Leaders in the Integrated Home: An Exclusive Security Dealer Roundtable

Susan Brady: Targeting the high-end client involves highly tailored and customized electronic systems solutions to residential customers with more complex security needs than the average customer. What do these customers require most and what types of equipment and services fill their needs the best? How big a market would you estimate high end residential to be?

Darrel Hauk, President and CEO of Channel Vision Technology: These customers require a one-stop shop for all “technology” in the home, including security. Higher end customers don't want to think about products… nuts and bolts, they just want the end result. DVRs in the home have increased in demand along with their use in vacation homes utilizing the networking and remote access functions. Basic intercom technology is in much higher demand as well. Enabling homeowners to communicate with visitors at the front door before opening it along with a camera/modulator allows them to see the person before they even decide to talk to the person.

Greg Burge, President, GE Security, Americas Commercial: High-end consumers tell us they want more than security. They want 24/7 connectivity and to have more control over how they interface with their homes. We see the advent of cameras both outside and inside the home as not only a much-needed security solution to the false alarm issue but also a lifestyle enhancement feature that will result in increased usage of the entire system. The cameras, for example, can also act as a portal for parents to stay connected to their family or to see if FedEx delivered the Christmas package. They are also able to tell what time the kids arrived home from school.

Jay McLellan, President/CEO, HAI (Home Automation Inc): As far as what consumers require most, a recent survey by the Consumer Electronics Association showed that 61% of consumers expressed interest or strong interest in a vacation setting that gives the home a lived-in look while out of town; 59% of consumers expressed interest or strong interest in lights that automatically turn on or off when someone enters or leaves a room; and 50% of consumers expressed interest or strong interest in the capability to turn off lights and other items when arming the security system as you're leaving.

Bob Gartland, President of AVAD: High end clients require an integrator who is “listening” to their needs and supplying a turnkey solution based on those needs. Their time is worth more than their money. They want their project designed and installed properly right from the start. Service is most important. From an entertainment client perspective, high end residential “is” the market.

David Yu, Product Marketing Specialist, ICC: In residential electronic systems, video distribution and telephone systems are usually the first things that come to mind. The key to developing a good system is to have one that can enhance a person's lifestyle. It should be able to run by itself with minimal programming, yet fully automated that can detect when a person is home to set the desired lighting, music, and temperature. The demand is there, and the technology for home automation is out there. However, it has yet to reach its product maturity.

Bart Manguno, AuroRa Sales Team Supervisor, Lutron Electronics: Assuming that high end in an average market is $2 million and above, video surveillance, multiple keypads, driveway alerts, gated access with perimeter defense, 24/7 monitoring, whole-home audio systems, and home theatres with media servers would often be associated with this demographic. From a lighting control perspective, “integration” and flexibility is paramount. The typical high end home is likely to have multiple lighting scenarios, with multiple zones and multiple types of lights. In addition to lighting that responds to security systems (e.g. motion-sensor triggered, exterior flashing lights, remotely controlled lights, etc.) high end homes are also likely to have other types of lighting such as landscape lighting, automated window shades, special task and/or artwork lighting, and much more. There is also likely to be multiple types of residential systems beyond lighting controls and security systems, such as life safety, automated HVAC, and back-up power systems which would generally be controlled from a centralized location (wall-mounted and/or tabletop GUI).

Chris Geiser, Global Leader, Custom Electronics, Honeywell Security & Custom Electronics: Provide simple-to-install, easy-to-operate, cost-effective solutions that scale across multiple low-voltage technologies (like thermostats, lighting and security). Some of the needs that high end home owners express are the ability to monitor and control from remote locations (e.g. second or vacation homes, etc). By providing these functions, Honeywell can lower the cost to serve, by allowing dealers to remotely configure systems. However, the basic security needs of a high end residence are not all that different from the average homeowner: everything from protecting high-value assets, to residential video, to providing remote connectivity over broadband connections.

Jason Root, Vice President of Strategic Relationships, SmartLabs, Inc: Like all of your customers, high end customers are looking for ease of use, plus increased functionality of their security system from remote access via mobile phone or computer to whole home automation and control.

Brady: Reaching out to mainstream America and getting the general public jazzed up about spending money on residential security and automation systems has its challenges. How do you suggest dealers sell to the mainstream market?

Hauk: Dealers that sell to the mainstream market need to have a customer-centric business. Building business through customer service and maintenance: This is a differentiator in a dealer's business. When all things are equal in products, the people you have on board and how responsive you are to the customer is what will separate you from the competition.

Burge: For years, our dealers have sold and installed traditional security systems, which have become the life-safety confidant of the homeowner. This goodwill serves the dealer integrator well in assuming the trusted role when offering new products and services. Customer service is paramount in customer retention and building a sustainable business. Part of maintaining a relationship with the subscriber is offering quality service and service contracts. Safety fairs, home shows and community involvement are all important aspects of any successful marketing campaign. The real key is a well-orchestrated and sustainable marketing campaign.

McLellan: Simplicity and cost are the two most important points for most consumers. People do not want systems that are complicated and expensive. Very few people have lived with an automated home before and the benefits are sort of intangible to most people until they live with an automation system, but cost and ease of use are very tangible. Dealers can sell to the mainstream market by focusing on the benefits of a home control system, not just the security aspects. Security installers can now expand their offerings to include features that home owners enjoy such as lighting control, energy management, and whole home audio systems.

Gartland: Create simple, scalable, repeatable packages in multiple price points. Even though these packages may be common to you, they will seem exotic and custom to the mainstream market. Provide packages with all the key features, but keep it simple. Create them so they can be easily installed and programmed. You need to be able to “get in and get out” of these jobs in 1 to 3 days. Service is paramount. Be communicative. Follow-up, do what you say you'll do when you say you'll do it. Walk the project at the end to make sure it meets your client's approval.

Yu: Selling residential security is a bit like selling a car. Some customers prefer the deluxe model where it can do everything plus extra features they will never use in their life time. Others want a vehicle that can transport them from point A to point B. Whether or not it has power seats or heated steering wheels aren't important features. Similarly, there are customers that won't need all the bells and whistles and will “wait and see” until the technology has matured.

Manguno: No matter what the demographic and how sophisticated the residential security/automation system is, homeowners want simplicity, quality and reliability. A home could have the latest and greatest security, life safety, environmental and lighting control equipment available on the market, but numerous studies and surveys have confirmed that the vast majority of homeowners still want to control all of these “cool gizmos” with 1 or 2 buttons. Likewise, impeccable customer service and timely responses are critical.

Geiser: We spend a lot of time helping our dealers win in the new construction arena—so we suggest dealers work with builders to educate them on the added value, convenience and differentiation that automation and other digital living products provide. Focus on solutions to end user problems. Developing targeted messaging to potential homebuyers typically works best (e.g. home office for working professionals, home theater for families, etc.).

Root: We recommend integrated packages that include security and whole home automation; a solutions approach that outlines specific applications to educate consumers. Customer service is an important part of our business and an increasingly important up-sell opportunity.

Brady: Since dealers have the technology knowledge required for security and many are now getting IT-educated, do you feel security dealer integrators have an edge on ways they can profit from increased consumer demand for the latest product and technology?

Hauk: IT is the way of the future! With the knowledge of networking, dealers now have unlimited opportunity at their fingertips. New product offerings such as IP cameras, automation touch screens, Windows Media server and related items, they have the tools to sell a full system and be a one-stop shop.

Burge: You bet. When we asked that question to 300 folks who attended our recent dealer event (a Caribbean cruise), the majority of our dealers indicated that they are actively involved in marketing and selling additional products and services, thus complementing their traditional alarm business. The convergence of technology, public acceptance and new entrants into this space has made it easier for dealers to penetrate this new “frontier.”

McLellan: Home automation is a natural evolution of the security industry. Items that people are familiar with today, like security panels, thermostats and light switches are still on the wall. Remote monitoring and access is a hallmark of both security and home automation. Yes, security dealer integrators definitely have an edge.

Gartland: The security dealer often is the first person on the project. They have a tremendous opportunity to offer a complete menu of services: audio, video, communications, lighting control, etc. Be the “low voltage architect” for your clients. Don't be afraid to tie it all together and charge for it!

Yu: Security dealers that have been in the business for a long time definitely will have an edge because of their ability to integrate security with home automation to deliver the best all around solution.

Geiser: Dealers who embrace new technologies generally have a better opportunity to deliver focused solutions with more compelling user experiences. Security dealers who have traditionally relied on an RMR revenue model have a specific advantage because of their focus on generating recurring revenue by focusing on the lifetime value of the customer through things like maintenance contracts. Moreover, these dealers are in a unique position to provide “one-stop-shop” support for multiple residential technologies (like structured wiring, security, lighting, etc.).

Root: Yes. Home automation and control is an enormous opportunity for security dealers.

Brady: Residential electronic systems should simplify or automate tasks, entertain and protect homeowners. Do you feel there are any negative factors in the technology out today that are holding back market growth?

Hauk: Currently the only thing holding back the industry is mainstream consumer awareness and product compatibility. Many homeowners believe that custom installations are expensive and reserved for high end homes, but with more focus on educating the consumer, the market can move toward greater awareness and acceptance of home technologies. Products that are not compatible with each other are often difficult for dealers to integrate, making them labor intensive for installers. We need more collaboration between vendors with complementary product lines. As an industry, if we can work toward the “plug and play” model, it will streamline installations and in the end it will be beneficial not only for the dealers but also for homeowners.

Burge: The only negative factor that will is if manufacturers make the system so complex, the homeowner becomes frustrated and does not use the system.

McLellan: The only negative factors holding back the growth of the market are consumer and in some cases, dealer, misconceptions that systems are too expensive or complicated. Once people understand how affordable and easy to operate they are, they don't know how they lived without one.

Gartland: Dealers need to design and install systems their customers want to own, not systems they would like to own. Well-designed, repeatable systems will provide better long-term solutions for homeowners and more profitability and scalability for integrators.

Yu: One of the main issues most home automation users face is programming. Many dealers will do the initial programming and walk through the procedures with the consumer. However, when something goes wrong, most consumers will have to take out the manual and resolve the problem themselves. This is just unpredictable and too time consuming.

Manguno: From a lighting control perspective, there is general consumer perception that current systems are complex and difficult to operate. While this may have been truer in years past, evolving technologies and new products have greatly simplified the operation of lighting controls and integration with other products.

Geiser: Residential automation systems have typically been difficult for end users to understand and operate. It's also been difficult and confusing for dealers to develop turn-key solutions which are cost effective and easy to replicate in the builder environment when so many installations have involved extensive customization and third-party product integration.

Root: Awareness is the key issue. Home automation and control does not have to cost upwards of $50K for homeowners to enjoy the added security, comfort and convenience benefits of home automation/control.

Brady: What has been the most positive development in the residential electronics systems market to date? What is your overall view of the future of home systems?

Hauk: The two most significant developments in the market have been HDTV and the iPod. HDTV has really driven the video and home entertainment market and the iPod has brought music back to the forefront. Networking everything from HDTV, audio, lighting, security cameras all working over the existing infrastructure with “no new wires” will make products easy to install and take the objections away about tearing up the drywall in the home.

Burge: The most positive development in the industry is the convergence of security and entertainment. We also see connectivity to the home as another positive development in this market, giving consumers real-time information. This is key to the growth of the residential market. We are bullish on the future of the residential market.

McLellan: Remote access to the home is growing very rapidly right now. Internet, telephone, touchscreen, hand held tablets, and television interfaces are very popular.

Gartland: Home systems that integrate with each other offer high end, “plug and play” solutions and will open doors for more dealers to provide better engineered systems .

Yu: Residential electronic systems have come a long way. Before, it was just a box that distributes phone and video. Now, it can distribute surround sound throughout the entire house, control central air systems, surveillance, security and home networking. The focus is bringing everything together into a center console where everything is easily integrated and simple to use.

Manguno: Increased competition has been one of the most positive developments in residential electronics. The evolution of new technologies New products and technologies have actually allowed the creation of better products….at more affordable prices!

Geiser: Technologies now deliver a new platform that more readily fits the needs of the production builder and their integration partners than previous more costly solutions.

Root: Positive developments include the iPod generation that will come to expect technology in their homes; the boomer generation who will be able to age gracefully in their homes with the advances of automation/control; concerns for personal security caused by increased cocooning; and, environmental and economic concerns such as energy efficiency. Home systems will be completely integrated in the near future.

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