The agreement between Wynn Las Vegas and Gateway includes Gateway's 42in. HD plasma televisions.

In the heyday of expo photography, he explained, the cash cows of the business were rush charges and quantity prints. “See if you can guess what digital cameras have done to rush charges and quantity prints?” he asked.

The same lament can be heard in dozens of businesses today. For two decades, under the tyranny of Moore's law in which processing power doubles every 18 months, one industry after another has gone digital. But in the process, many have cut off their familiar business models.

Systems integrators and high-end pro A/V resellers may be wondering what to make of the recent announcement that casino mogul Steve Wynn plans to equip his new Wynn Las Vegas resort (formerly Le Reve) with approximately 7,000 LCD and plasma displays purchased from — drum roll — Gateway.

“The fact that a nontraditional consumer electronics player was awarded a contract of this size illustrates just how dramatically the consumer electronics paradigm is shifting,” says Bob O'Donnell, research director at IDC, in Gateway's news release.

But some observers would add that the real news is that we read the words “consumer electronics” again and again in describing a vintage high-end deal that not so long ago would have been wired for a traditional pro A/V reseller.

It shouldn't be a surprise, though. Plasma and LCD makers have been moving their manufacturing facilities to cheaper locations overseas, looking toward huge production volumes that reflect a mass retail strategy more than a traditional high-end approach.

Last fall the International Communications Industries Association (ICIA) hosted a morning of industry forecasts at which Tom Philbin of Display Search, Austin, Texas, predicted LCD sales would reach 30 million by 2007. The most spectacular growth will be in the 40in.-plus range, which will go from 22,700 units today to more than three million units in 2007.

Numbers like that don't describe a market shaped by one-off, custom installations and in-depth customer support. “Dell and Gateway want to get into the consumer TV market,” Philbin says. “They will accept smaller margins to gain entry.”

Bob Walsh, a longtime industry player now associated with Kayye Consulting, Chapel Hill, N.C., adds, “the Gateways and the Dells, they think 10 points is a huge margin. That's not the structure the pro A/V channel is built on.”

Steve Emspak, a partner at Shen, Milsom & Wilke, New York, also sees the Wynn/Gateway deal as a market-changer because it appears the pro A/V reseller community never had a realistic shot at the deal.

“A lot of other large customers will look at the Wynn transaction and ask, ‘If he bought Gateway products, shouldn't we?’” says Emspak.

Was the Wynn purchase purely price-driven? Well, yes and no, according to Emspak. The arithmetic is actually more complex than simple price comparisons.

For example, the Gateway products going into the Wynn Las Vegas “are not just throwaways. This is not an arbitrary decision to put in an inferior product,” Empspak says. In fact, these displays will probably perform well for a long time, and when the time comes to retire them, it may be possible to get even better products at the same or a lower price.

In the meantime, the hotel gains even greater buzz; it opens and stays full, generating cash flow that will easily support whatever Wynn decides to do about product replacement a few years from now. And, as Emspak notes, casino hotel managers don't want people lingering in their rooms in the first place.

The same sort of squeeze is hitting the projection business, driven by last year's rush past the sub-$1,000 barrier. Speaking at the ICIA conference, Rosemary Abowd of Pacific Media Associates, Menlo Park, Calif., predicted that by 2007 sub-$1K projectors would command 35 percent of the market. But she also cited a striking attitudinal fact among pro A/V dealers:“The contrast between their optimism about the demand and their lack of enthusiasm about handling the business.”

For Brad Gleeson, president of ActiveLight, Poulsbo, Wash., part of the solution is to clearly differentiate pro-level products from consumer products, and to recognize when a prospect is a long shot to become a true customer. “We sell through pro A/V resellers and VARs who specialize in educating the customer on the differences between the industrial-strength professional models and the lighter-duty consumer models,” Gleeson says.

But competing with the Gateways and Best Buys of the world isn't on ActiveLight's agenda. “If the customer wants to buy on the Internet and just wants the lowest price, they are not typically our customer or our reseller's customer,” he says. “I would say that the educated business consumer understands the benefits of buying a professional product for commercial uses.”

The problem isn't just that prices keep tumbling. The price of the best stuff out there keeps tumbling, and it keeps getting easier to install and use. When a complex, costly product becomes just another television set, and when the buyer perceives that all available products work equally well, it gets difficult to identify the value a distribution channel adds to the transaction.

Consider the high-end commercial printer. For decades, denizens of this sophisticated and expensive niche applied a nicely dismissive little phrase — “good enough color” — to competitors at the lower end of the market that promised decent work at a low price. You'd get your job printed, and the quality would be okay, but don't expect fine-tuning, color correction, and all the other hallmarks of the very best production.

Standard rooms at Wynn Las Vegas will be equipped with a Gateway 30in. LCD TV (above) on a swinging arm in the living room and a 13in. LCD TV in the bathroom.

Or look at the electric power industry. A decade of deregulation and restructuring has smashed the old state-protected utility monopolies and opened up new competition. But one result is that the one thing the industry needs most — new transmission capacity — is the single thing companies have the least economic incentive to build.

In the power business, you don't want to own wires. And in the A/V world, if you're just reselling equipment, you're toast.

An executive at one leading national systems integration company reports, “We're losing accounts all the time because others are cheaper.” Consultant Bob Walsh fears “the low end of the business is going away,” while the high end is “becoming an IT environment instead of an A/V environment.”

Walsh also worries that there's not much of a role for a traditional sales force to play in this new environment. “I see no new trend-breaking product coming along that would require the sort of support and missionary work that a sales force provides,” he says.

The answer? In Walsh's view, it's to focus on more sophisticated applications and build business on relationships.

Service and relationships are part of the solution, but another part, which might be even more important, is for the integrator or reseller to remain essential to the customers' adoption of effective new technology solutions. “The future of A/V is videoconferencing over IP networks,” says Jennifer Thompson, marketing manager at HB Communications, North Haven, Conn.

Instead of trying to compete in the equipment market, HB sees blossoming opportunities in areas like higher education. “Schools tend to be the trend-setters, especially the colleges,” Thompson says. “You would not believe the classrooms we're doing.”

In addition, she reports lively business in command and control facilities, using video display walls of up to 24 different screens that can be configured any way the user wants, driven by sophisticated new control systems.

It's probably also premature to beat the drum slowly for the corporate market. Emspak, at least, sees a rebound in progress. “The corporate market is coming back in a fairly considered way,” he says. “We are seeing well-grounded decisions, a more conservative and well-founded approach.”

Resellers, systems integrators, and designers will still find ways to deliver value to customers. But these days they're working in an environment shaped partly by Moore's Law and partly by the law of unintended consequences. The industry has encouraged development of some fabulous technologies, which has put wonderful tools in users' hands in a way that's more economical than ever before. But we're just starting to come to grips with what that's doing to the bottom line.