at all or decide to purchase the cheapest equipment to be installed by local employees without any assistance of integrators.
"Federal authorities have reduced their expenditures significantly too. 1 would not say they have fully lost their interest in audiovisual systems, but it is easy to notice that they cannot afford to enter any large-scale projects." Russia's regional governments currently have the most to spend on large-scale AV projects.
"In my opinion, this is caused by several reasons," Petrov says. "Firstly, governors enjoy a certain level of freedom in terms of prioritizing regional project financing. Secondly, there is trend of innovative and IT development at the moment in Russia which includes the establishment of an audiovisual environment to support making efficient decisions.
"Thirdly, governors, as representatives of the central power, need a modern hi-tech audiovisual environment. Fourthly, the country's top leadership tends to make frequent visits to regions with regional authorities wanting to look as modem as possible in their eyes." Some AV spending is driven by regional forces, such as the European Commission (EC).
"We're seeing a lot in ЕС-funded projects," says Kevin Morrison, AMX's European managing director and vice president. "The EC has funded lots of infrastructure projects for rail and road transport in a lot of emerging countries in Eastern Europe. Poland has been a big benefactor of that over the past couple of years. That's required everything from control rooms to all sorts of projects." Open-government mandates are boosting spending in sectors such as town councils, which are increasingly streaming meetings.
"The central governments have said, 'You have to make the democratic process more transparent and also more accessible to the public,'" says Sound Advice's Hunnisett. "So a lot of them are getting into Webcasting, archiving meetings and electronic voting. They need a good AV system to do that." Sometimes that equipment is attractive because it can do double duty to help cut costs, such as by enabling videoconferences that reduce spending on travel.
"Since state administration is linked from central level through regions to towns, we see first projects of videoconference equipment, [which] can make their communication much more effective and cheaper," says David Lesch, sales director at AV Media, an integrator in the Czech Republic. "They have experience [with videoconferencing] mainly through emergency meeting and then they try to see them for normal routine operation." Good AV experiences at one government level can trigger spending at other levels.
"Tier 1 or 2 governments who bought AV several years have got good Rol results," says Wayne Li, Radvisions's China country manager. "They have the plan and budget to extend AV system to Tier 3 and 4 governments."
AV in play
Even in the toughest times, governments often find money for sports facilities, partly because they create construction jobs that last a year or longer. The current recession is no exception.
Examples include the 2012 Olympics in the UK and the 2014 Olympics in Russia, as well as the 2012 UEFA European Football Championship, which is driving major stadium projects in Poland. For AV, sports-related work ranges from rental/staging to permanent installations, such as video surveillance systems that remain long after the games are over.
"The institutional market (government and education) is one of the fastest growing vertical markets within EMEA when it comes to (ultra) short projectors and interactive whiteboards"
Peter van Dijk, Mitsubishi Electric
"The key driving force behind government spending initiatives is the 2022 World Cup and the Qatar National Vision 2030," says Techno Q's Hamaideh.
The bigger the event, the more likely it is to require major infrastructure upgrades in the host city, such as new train stations and highways. Those projects frequently have major AV components, such as digital signage for wayfinding and command-and-control rooms. That's one example of how, in developed countries, sports projects can spur AV spending that otherwise wouldn't occur.
"In developed countries where infrastructures are in place, pro AV spending will likely remain more or less flat perhaps with the exception of CCTV applications," says Mitsubishi's van Dijk. "In emerging markets, governments will spend money on infrastructures such as rail, subway, airports and roads but also on utilities such as energy water oil and gas, all of which will provide opportunities for pro AV products and services."
Winning the business
Knowing that government projects exist is one thing. Knowing how to win them is another.
For example, on large projects, submitting a bid directly to the government might not be an option if the integrator doesn't meet financial requirements designed to weed out companies too small to pull off a major project.
"Participants can only take part in the tender if they can provide proof of a certain amount of annual revenue or proof of a certain amount of annually delivered projects similar to the tender," says Mitsubishi's van Dijk.
Instead, becoming a subcontractor often is effective.
"You see a lot of large government contractors -[such as] Lockheed Martin and they partner with these people because they're used to working in the centre, they have a good balance sheet to take on the size of this work," says AMX's Morrison.
Another form of credibility is a scale, such as the size of past projects, of the integrator or of the integrator's partner.
"Vendors and integrators will often find that a close partnership with the lead contractor, or a manufacturer with a proven track record of success in major projects, greatly improves the credibility of their tender," says Mitsubishi's Toshihiro. "For the pro AV integrator, the backing of one of the world's largest engineering companies adds considerable weight to their proposal." IT companies and even telcos are other potential partners.
"For bigger projects, we need to work with big 1CT project integrators like IBM or Cisco and a lot of local and central European ones like ICZ," says AV Media's Lesch.
Even so, a few integrators say they've been able to land major public projects on their own.
"Because we are a local company operating in the Qatar market since 1995, we have the advantage of dealing directly with the government clients," says Techno Q's Hamaideh. "Generally, we have gone into new projects through the consultant and as a subcontractor. It usually depends on the circumstances and the project setup." It also helps to keep up with politics, particularly election cycles. For example, some integrators say it's not uncommon for new officials to scrap projects that their predecessors endorsed.
"In Spain, there's an election coming up," says AMX's Morrison. "There was a bit of spending, but now, nothing will be spent until the election is over." When an election is approaching or the economy is down, project choices sometimes are based on whether they directly benefit the public, such as digital signage thai announces when the next bus arrives, or appear to benefit politicians, such as a new control system for the council chambers. Those political considerations are just one example of the things that integrators and vendors face when targeting the government market.
"It's been good to us," says Sound Advice's Hunnisett. "But I've had to keep a sense of humour."
Автор публикации: Tim Kridel