Services Just Overtook Hardware in AV Revenue. Here's What That Means for Your Business.

For the first time in the history of the professional AV industry, services revenue has surpassed hardware revenue. According to the AVIXA 2026 Channel Survey, services now account for 38% of total AV channel revenue, edging out hardware at 36%. The remaining 26% comes from software and other sources.

Source: AVIXA Channel Survey 2026, 202 respondents, published February 25, 2026.

If you run an AV company, that number should stop you. Not because it is surprising. Because it confirms what the best-run firms figured out years ago: the project-based, hardware-margin model is running out of runway.

The margin math that is forcing the shift

Here is the financial reality most integrators already feel but rarely quantify. According to the NSCA 2023 State of the AV Industry report, 57% of integrators earn 20% or less on project-based profit margins. Industry financial experts consider gross profit margins below 30% dangerous and unsustainable long-term.

Source: NSCA 2023 State of AV Industry, cited by AVNetwork (Jeff Singer, December 2024).

Hardware margins have compressed to as low as 6% for commodity AV equipment, per AVNetwork reporting. NSCA guidance recommends targeting at least 30% on hardware to cover overhead costs that typically run in the high 20s. For many firms, that target is a memory, not a reality.

Now compare that to managed services. The same NSCA data shows that the average managed services margin runs at 52%. The NSCA and PSA joint study, Anatomy of a Successful MSP, surveyed 25 integration companies already running managed services and found that 97% reported positive financial impact on their bottom line. Among successful MSPs, 43% reported that 26 to 50% of their gross profit came from services. Nearly one-third reported that services generated 51 to 74% of gross profits.

Source: NSCA/PSA "Anatomy of a Successful MSP," September 2021, reported by Commercial Integrator.

The market is moving, fast

Futuresource Consulting sizes the AV managed services market at $1.6 billion in 2022, projecting growth to $6 billion by 2027. That is a 29% compound annual growth rate. The AV remote monitoring and management segment specifically reached $681 million in 2025, projected to reach $1.675 billion by 2033.

Sources: Futuresource Consulting AV Managed Services Report; Market Reports World AV RMM Market 2025.

For broader context, the global Pro AV market reached $332 billion in 2025 and is forecast to hit $402 billion by 2030, per AVIXA's IOTA report produced with Omdia. But the growth rate has slowed from 5.3% to 3.9% CAGR. Hardware is commoditizing. Services are where the growth lives.

Meanwhile, 76% of AV channel providers predict growth in 2026, with 69% identifying corporate as the biggest opportunity. The direction is clear. The question is whether your firm is positioned to capture it.

What is actually stopping most firms

The barrier is not awareness. Every AV company owner has heard the managed services pitch at an NSCA conference. The barrier is infrastructure. Delivering managed services at scale requires 24/7 monitoring and support capabilities, knowledge management systems that make your best technician's expertise available to your newest hire, and client-facing tools that justify the monthly fee.

Building that infrastructure from scratch requires headcount, software licenses, and months of implementation. For a 15-person integrator, that feels like a bridge too far.

Where AI changes the economics

This is where the conversation shifts. AI is not a buzzword for the AV industry. It is the infrastructure layer that makes managed services viable for firms that do not have 200 employees.

The AVIXA 2026 Channel Survey confirms that AI has overtaken AV-over-IP as the technology expected to have the greatest business impact. But only 13% of providers plan to invest proactively in AI through hiring or training. That gap between expectation and action is the opportunity.

Consider what a purpose-built AI platform can do for a managed services offering. A QR code support bot in every client conference room that troubleshoots issues before a support ticket is filed. A knowledge base trained on every manufacturer manual you carry, accessible to your entire team in plain English. A voice agent that answers your support line at 2am and dispatches a tech if it cannot resolve the issue remotely.

That is not a roadmap. That is what platforms like AVCodex are delivering today, specifically for AV companies, trained on AV data, deployed under your brand. No code. No developers. No six-month implementation. A firm running three or four AI agents can offer enterprise-level managed services to their clients without hiring a single additional person.

The integrators who move first get the best margins, the stickiest client relationships, and the competitive moat that comes from being the company that actually delivered on the managed services promise.

Sources cited

• AVIXA Channel Survey 2026
• NSCA 2023 State of AV Industry
• NSCA/PSA Anatomy of a Successful MSP (2021)
• Futuresource Consulting AV Managed Services Report
• Market Reports World AV RMM Market Report
• AVIXA IOTA 2025 (with Omdia)
• AVNetwork (Jeff Singer, Dec 2024)
• Commercial Integrator