The Role of OEM in the AV Industry: Shaping Innovation, Quality, and Market Competition

Hey, everybody. Welcome back to ProAV Today. I am your host as always, Ben Thomas. You know, our industry gets to have a lot of incredible conversations, and we get to talk to a lot of different manufacturers and verticals, especially on this show. We get to really ask a lot of different questions. But one of the conversations that I'm pretty passionate about that we don't really get to talk about as much as I'd like to on the show is the world of OEM. And when I say OEM, it's a original equipment manufacturer. So we'll dig in a little bit, more of of what those specifics are. We'll ask some questions about what that means and how it fits into the industry. But I wanted to bring on someone today who's far smarter than me about a number of different things. OEM is one of those, and it's George Pappas, CEO of I five LED. George, thanks so much for coming on. I appreciate it, Ben. Appreciate the time, and I wouldn't say that I'm far smarter than you. I just specialize in manufacturing. So I won't allow that. You are far smarter than me. I'll I'll I will I will stand on that hill. But George, I'll tell you what, you know, you have the opportunity really through a number of different partnerships throughout the years to live on both sides of the world when it comes to OEM. And and obviously, that exists far more than just beyond the world of LED that goes into manufacturing and components and things like that as well. But I really wanted to start at a high level. Right? How are OEM partnerships really, how are they they they working in the AV industry right now? Right? I know we've got some people who may not have quite the level of expertise that you have. When we think about OEM partnerships in the world of AV, what does that mean typically? So, you know, there's different reasons for different, people wanting to have the OEM model. So, you know, it's it's, somebody can just go the private label route. Right? So that that that kind of bridges a little bit on the OEM, and there's also this thing called ODM. Right? So it's it's original design manufacturer. So, you know, we can be both of those, and different people want it for different reasons. Some people have their own brand and they want their own product, and that's usually the case, for a lot of the things we do. Well, I remember somebody for the first time when I I learned about it fifteen, twenty years ago, they described it as, you know, you go into the grocery store and you look at the macaroni and cheese aisle and there's one that says mac and cheese, and then there's one right next to it that's a totally different brand that's that's, made by the store that says mac and cheese. A lot of times, those are actually the same thing made by the same people. So you mentioned private label. It gives folks an opportunity to sort of create things that they may not necessarily have the infrastructure for, maybe the expertise for. You know, in in when you think about OEM in our industry, typically, how do those conversations start? Right? Is it more the manufacturer who wants to sell it and says, hey. This is a need, or or is it sort of the inverse? How do those partnerships typically start? So for for I five, what we did is we set out to find companies, system integrators, and and other companies that already had products in the AV space that wanted to expand into the LED DirectView market. And what they didn't want to do is sell somebody else's brand and then compete with that exact same product with ten other people. You know, back to the the macaroni and cheese, you know, you you pay more for the blue box than you do the, you know, the the the store brand thing, and they they may taste the same, but they don't always taste the same. Right? True. That's true. So so we enable, that person that wants that, maybe even a better quality than the blue box. And, so we can build it to their specifications. And and we're not always just taking a product that we already manufacture and white labeling it. That happens and we do have some of those clients. But more off, we're building it to their unique need. Right? Maybe they wanna be in the high end space. So they're not concerned as much about price. It's about quality for the use case. You know, maybe they're, you know, in the XR space, so they need the highest end specs. Right? So it's gonna be tailor made for their market. Or maybe they're in the residential and they really wanna go after, you know, the ultimate man caves. Right? And that's a little bit different product. And so we're, you know, customizing, tailoring it down to the packaging, not just putting a name on it, but how they wanna deliver. Right? Ease of use and and those kinds of things. Yeah. Well, it's interesting too. Right? And obviously, we're talking mostly sort of about LED, but I think that that a lot of times you do see OEM products in a number of different verticals in AV. Obviously, you look at things like cameras and speakers that are very component driven. You do see a lot of OEM partnerships in there, and some of those are are hidden behind NDAs, and some of them are public, which is which is totally fine. But I'm curious, you know, Georgia's you know, say I'm a manufacturer. Why would I want to leverage an OEM versus maybe trying to do it in house? What are the benefits there? So the big benefits are, it's very, very difficult. You if you don't have a big enough need, right? So it's all about your volume, right? So what I can do is have similar products for one or two different clients. They're different enough, but the same enough the same where I have enough volume to give them, the great pricing they need, with the service. The other thing is is, you know, because we have factories both in Taiwan, mainland China, and Malaysia that are our factories. We're doing what they can't do. You know, we're watching every component. They get a really good factory acceptance test. We'll do it via, virtual tour. So they don't have to have a person on the ground. We are the people on the ground. We're doing the manufacturing. And then we guarantee something that's very hard. If they just go to a manufacturer that's not a big they're not a big player with and say, hey, make this for us and put our name on it. They don't always know what they're gonna get. So one of our benefits and and one of the things you have to look out for in this space is you don't always know what you're gonna get. So you have to be careful. And so that that system integrator and or distributor who wants their own product, now we take that worry away of they're always gonna get what we they've specified and that we've agreed to building. Well, you know, you you bring up a really good point. Right? Is that sort of hands on partnership. And I I think that it's important to note that that there are there are some OEMs and manufacturers that are more, hey. We're gonna design it, give it to you, and that's it. Right? But there's there's sort of a white labeled and different tiered approach to to sort of the OEM side. Right? You mentioned certification, compliance. You know, one of the conversations that we have regularly in our industry is things like t TAA compliance or certifications or or all sorts of different conversations. Could you talk about sort of how different OEM partners work in that that partnership tier? I mean, like I said, some are not very hands on at all, some are are very white labeled. What's sort of the difference there that you'd see? So the the the hands on ones, you know, may wanna do all the certifications in house. Right? They may wanna have somebody manufacture. They'll bring it in. They'll do all of the search themselves and and, you know, take it from there. And and usually when they do it that way, their cost of purchasing the goods are are lower. You know, they'll even ship it in. But others are very busy on the sales and service side and don't have the time to put in all of the importing, all the certifications and all that stuff. But we can take it to the level where we co brand or co name, co list. So we do all the certifications. Somebody looks up the number and it has their name on it. So we're we're in the background. We're a manufacturer. We do all the work and, you know, they they get to do what they're most proficient in, which is, you know, sales service, you know, and and after the sales service. Well, how plugged in, you know, are, I would say, the end manufacturers, not the OEM, but the end manufacturers. How plugged in are they with things like R and D and product development and, sort of the the the next steps of what a product could be. Is that something that they are typically pretty involved in, or is that something that they're a little bit more hands off? Yeah. That's a big spectrum. I mean, we have people that, they're very good in sales. They've never actually manufactured, but they want their own product. So they rely, you know, ninety percent on us for all of that. And then we have some that say, this is exactly what we want built, you know, and we will take it from there. You just build it, have it ready on the dock, we're picking it up. So it's a it's a very broad spectrum and, you know, it's it's a different kind of business for each one of them. They have their unique challenges. The people that want to be very involved and us more of just the product manufacturer, those challenges are, you know, they they can make changes faster than, you know, people want, right? Because they're always trying to innovate. And then on the other hand, other people, they may not wanna innovate, right? They're very happy with what they have. They don't want big change because they're not used to, you know, pushing the edge of technology. So big difference in the types of people and the method of of supporting them. Well, absolutely. And and one of the things that naturally kinda comes up to and it's funny, I'm not gonna name any names, but it's funny you go to shows like Infocom or ISE or whatever and you see products that look very similar. A lot of times, it's because they are in fact the same. Right? Out of curiosity, I mean, we don't even have to talk necessarily just specifically LED, but how common is it to have OEM partnerships in the AV industry? Is it something that that you would say seventy five or above seventy five percent of above are manufacturers' average? Is it something that, you know, hey, maybe fifteen, twenty percent of folks are using it? Well, that's that's a that's a a big question. You can guess, and you don't have to you don't have to give away any secrets or anything like that. No. So that's a big question because here's the interesting thing. I'll I'll give out some some dirty dirty dirty laundry in this industry. If you go to China, there's, you know, five or six very large manufacturers, and then there's a hundred small manufacturers. And within that, then there's trading companies. So there's kind of three levels. And some of the large manufacturers only focus on three or four products because they just want throughput, but they offer a wide range. So they're going to other smaller manufacturers and just doing the same thing, having them white label it for them to their specifications. And then it's vice versa. Some of these smaller ones go to the really big guys and have them make something. So when you go to an Infocom, I would say there's a cross pollination between seventy five percent of the companies there. I I think that's a safe bet too. But I I do wanna give the caveat. Right? Is that it's all it's not all the exact same components. Right now, what you may find, and you you see this as well, is, hey, this manufacturer makes the camera for this this video bar. Right? There you talk about cross pollination. That's kind of what you mean. Right? Or, hey, this this manufacturer OEMs, this chipset, or these speakers, or things like that. I think that's important to note too, because it's not all just off the shelf stuff. Right? Where you've got, hey, There are four manufacturers, and they're all making the exact same products between competitors. There is a level of sort of that component side of things. And and, you know, I I'm curious. Right? Because we talk about TAA compliance, and obviously, there's a lot of manufacturing overseas. Do you see sort of a demand for kind of that all in one piece where people say, hey, I want you to deal with everything. I want you to manage everything and build everything. Or do you do you see sort of an increase in folks saying, hey, I want you to manufacture the components. I'm going to assemble it in my factories. I'm gonna have my team do all the r and d. Or do you see maybe sort of a cross pollination of both there? You got two two questions there. So first one, on the component side, yeah, there's so there's a lot of parts, that all the manufacturers use, whether it's, you know, the same kind of wiring harnesses and and the same cabinets, right, or same cabinet makers, you know, and and same power supply. So so you're right. There's a lot of the same components going in a lot of different people's products, and and sometimes they are almost identical or sometimes they just look really the same because they use the same cabinet, but the manufacturing is at a different factories. And and then on the the question of where are we seeing more of, we're seeing more of we want hands off. You know, we don't have the time for all of the the details in the manufacturing. We wanna focus on on the sales part. Some people just, you know, all the aspects can be a hiccup, you know, importing. Right? And, you know, we have a very good team that works closely with our, our logistics, bringing things in. And that's a monthly call we have with them just because things do change on a month monthly basis. Right? Codes, tariffs, or it's not a a stable part of of the industry. Importing is something you gotta pay a lot of attention to. You know, I'm curious. So you you mentioned things like tariffs and shipping costs and things like that. You know, what are some of those common challenges that people may not always know about the OEM side of things? I mean, is it are there are there things that we haven't thought about or even talked about yet? The codes vary from a finished good to components that we final assemble here. So they all have different codes and different tariff rates. And then, you know, when you bring things in, you know, you have a minimum cost, right? Just for the brokers, the pickups from the factories, the loading of the containers, the offloading of the containers. So, you know, one of our benefits are is we're loading containers with three or four different types of orders and sometimes two or three different clients. Right? So they can all benefit from, you know, this bulk, this bulk buy. So but, yeah, there's a lot of challenges knowing knowing the rules because I've seen things get hung up in customs for weeks just because the paperwork wasn't right. Yeah. Well, I mean, look, it's it's a challenge that manufacturers, whether they're using OEM products or not, faces. Right? There's there's that level of product development and transportation and tariffs that that they have to manage kind of anyway. You know, I'm curious though, right? What's been interesting to see as our industry has evolved is that there's been sort of an adoption of, not that there hasn't always been smaller players in our industry, there obviously always has. But now it's very easy and really easier than ever for what I would say, someone like you mentioned who's really good at sales or installation or development to say, hey, George. I have zero product experience in understanding how to build and and do all these things. Helped me as as Ben Thomas who wants to come into the industry and deal LED. Those relationships now can happen now at scale. You think you think technology for that. You can think, you know, whatever you want for for from an industry education standpoint. But where does where how does that look a little bit different maybe than those larger partnerships? Maybe those smaller manufacturers versus the larger ones. Those are the ones that are growing. Right? A lot of people don't wanna be part of that bigger ship. Right? And and so COVID also broke things up. Right? A lot of people lost their jobs, worked for bigger companies, and they went and started their own company, and they want a way to have their own product. Right? They don't want to just compete and say, you know, ten different guys sell this exact same brand. What's your benefit? They want their own brand. So that's a growing part of this industry. And it's getting very easy for them to go directly to China because China's economy has dropped. China is forcing their way more into the US by sending more and more people here and looking for those OEM partners. You know, the downside is is a lot of those companies don't really care which way they go. You know, they'll they'll support an OEM. They'll do a white label, and they'll send to the end user, you know, all the same product. Right? So, you know, that's that's, that's something that, you know, a lot of my clients are concerned about. What what's my position and where am I in the marketplace. Right? And how do I support them and protect them? Yeah. Well, I I love kinda talking about those folks. Right? And because you've seen it a lot. You've seen people whether it's them going into consulting or coming out of large integrators, building private labels for themselves, things like that. You know, how does that conversation typically start? I know that you mentioned from an I five standpoint, you guys do a lot of sort of the the outbound relationship. But how does how does the inverse start? How does that inbound sort of OEM relationship start? And and how do those conversations really spark up? So I we've seen a lot of them from shows like in Infocom. Right? So we'll be at Infocom, people come to the booth, we talk about the product, and we're very transparent there that, you know, we're we who we are, what we do, and what our focus is. Even though, you know, it's it's kind of an odd space. Right? We're trying to be not the guy out there selling. So but we're out there selling and promoting our brand. So it's a it's a it's a tight tight rope walk. Right? Because we don't wanna step on our partners, but but we have to promote our brand and and let people know about us. And so through promotion, right, LinkedIn, email, and, you know, outbound calls, people are starting to know about us and and hear about us and then they're coming to us. We're not always reaching them directly, but through our just like this podcast and and and you and what you do, people are starting to hear about us and coming to us. You know, George, that's that's great to hear. You know, you don't have to answer this question. I'll preface it with that. But how do you tow that line as somebody who has an established brand with I five. Right? Obviously, you guys have relationships with integrators, installers, folks and buyers, and things like that. How do you find that balance between being somebody who actually sells and and transports product versus being the OEM side that's more on that white label? How do how do you find that balance? So we've been very strategic about who we partner with also. So there is different levels, right? And there's different price points. So some of our OEM partners, we just manufacture for them. So their price is much better than know, somebody that's white labeling and we're doing the heavy lift, right? So they have that benefit of price. But the smaller guys, what I've noticed is, that we support, they're in the places where the big guys are not hearing about. Right? They're in their local mom and pops. They've been doing work for these companies forever. And, you know, this guy all now decides I I need an LED screen. And I go to the guy who's been doing my phone system, and he did my Zoom system, you know, during COVID. Right? Now I wanna you know, I I'm hearing about these LEDs and, you know, I I need something. And that's their guy. And those guys are the ones that, we're helping a lot. And and they're not in the same lane as the big guys. Right? The the big guys are going after these big corporate accounts. They already locked in many corporate accounts, and the little guy's not in. So there's very different lanes, you know. It's not the same vertical if you say, you know, I do corporate buildings. Right? Man, there's such a big diverse thing of a corporate building from the the dentist office compared to, you know, CBRE. Right? So it's a it's a huge and everything in between. So there's a lot of room. I mean, it's a bigger sea than everybody would realize. You get out there in a boat and you don't see land. And that's kinda how this industry is at at some point. Yeah. Well, I'll tell you, I'm gonna ask you to put your, your your future cap on and maybe pull out your crystal ball and and ask, you know, with this sort of accessibility, you know, you look at at how easy it is now to find some of these manufacturers overseas or even work with folks like you guys. Do you see the world of OEM continuing to to grow? I mean, is it something where, hey, more and more people every single day are trying to find a way to offer these products or have these services? Is it something that you think is gonna continue to grow or maybe something that that's kinda found its plateau in the industry? I I think it'll grow. And, I think two things are gonna happen. One, we're gonna be doing more, I would believe, on shoring. Right? So we as a company are looking at how we can do more and more of the manufacturing and assembly here in the US. And, you know, that will be something we're looking at the next two years heavily and and bringing on. And that'll make it actually easier for some of our our partners, right? Because then they can take their clients right to a factory and they can say, hey, this is where I'm manufacturing. And the manufacturing facility will be very, you know, vanilla, right? It won't be, you know, plastered the I five logo all over the place. It will be a, you know, OEM manufacturing facility. So people can come, bring their clients and and see what they're what they're having made for them. Well, George, I'll tell you what. I I know we've really just scratched the surface of this conversation and it's one that that, you know, we'll continue to inform our industry moving forward, but also obviously a number of different industries. Right? As we look about we look at manufacturing components, we look at manufacturing fully fledged products, things like that. These are conversations we're gonna continue to have as an industry, especially as we expand into a lot of different verticals and use cases. And it's one that I'm sure we're gonna have to have you back on to dig in a little bit deeper on. I'll tell you, George, thanks so much for coming on the show show today. We, we're gonna have to find a way, like I said, to get you back on. Perfect. Thanks a lot, Ben. Appreciate it. Well, thank you, George. And thank you all for tuning in. Be sure to like and subscribe to us here on ProAV Today. We'll see you next time.