. — The AVC Group, the new business group formed earlier this year to combine three Linear-owned residential installation companies — Niles, Xantech and Elan Home Systems — recently expanded its grouplevel management ranks with the appointment of the group’s first chief technology officer, finance VP and operations VP.
AVC Group president Mark Terry, a 17-year Harman International veteran, also created a new corporate headquarters for the group here, essentially moving all of the Niles operation and most of the Elan team out west.
Terry, who has been relatively quiet since taking his new role, sat down for an exclusive interview just prior to CEDIA Expo 2010 in Atlanta. Here’s what he had to say about the AVC Group’s transition so far, his plans for the brands, and even his opinion about the future of the custom installation industry.
Even though you’ve been quoted about taking your new position, could you backtrack and reiterate what it was that attracted you to this position and convinced to you leave the world of consulting for another full-time gig?
It’s right up the alley of the kind of thing that I’ve done before, taking a group of disparate companies and combining them together to create something that’s more effective. When you have a whole lot of brands, I think it’s a unique opportunity.
There’s two ways to play in the market, I think if you’re going to be significant, you can have the single mega-brand, i.e. the Sony-type players, and then you can have a collection of brands like ours, where brands represent independent categories and specializations, which are things that are valuable to a customer. So I think I saw this as an opportunity to do that again. That’s what brought me into it.
One of the big changes so far was the decision to create a new headquarters and moving parts of the company into one place. Can you explain the rationale for doing this and the expected benefits?
Clearly it’s a lot more efficient to put it all under one roof to get better cooperation. We’re consolidating back-office functions, which would be of no surprise. Having redundant accounting, supply chain, and warehousing is not an efficient way to collectively run the company. The other thing is that it’s important having people working closely together and communicating and getting to know each other.
We can’t forget that, before this, the group saw each other more as competitors than partners. Being together, side by side, really helps build the esprit de corps.
Explain a little bit further the locations that will remain intact and what those represent again.
Well, it’s pretty simple. Research, development, and repair will be consolidated in Lexington, Ky. We’re moving engineers from Niles and Xantech there to the Elan facility, and that will be the joint R&D facility. We also have an R&D operation up in Marblehead, Mass., the former home of HomeLogic doing software and IP-based development for us, and we’re bringing more people in to bolster that.
And that’s just a matter of having existing facilities that were suitable?
Yes. They’re there and in place and we have a lot of tribal knowledge in those locations of people who have been working on these products for a long time and really understand the technology. We don’t want to re-invent that wheel, so it’s worked out. We’ll also have some engineering out in California as well, so we expect to have different projects working in some different areas, and I think we can get the best of both worlds.
Can you break it down and be specific about what each brand represents and what their strengths are?
Clearly Elan offers higher-end, higher-priced, more IP-based whole-home automation. That’s more of their thing: complete systems, including automation and lighting control, security, video and all of that. Niles has really been more of an audio/video entertainment company — lot of emphasis on audio, high-quality speakers, audio distribution and control, and that’s really been their forte and they do exceptionally well with it and have a great history in that.
I’ve always thought of Xantech as a widget company, a toolbox, the go-to company for solutions when you’re doing an install and hey this thing doesn’t work with that. And that’s really who they are and that’s represented in the kind of IR products and converters and baluns and all the stuff that they do.
That’s also very complementary for the other brands, because there’s widgets that don’t make sense for Elan to carry by themselves but Xantech would be the perfect place to have them. And then ATON is our low-cost solution [which is] competitively priced, pre-packaged, easyto- install kind of systems, get into multi-room inexpensively. It’s a very distribution-oriented product.
And Sunfire is more of our home theater. It’s our audiophile product. It’s more of a traditional speaker/home theater product line. So the brands are really quite different in what they do, and they overlap in some areas but surprisingly less than you think. And as we go forward in product development and growth, we’ll focus more on the strengths and less on the competitive aspects.
It seems you’re in a position with the group to not try to be all things to all people or a one-stop shop that ends up not serving the dealer as well as you intended.
Exactly, I think you hit right on the head. One of the frustrations of so many dealers we talk to is that everybody has come out with everything, and they don’t need everything from everybody.
And it’s been awfully easy for all kinds of brands to offer a broad range of products, not particularly deep, but broad, and then they go to the dealers and want them to sell a broad range of products and there’s not a lot of advantage for a dealer to sign up with a smaller vendor that’s got a broad range.
It’s much better for him to be with a larger company or a larger group of companies that are more specialized. Unless you’ve taken the Crestron- or the Sony-type of approach of being big and doing everything well. I think we provide a very viable alternative for them. And it also allows the dealer to add more value. If a dealer goes in there, and he’s really customized a system, and he’s optimized and used a number of brands, and chosen the right pieces for the right system, then I think the perceived value for the customer is greater than if he sold a one-brand system.
Jeremy Glowacki is editorial director of Residential Systems, a sister publication of TWICE at NewBay Media.