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Guest Commentary: Focusing on Installers - Why ClearOne Bought NetStreams (1/3/2010)

By Zee Hakimoglu, ClearOne

Having earned a bachelor's degree and then a master’s degree in physics, I served in a variety of executive roles including business line and general management, business development, product marketing, and research and development for several publicly traded companies. I joined ClearOne in December 2003 with more than 15 years of executive high-tech management experience, and in 2009, ClearOne was named one of America's fastest growing small public companies by Fortune Small Business magazine.

ClearOne is a communications solutions company that develops and sells audio conferencing systems and other related products for audio, video, and web conferencing applications. In 2009, ClearOne bought NetStreams, whose products are designed for distributing high-definition audio and video over TCP/IP networks for commercial and residential use.

Constant change

The one constant in our industry is change. While the tendency of the majority of integrators is to focus on hardware, we recognise that our customers are most interested in content. The way content is delivered and consumed is changing radically; physical shipments of discs and tapes are being replaced by wired and wireless distribution via IP, providing unparalleled scalability, an open architecture, universal acceptance and incredible reliability. Networked distribution is the most logical solution for digital audio and video content storage and delivery.

Challenges

One of my concerns for the industry is the plethora of products being introduced into our channel which are produced by companies with no real interest in the integrator/installer business. These companies tend to focus on a larger market; their products are intended for self installation or inclusion in packages offered by builders, electricians and online sales outlets. There are certainly some compelling technologies being offered, and I applaud the innovations and technological advances, but I am concerned with the continual race to the bottom of the market.

This race erodes profit margins for integrators and leads to the implicit migration to labour-based (time and materials) pricing in our industry. There are many cases where charging strictly for labour is appropriate, but unlike most other trades that service corporations and residences, our residential market is required to adapt to continual learning curves and invest in engineering/development costs for cutting-edge integration. These industry challenges result in overhead that is exceedingly difficult to recoup.

Why ClearOne bought NetStreams

We are seeing a migration to IP-based distribution in professional markets. NetStreams was built on this premise and has developed very well-designed solutions for both the commercial and residential markets. ClearOne and NetStreams share a common audio/video-orientated heritage and vision, both focusing on the importance of their relationships with integrators. We believe in, rely on and have designed our businesses to focus on the professional installer.

The acquisition of NetStreams has allowed ClearOne to provide a wide range of high-definition audio and video solutions as well as add a new market segment. Combining ClearOne's audio expertise with NetStreams' IP technologies creates opportunities for exciting advancements. ClearOne has focused on expanding into the residential market and NetStreams has strong worldwide partners to achieve a successful expansion.

Additionally, NetStreams has a number of valuable technologies and intellectual property rights. The most recent US Patent publication allows companies to see how advanced and comprehensive NetStreams' technologies and intellectual property rights are. As we combine NetStreams technologies with ClearOne's operational and quality assurance capabilities, we will deliver industry-changing products. I believe that the merging of NetStreams and ClearOne has brought a new synergy to the market. Buzz Goddard, recently promoted to Vice President of Worldwide Residential Sales at ClearOne, has a comprehensive understanding of the residential market as well as extensive relationships in the field, making him an integral influence and force as we focus on growing the residential business.

As a result of the NetStreams acquisition, ClearOne plans to enter into new vertical markets including digital signage and commercial sound distribution. I expect that our StreamNet technologies, in both the commercial and residential markets, will produce an ecosystem of new StreamNet-compatible IP-based endpoints through licensing activity, bringing new opportunities for our integrators and distributors.

The user experience

Our industry tends to focus on gadgets, what widgets can be jammed onto the screen, and how many functions can be layered onto products that are already too complex for the user. I don't believe that customers want to stand in front of a wall-mounted touchscreen to check the weather or the stock market - this content is better suited for mobile devices and computers.

The industry's obsession with what's new has obscured the focus on quality. Quality is important to customers, and drives our success in the market. With faster network speeds and cheaper storage, there is progressively less need for compression and reduced attendant quality. Our residential industry was built on delivering an unparalleled entertainment experience. While audio quality has improved dramatically, if the audio experience is not to be diminished by concentrating on compression and conversion, my advice to the industry is to focus on quality, not efficiency.

Zee Hakimoglu is the President and CEO of ClearOne, a communications solutions company that develops and sells audio conferencing and collaboration multimedia and network distribution systems, for audio, video, and web applications.

www.clearone.com
www.netstreams.com

NetStreams is distributed in the UK by Invision UK.

www.invisionuk.com