The R&D Tax Credit Aspects of Emerging AV Trends
AV-Trends
Federal and State R&D Tax Credits provide
excellent opportunities for innovations in AV technology. Infocomm’s
2017 Emerging Trends Day highlights the main emerging areas:
microphones, displays, digital signage, collaboration, the cloud, and
managed services.
The audiovisual industry is pursuing an astounding trend towards
changing both the workforce and the consumer industry. Audiovisual
technology is geared towards enhancing communication and interaction
throughout a variety of sectors. It incorporates microphones, displays,
digital signage, collaboration, the cloud, managed services, and many
other facets.
In order for the seamless
integration of AV across the aforementioned sectors, interoperability
and new network standards are required. Moreover, customers now demand
that AV fits the mold of their existing environments. Contrary to user
demands, AV technology was designed to work specifically in a space;
however designers now must design technology that the user requires.
With growing adoption of AV technology, network management will be
critical in order to ensure successful deployment of applications on
personal devices (concerning BYOD policies), network security, and
cross-platform integration.
InfoComm estimates the global AV
market will be worth almost $183 billion by 2020. Alongside this
growth, any companies engaging in development and innovation in AV
technologies are now eligible to receive Federal and State Research and
Development Tax Credits.
The Research & Development Tax Credit
Enacted in 1981, the federal Research and Development (R&D) Tax
Credit allows a credit of up to 13% of eligible spending for new and
improved products and processes. Qualified research must meet the
following four criteria:
- New or improved
products, processes, or software
- Technological in nature
- Elimination of
uncertainty
- Process of
experimentation
Eligible costs include employee wages, cost of
supplies, cost of testing, contract research expenses, and costs
associated with developing a patent. On December 18, 2015,
President Obama signed the bill making the R&D Tax Credit
permanent. Beginning in 2016, the R&D Tax Credit can be used to
offset Alternative Minimum tax and start-up businesses can utilize the
credit against $250,000 per year in payroll taxes.
The Basics of AV Technology
Four elements are required for successful AV design and development:
hardware, software, environment, and content. These elements are
applicable to usage in the consumer/retail, residential, and
professional markets, where AV technology is most popular. Examples of
AV in each primary market include:
I.
Commercial/Retail: Digital signage, kiosks, media players,
cameras, televisions, and other home audio and video devices. These AV
devices are most often purchased as components or pre-packaged systems
by the end-user.
II. Residential:
Includes
home theater and whole-house automation. AV professionals serve this
market to introduce the concepts of the systems as well as integrate
and install. Components can come individually or part of a whole,
depending on whether the application is small or large scale.
III.
Professional: Usually system-focused and includes
commercial-grade equipment with some consumer or ‘prosumer’ gear. This
is applicable in commercial, government, education, religious, and
transportation facilities. This use requires design skills from an AV
professional and installation skills from a systems integrator.
Because of the sudden and rapid
growth in AV technology, IT professionals are now gaining more
knowledge about AV tech that will integrate it into an IT environment.
Technologies such as streaming media, webcasting, digital signage,
wireless, and new software are some areas causing shifts in processes,
roles, and integration within IT. The industry can no longer rely on
one standard to bring value to customers. Instead, it is necessary that
the industry discovers new ways to deliver value to customers,
especially when customers require the technologies to be built in order
to fit their needs.
Some of the most popular areas
for growth in the AV industry which were prevalent in the 2017 InfoComm
Emerging Trends session, include microphones, displays, digital
signage, collaboration, and the cloud.
Microphones
By
2022, the microphone market is expected to grow to $2.07 billion, a
CAGR of 6.9%. Since consumers demand better audio experience, companies
are developing better sound-to-noise (SNR) in microphones. It is
expected that quality and implementation of this technology, which
helps complete high-fidelity sound recording in noisy environments,
will improve alongside developments in voice command technology.
Today, microphones are essential in all electronic
products, whether it be for voice-over texting, asking Siri a question,
or GPS. There is a price premium associated with technology that
employs microphones. Companies are finding ways to incorporate
microphones into other industries, including sensor technology and
healthcare. The main challenge within microphone technology is that
microphones face some difficulty in capturing sound from a distance.
Furthermore, microphones are built to capture sounds, not speech. In
this regard, new advancements are being made to make microphones more
sensitive in picking up speech and assuming what the user is saying.
This will help avoid transcription errors.
In
addition, smart microphones have emerged as an alternative solution to
integrated voice input and processing in which ultra-low power
consumption is key.” Smart microphones offer voice enhancements
that improve usability of speech recognition. This is most
prevalent in smart phones now featured in Amazon’s Alexa, Windows’
Cortana, and Google Now. In fact, most products already use three to
four microphones to enhance hands-free calling and voice commands. Some
smart phones even employ Microelectromechanical Systems (MEMS)
microphones on the backs of devices to create richer audio fidelity in
voice recording, noise cancellation, and better call and recording.
Voice-activated technology is on a steady rise in
development and adoption. Machine learning capabilities and cognitive
computing technology make it more possible for machines to transform
natural language into actionable data. It is anticipated that the voice
and speech recognition market will experience a 40% CAGR between 2015
and 2024, increasing to an estimated $5.1 billion.
Voice-activated technology is expected to see advancements in mobile
devices and applications, biometrics, smart cars, and IoT – all of
which require precise microphone capabilities that pick up accurate
sounds and speech to create machine actions.
Because of its wide use and customer reliance,
manufacturers seek to constantly add new features to their microphones.
Some of the major market contenders include AAC Technologies, GoerTek,
and Knowles Electronics.
Commercial
Microphone
Efforts
AAC Technologies: AAC microphones are
included in smart phones, tablets, wearable technology, and PC
notebooks. In February 2016, AAC partnered with Vesper to
commercialize the world’s first piezoelectric MEMS microphone for
consumer electronic devices. It is anticipated that such
microphones will be immune to environmental obstacles including water,
shock, and dust. The new microphone features a very high SNR ratio with
low noise. As a result, there is more advanced acoustic performance for
a wider range of applications.
GoerTek: iPhone 7 and 7 Plus employ several
MEMS microphones offered by GoerTek. The two front-facing bottom
microphones are sourced by GoerTek and Knowles. GoerTek is
ranked number 2 in the MEMS microphone market. GoerTek has over 7,800
patents, and is leading in acoustic, optical, wireless, software, and
system integration software.
Knowles Electronics: Knowles produces its own
microphone dies and holds the number one
spot for market share in the MEMS microphone die production. It
dominates 43% of the market share.10 The front-facing bottom microphone
on new iPhones is from Knowles and GoerTek. The company’s newest
technology ensures crystal clear sound reproduction with an immersive,
high-fidelity audio delivering true-to-recording in-ear earphone
listening experience. Knowles creates sophisticated products in
hearing aid components, MEMS, transducers, capacitors, and oscillators.
Knowles also offers hardware and software solutions for intelligent
microphones, voice processors and others that optimize performance of
audio signal paths. .
Displays
The display market is expected to grow to $169 billion by 2022. High
dynamic range (HDR) is one of the most clearly visible and significant
image quality improvements in the 21st century. Other improvements are
being made, which have significant impacts on the future of smart phone
and mobile device industries.
Displays are seeing substantial advancements with
organic light-emitting diode (OLED) technology. OLED displays are
mass-produced for phones, tablets, TVs, and wearable technology,
including the iWatch. It is anticipated that by 2026, the OLED displays
market will reach $57 billion. In fact, plastic active-matrix
organic light-emitting diode (AMOLED) panels are being utilized instead
of conventional glass-based displays since they are thinner and
lighter. Because it is also flexible, AMOLED panels are even more
applicable to varying forms of mobile devices. Plastic26 and flexible
displays are most common in recent smart phone designs and wearable
devices.
The figure above, sourced from the IDTechEx,
demonstrates the plastic and flexible OLED display revenue forecast in
four market segments.
The smart phone industry is changing as a result of
development in flexible AMOLED displays that offer higher performance
and design. Samsung’s OLED displays come from Samsung Display, which is
the dominant supplier for OLED mobile displays in 2016. Apple
also receives its AMOLED panels from Samsung Display. The display panel
is thin, light, and features curved edges. Complexity in the OLED
manufacturing process to attain these features have made production of
advanced displays slower than anticipated.
In 2014, manufacturers of display panels reduced the
prices of HD and Full HD in-cell and on-cell modules. As a result, it
is anticipated that HD and FHD adoption in smart phone displays will
increase in the next several years while 4K UHD is expected to enter
the smart phone market in coming years.
LG and Panasonic recently
released 4K OLED TVs, which are growing at 26% CAGR over the next 10
years. New applications in wearable devices, including augmented and
virtual reality, are providing revolutionary uses for OLED displays.
OLED displays will gain more popularity in the following markets:
- Mobile phones
- Tablets and notebooks
- TV panels
- Automotive and aerospace
- Wearable electronics
- Industrial and
professional displays
- Microdisplays
Growth in displays must be able to handle multiple
inputs and achieve the goals of all applications—whether it is reaching
an audience in a large room or functioning in direct sunlight on a
watch. Simple adjustments such as adding deeper blacks or making
brighter whites will give images more improved visual impacts, and thus
achieve the intended goals.
Advanced displays must take into consideration video
compression, especially when most video-processing today is conducted
through the internet and on the cloud. Video compression technology
eliminates redundancies to transmit video content more efficiently,
however quality is usually lost during this process. In fact, the
higher the compression ratio, the more data and quality is lost during
the compression process. Since consumers are demanding higher quality
broadcasts, it is necessary that compression technology alongside
displays fulfills consumer demands.
Digital Signage
The digital signage market is expected to grow to $27.3 billion by
2022. Improvements are constantly made in visibility,
flexibility, and energy efficiency of electronic signs. Such
technological advancements change the ways in which marketers reach
consumers. It adds value in consumer experiences and optimizes store
performance and processes. Now, users can change content on
advertisements easily and quickly from personal devices. They can
display not only letters and words but also pictures and graphics. This
creates an informational and interactive use of marketing and
advertising, which is unparalleled in traditional signage.
Smart signage is gaining popularity as the market
realizes which messages generate positive reactions from consumers.
Such signs pick up facial emotions and motions.28 Depending on what it
reads, it creates a corresponding rating for that message. Smart signs
are capable to deliver advertisements geared towards the specific type
of person looking at the screen. For example, it learns and collects
information about consumers’ interests, then uses that to deliver more
appropriate advertisements and even promotional offers. In Japan,
for example, some digital signs have barcodes integrated into the ad
content, allowing customers go to checkout counters to redeem free
items or discounts. This form of digital signage helps advertisers
determine what products they should be advocating for in the market to
reach a specific client base.
Digital signage is the future for advertising and
marketing campaigns. It is anticipated that future growth in digital
signage will increase the amount of consumer interactions. For example,
Nike already employs digital signage to project custom designs onto
sneakers so consumers can have a visual of what their final product
will be before purchasing it. Smart signs are the first example of
digital signage that is personalized to the needs and specifications of
individual consumers. It is only a matter of time before such signage
becomes ubiquitous.
Digital signage will eventually have to incorporate
predictive modeling analytics coupled with big data to reap even more
benefits to advertisers and marketers. Predictive analytics can
facilitate advertisers to estimate key data items so they can determine
the best ads to show to particular customers. It was found that
organizations using predictive analytics are twice as likely to
identify high-value customers, according to Aberdeen Group. This
is something to consider in the advancement of digital signage as an AV
technology.
Collaboration
Collaborative technology enhances the ability for all individuals to
work together to achieve defined and common business objectives.
Collaboration is anticipated to grow to $49.5 billion by 2022 and is
most prevalent in professional working environments where UC, video
conferencing, and huddle rooms are readily adopted. An important point
to consider is how collaboration and sharing all forms of documents,
data, images, and video will be standardized.
What makes collaboration in the work environment
different now than in the past is that users know better than anyone
else what products they require to be effective. Consumerism led to
‘democratization,’ in which the user experience trumps the IT technical
selection process. In this regard, it is no longer up to the IT
departments to make decisions on what users require for best
experiences—they are knowledgeable enough to make their own tech
decisions. It may be a challenge for IT departments to accept this
reality; however, it is required to achieve collaboration efficiency.
communications (UC) describes the integration of
enterprise communication services to meet the collaborative and working
needs of professionals in the same environment. UC includes instant
messaging, audio and visual services, web and video conferencing, and
various other necessary business applications. However, as previously
mentioned, all processes that were formerly used to pick the best
technology are no longer representative of the best practices. It no
longer matters what tech managers believe are the best; the new
generation of users know what is needed, such as instant messaging and
video conferencing, and thus can help the organization select an
optimal UC package that meets all specific user requirements.
This rise in the UC market
results from the ability of collaborative software to deliver real-time
communication services required for critical business operations. Now,
enterprises incorporate new solutions in their systems to update the
existing telephony and messaging infrastructures. What makes UC
technology desirable for increased collaboration is its scalability and
flexibility to meet all user demands as well as essential business
tasks. Furthermore, it accommodates the multiple functionalities of a
communication system on one platform. As a result, collaboration and
telephony become essential and easy tools to employ in any business
environment.
Video conferencing is another form of
collaboration as a result of increased globalization in businesses and
new requirements for scalable communication methods. Another
reason video conferencing is flourishing is because hardware costs are
decreasing. In this regard, excellent devices are more affordable,
which makes it a more favorable investment in businesses seeking to
increase collaboration and transparency efforts amongst workers.
Finally, the creation of well-equipped, high-tech office spaces for
small meetings has the ability to enhance business collaboration. These
are known as huddle rooms. Large enterprises ought to look for
manageable solutions and cost-effective devices to include in huddle
rooms. Determining these features goes back to the previously mentioned
point that user preferences must be taken under consideration first.
Because of growth and adoption of UC, enterprises
shifted to more manageable, multi-use open office spaces. This helps
meet some changing demands of employees, however it also presents
somewhat of a distraction regarding noise levels. As a result, new
collaborative spaces are demanded, which come in the form of huddle
rooms. These are preferred over large conference rooms as there is this
“transition to companies creating small and flexible spaces, mainly
driven by the prohibitive cost of maintaining a huge IT
infrastructure.”
As one can see, new advances in audiovisual
technology change the landscape of the business world. Advanced
technology, such as the Acoustic Beam, has the ability to eliminate
background noise in conference calls. Companies such as Polycom seek
ways to advance the use of huddle rooms because they realize that
future collaboration will rely on interaction via video, instant
messaging, web streaming, content sharing, and audio tools. Huddle
rooms are the future of collaborative efforts and efficiency in the
workplace, especially with a reliance on newly advancing audiovisual
technologies in the market.
Cloud
The cloud is expected to have significant growth of up to $42.5 billion
by 2022. At first, it was primarily adopted to increase
efficiency and reduce IT costs. Now, it is increasingly useful in
fueling innovation and growth. There are four types of models for cloud
computing, as outlined below.
There are four types of models
for cloud computing, as outlined below.
- Public: Fully owned and provided by
a third party vendor and available for open use by the public - most
common in cloud storage, online office applications, and cloud-based
web hosting and development.
- Community: This offers
multi-tenancy. It is restricted to organizations from a specific group
and is driven by common computing concerns including regulatory
compliance and performance requirements.
- Private: A private cloud is for a
single organization and its exclusive use. It can be owned, managed,
and operated by the organization, a third party, or a combination of
both.
- Hybrid: This cloud combines two or
more cloud infrastructures to enable data and application portability.
It is an increasingly popular alternative amongst enterprises.
Regardless of the type of cloud employed, cloud
security remains a pressing issue. Data breaches and loss are the
greatest concerns. Cloud computing creates new avenues for attacks and
loss of data integrity. Such risks must be taken into consideration
when deploying a cloud. The cloud and its security is only as good as
the measures taken by its creator. Even if an organization employs a
public cloud with built-in security measures, the organization should
take additional measures to enhance the security.
Hybrid clouds integrate the scalability of public
clouds with the security of private ones. Hybrid clouds are unique in
that a single application or user interface manages the data that can
be located inside and outside a firewall. Microsoft pursued efforts
with Dell to create the Cloud Platform System. This cloud is beneficial
to organizations seeking to leverage public cloud benefits while
maintaining some aspects of the workload in a private environment.
Cloud innovation is vital for development in mass
customized service delivery on the Internet. Incorporating cloud
computing with mobile devices creates new avenues to virtualize
anything as a service, whether it is banking, healthcare, or
education.21 Cloud computing also can change the face of advertising to
better understand consumer behavior and offer personalized marketing.
Some clouds offer standardized solutions to
consumers in an effort to accelerate development, migration, and
transformation of enterprise workloads. Apple’s iCloud service offers
standardized solutions for personal use with easy access to documents,
music, and whatever formats of data the user stores on the cloud. Apple
also has the iCloud Drive to create compatibility with Windows and
offer enhanced convenience and standardization in tagging and indexing
cloud files. Further customization to the cloud is offered via the
CloudKit, which helps application developers integrate cloud components
in products.
Finally, cloud-based video conferencing is becoming
one of the most popular seamless collaborative technologies available
to increase efficiency and innovation. As a result, organizations are
no longer concerned with hardware and infrastructure costs. It is
anticipated that by 2020, the cloud video conferencing market will
reach $2 billion and will grow at a CAGR of 39.6% by 2019.
Because employees are more often located outside of traditional work
environments, adopting cloud-based video conferencing enhances the
ability to collaborate anywhere at any time. It even supports BYOD
practices, which are becoming a more popular policy in corporate rules.
The cloud also permits those in diverse locations to meet, collaborate,
exchange files and documents, and solve problems quickly and together.
The bottom line is that cloud computing reduces
business costs and increases overall productivity. Recent research
indicates that 69% of enterprises see increased productivity, 65%
experience better access to data, and 63% witness a reduction in
operating costs. Most enterprises incorporate the cloud to
increase video conferencing and collaboration efforts. At the same
time, there seems to be a small yet steady decline in the overall
market for video conferencing equipment. This is the case primarily
because the market is transitioning from reliance on hardware-based
technology to software-based solutions. This type of migration,
according to a Videxio whitepaper, also translates to the fact that
companies enjoyed a 25% reduction in IT costs.
Although it is foreseen that future businesses will
shift entirely to cloud reliance, it is still questionable whether
existing networks have the required performance and ability to handle
the shift. There are several factors that must be taken into
consideration, as outlined below:
- Quality & Performance: seamless
service must be offered on all devices. Meeting all enterprise
requirements must be possible without compromising on quality or
performance.
- Compatibility with Existing Systems:
it may be more beneficial to invest in a system agnostic
videoconferencing system which can run on any operating system. This
will help connectivity and balance out recent hardware purchases.
- Bandwidth & Network Capability:
IT must identify and address the bandwidth needs before deploying any
video software. IT must also ensure the network meets all needs.
- Scalability: it may be more
beneficial to invest in a service that can be scaled up or down based
on varying performance requirements.
- Security: this is the topmost
concern for companies implementing the cloud. Security is only as good
as the service provider outside the corporate firewall. It may be
beneficial to build a second layer of security because reliance on the
provider’s security measures may not be enough.
These challenges, however, will be easier to tackle
than challenges of the past, in which attaining software and then
installing, testing, and immersing it in the user base was required.
Now, everything can be done virtually on the cloud, reducing delivery
time to clients and partners, increasing efficiency and productivity,
and reducing overall expenditures.
Benefits of Video Conferencing as a
Service
Companies are seeing a shift towards cloud-based video conferencing
versus the traditional in-room hardware approach to video conferencing.
This is for several reasons.
Cost is a major factor. However, one of the primary
underlying factors is that businesses are more global, dynamic, and
agile now. On-premise hardware and systems are no longer feasible when
employees are located around the globe and working in different time
zones with different devices. Cloud-based services immediately
eliminate expensive hardware and installation costs prevalent with
previous video conferencing.
Another advantage, according to Videxio’s
Whitepaper, is that “switching to cloud is fully-managed technical
support that allows businesses with limited or no in-house IT expertise
to harness the benefits of video conferencing.” Cloud services were
developed with the intent of making its installation and usage
processes easy and carefree.
A final advantage of cloud video conferencing
reliance is that it meets the demands of the new and changing
workforce. Those being hired today are the portion of millennials who
grew up with technology at their fingertips. As previously mentioned,
their productivity statistically increased when surrounded by fast and
advanced technology that they are comfortable with. Training will be
less taxing and time-consuming since the average millennial has quicker
adaptation skills to technological advancements. It all returns to the
primary point that modern-day users know what technology is required to
accomplish business tasks and objectives efficiently and
effectively.
Conclusion
With rapid changes in the demographics of the new workforce and
technological advancements, it is only feasible that businesses invest
in new and improved devices and services to reduce expenditures and
improve productivity. AV technology has been witnessing significant
advancements in terms of microphones, displays, digital signage,
collaboration, and the cloud. R&D efforts in this industry are now
eligible for Federal and State Tax Credits. Amongst the many, this is
just one reason companies are investing in innovative efforts that will
undoubtedly propel businesses and consumers into a future heavily
reliant on advanced audiovisual technologies.
