Mega-integrators and the role of architecture practices

All EMEA players pale in size compared to the largest US mega-integrators API-SPL and Diversified. The two companies have grown enormously in recent years through mergers and acquisitions. However, their broad portfolio is also increasing the number of competitors, which now also include global architecture firms.

In early 2020, API-SPL, the second largest player in the US integrator industry, merged with its largest competitor and number three in the market, Whitlock. The result is a global champion with annual sales of USD 1.3 billion and more than 3,400 employees. Meanwhile „only second in the global rankings is Diversified, headquartered in New Jersey, with annual revenues of nearly $1 billion in 2019.

Both mega integrators AVI-SPL and Diversified have grown tremendously through M&A in past years. AVI’s business model revolves around AV-services, mainly providing digital workplace services to Fortune 500 enterprise customers worldwide. Core service tool is Symphony, a proprietary remote management and monitoring platform enabling API-SPL to monitor and manage video conferencing touch points, meeting room equipment and screens worldwide on behalf of global companies. The mega integrator grew globally with its customers and by acquiring local specialists.

Diversified on the other hand is more specialized in providing broadcast and digital signage services to its client mainly in North America but recently also through newly acquired integrators across the globe. While both integrators have slightly different focus, both believe that deep AV- and IT-skills, a broad product and service end-to-end offering, well defined processes and ideally inhouse vendor agnostic service platforms are necessary to stay competitive in the market.

Even if additional imminent mergers are currently put off due to the Covid-19 epidemic, mega integrators are poised to grow as they compete increasingly with professional service organizations (e.g. Accenture, Deloitte Digital) and even global architecture firms.

More and more service provider from adjacent industries are offering digital signage and digital retail solutions. Two of the surprising newcomers are architecture giants Gensler and NBBJ. Gensler is the US largest architecture firm with 1.4bn USD revenues. The firm formed a dedicated media architecture practice which in new projects manages to contribute with digital services as much as the core architectural activities. Gensler hired some experienced digital experts, like Michael Schneider formerly with Ney York City based ESI Design.

In early 2020 digital creative boutique agency ESI Design itself was acquired by Gensler rival NBBJ to enable the architecture practice to integrate digital experiences early in the design process. ESI had a long-term relationship with Diversified which needs to be reconsidered with the new ownership.

Not only North American firms are active in the digital signage market, also Netherland-based design& consultancy Arcadis is becoming more active in the field of digital in and around buildings. The global leader with 3.5bn EUR annual revenues is transforming into a data and insight-driven provider of products and services. Virtual design tools, such as Building Information Modelling (BIM), have drastically changed how design consultancies design and operate infrastructure, buildings and even cities.

Like Deloitte or Accenture Arcadis is a trusted name with global enterprises managing complex projects. Digital has become a central part of most construction and facility management projects, an area now also covered by service providers once outside the digital signage business. While some of the new multi-national players are still lacking technical digital signage skills and are therefore still reliant on established integrators, this will change in the future as they are building competence by hiring digital signage, media façade and digital retail experts.

Soon also global IT-Service Provider will get more involved too. Covid-19 has brought a boom to video conferencing (UC) solutions. Workplace services include notebooks as well as meeting room infrastructure. Vendors like Microsoft (Surface Hub 2S) or Samsung Flip are already sold and managed predominantly by IT service providers, not AV integrators.