Home Automation Goes from Fad to Market OpportunityBy Pedro Pereira | Posted 2005-03-11 Email Print
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Some VARs and resellers are finding that the home-automation, home-entertainment projects they used to do for friends are turning into a long series of contracts. Media centers, security systems and modular video and audio systems are turning entertainmen
As anyone can attest who's ever seen rabid sports fans maneuver for possession of the TV clicker on Super Bowl Sunday, entertainment is a serious business.
Even more serious is what happens before the clicker is ever in contention, when homeowners have to call in VARs and integrators to apply their IT experience to home installation projects with big entertainment components.
In environments with un-businesslike obstacles such as toys and couches, VARs are implementing computer-based networks that control everything from video projectors and audio receivers to air conditioning and lawn sprinklers.
As domestic techno-centrism becomes more common, the list of things inside the home that can't be automated is shrinking rapidly.
"Anything that can be controlled by an electrical device can be controlled by a home automation system," said Phil Mohammed, president of digital integrator Universal Computer Corp., University Place, Wash. "Heating, cooling, lighting, hot tubs, even fireplacesyou name it."
But these are not the James-Bond, swinging-bachelor home-automation systems that debuted in the 1960s and built only a tiny market share in the decades since, using minuscule-bandwidth technologies like X-10 and powerline networks to automate huge-speakered stereos and rise-from-the-floor big-screen televisions.
They're solid networks based on industry-standard technology; they're expandable, good for more than just turning on the hot tub and, for the people putting them together, highly lucrative.
Integrators cash in.
Lured by the lucrative convergence of networking products with audio, video and myriad home systems and appliances, small integrators like Universal Computer and Total Entertainment Design, of Ventura, Calif., are building sustainable businesses in this emerging market space.
Often, such integrators partner with home builders, contractors, and even architects, as in the case of Total Entertainment, to get the projects.
"There are a lot of guys out there that want to get into this market, and I encourage all the people that can to get into it," said Ted Lang, owner of Total Entertainment.
Lang, a network integrator for almost 20 years, began doing digital home installations once in a while, just to help out his architect brother.
Then about a year ago, Lang realized that he could make home installations the core of his business, rather than just a side project.
Distributors, which do not sell directly to users but supply VARs and integrators with products, have also noticed the market convergence and are beefing up their catalogs with home-networking and entertainment devices.
In the process, they are taking on the role of educator to guide VARs that are trying to break into the market.
D&H Distributing Co., of Harrisburg, Pa., is leveraging its relationships with entertainment and consumer electronics vendors, such as Kenwood Corp. and Panasonic Corp., to equip its VARs for home installations.
Rather than focus entirely on data products, D&H has over the years maintained a sizable business in the consumer electronics side.
Last year, the distributor took its knowledge and catalog on the road, putting on seminars and product demos on the digital home for VARs and integrators, said Dan Schwab, D&H's vice president of marketing.
"This year what we're doing is trying to take it to the next level, enhancing our Web site and delivering marketing campaigns to push these solutions, showing them how to set up a digital home," Schwab said.
In fact, the distributor has been literally taking a homea set made up of four digitally ready roomsto trade shows as a hands-on demo.
The "home" features technologies such as a 42-inch, all-in-one plasma projector from Hewlett-Packard Co., an Intel Entertainment PC; and Panasonic IP network cameras, all running on the Microsoft Corp. Windows XP Media Center Edition 2005 operating system.
'A service model.'
"There will be a tremendous market for the digital integrator. I think you'll see more people making a good business. And it's not just installations, it's a service model," Schwab said.
As more home systems and appliances go digital, keeping them running becomes as critical to the people using them as a corporate network, he said.
D&H and competitors Ingram Micro Inc., of Santa Ana, Calif., and Tech Data Corp., of Clearwater, Fla., are setting themselves up as "one-stop shops" for the digital home market.
That means supplying VARs and integrators with the software, hardware and cabling, as well as access to information, to help them succeed.
Ingram Micro is developing a training curriculum and plans to open a digital home solutions center next month to help educate VARs, said Irene Chow, category manager for consumer electronics and home automation products at the distributor.
"We're starting to see more and more networking capabilities in products we haven't seen before," Chow said.
"A digital revolution is taking place in the home," with such products as Kenwood's networked audio/video receiver at the vanguard.
"This was truly an analog company that just bridged the gap into the digital world," she said.
Chow estimated that 30 percent of Ingram Micro's resellers already are doing some home automation business.
For distributors, home automation also is opening the door to new sets of customers.
Karl Werner, director of the Advanced Technologies Group at Tech Data, said the technology convergence that is taking place also is driving a convergence in business models.
As data-side resellers move into home automation, often as a side project for an acquaintance, they start to compete with audio/visual installers who are inching into the data networking side.
A third business model is also at play -- what Werner calls a "low-voltage guy" with experience in such jobs as installing home security systems.
Werner said Tech Data is acquainting resellers with such home automation products as Microsoft's Media Center Edition and Hewlett-Packard Co. media servers.
The distributor has done road shows and eSeminars, but he noted that often the most important education comes down to the one-on-one questions the reseller asks the distributor right before closing a deal.