Audio Video Design’s Technician Mike Kirby dresses wires at a customer location.
Photo credit: Photo courtesy of Audio Video Design.
Audio Video Design’s IT Director Erik Briggs meters a network connection.
Photo credit: Photo courtesy of Audio Video Design.
Those of you who may have thought the residential market is dead—think again. While new construction has taken a big hit throughout the recession, the retrofit and upgrade market for home systems—including security, lighting, video, remote connectivity, energy savings and management, audiovisual and temperature control are making this vertical one which sparkles with newfound excitement.
It makes perfect sense. The majority of buyers are now aged 25 to 40 and they know how technology makes life easier. For the most part, they’ve done away with Plain Old Telephone Systems (POTS) and landlines, migrating to more flexible forms of connectivity—wireless, use of the Internet, remote programming and now, even Web-based and Software as a Service (SaaS) products. It’s evident that the full solutions provider who can do it all in a turnkey package will shine as growth in integrated technologies continues to spiral upwards.
Home systems buyers want to be able to arm and disarm systems, including lighting and controls, remotely from their cell phones, iPhones, Blackberries or other portable devices. They want to know who’s been at the protected premises and when, or which of the children is home and when they arrived. To do this they eagerly accept mobile video as part of the necessary mix.
New models of RMR
Finally, the systems integrator has the type of offerings everyone wants and sees value in – if they play it right and gain the necessary expertise. Homeowners continue to want one trusted source to do it all for them and will reward those installers with referrals, upgrades and add-ons. The beauty of it all is that it creates new streams of monthly recurring revenue and establishes the security integrator as a full service solutions provider who can handle everything the homeowner wants.
Ralph Gregory is the president of Security Force Inc., headquartered in Raleigh, N.C., and he regularly deals with the excitement of connectivity and systems solutions that his buyers—in the 25- to 40-year-old range—want with technology.
“There’s so much emerging technology that these buyers want to take advantage of,” said Gregory. His company offers the Alarm.com Web-based solution (through installed GE Security products) to customers. Gregory said the most asked about offerings include energy management, lighting and remote technologies which allow users to arm or disarm systems or set temperatures or automate services within the home while they are away.
“When the customer is able to get more value from their system, they will use the system more. And if they use the system more, they in general will want to keep that system and grow with it,” said Gregory. Security Force’s business is some 70 percent residential.
Gregory said that about 20 percent or more of his customers don’t have a home phone, and with that in mind, he opted to offer the Alarm.com SaaS model. “They want security monitoring and remote and event notification and to interact with their systems and use Web-based and IP centric dashboards,” he continued.
“There’s such a big value proposition for integrators who can offer all these solutions. It’s much more than security, and as such, there is so much more value added for the installer and the end-user,” explained Gregory. “It’s also a much easier sell to the homeowner.”
Alarm.com started out in the security side of the business, but will be moving more into the automation arena, beginning in 2010, according to Bob McCarthy, director of Product Management for Alarm.com, headquartered in Tysons Corner, Va. “The offering really helps dealers differentiate themselves. With this hosted model, we want to keep the smarts here on our server as much as possible. We will be rolling out some new automation platforms to respond to the industry needs early next year, focusing on optimizing e ease of use and operational parameters for dealers and their customers,” he continued.
According to McCarthy, video has seen much interest in the residential market. “A lot of dealers are earning RMR with video,” he said. “It’s a great management tool and allows for visual mobile access to the user’s system.”
Overall, the emphasis by the systems integrator should be on the full solution, which adds value for the integrator and their customer, according to Rich Matthews, marketing director for Lutron Electronics Co. Inc., Coopersburg, Pa.
“Right now it’s time for integrators to look at the existing construction market,” Matthews continued. “For every one home constructed, there are 12 existing ones bought and sold. Integrators need to focus on existing homes and a vast majority of products are ideal for retrofit.” He added that Lutron has developed new wireless technologies, controls and devices that are robust and more reliable than ever and fit perfectly with new demand for energy management and overall system control.
Homeowners are driving demand and much of it is centered on achieving energy-related savings through managing the environment with lighting and automation controls, as well as occupancy sensors, according to Matthews.
“There’s definitely thirst from integrators in the field to learn how to sell to existing homes now that new construction is gone,” Matthews added. “Security dealers are already a trusted entity in the home and they want to sell more products on the same job which makes perfect sense.
They have fewer jobs so they want to sell more on every job.”
Matthews said that energy savings, energy management, monitoring and lighting are part of the total solutions customers seek. “Lighting control as a systems installation category is a significant part of the business,” he said. “One of the other fastest growing segments is automated shades, which can save up to 10 percent in energy costs. Energy management and monitoring may be the growth market similar to what the home theatre was 20 years ago,”
Brad Smith, president of Audio Video Design, with offices in Newton, Osterville and Nantucket, Mass., epitomizes the changing face of the home systems integrator. In fact, his company was a traditional security alarm company that moved into the audio-video space, no regrets.
“Everything has changed with the ‘great recession’ we are in,” said Smith. “What people want and what they’ll get are very different, probably for the foreseeable future. People want consumer electronics (a/v) more than they want building electronics (automation). Who doesn’t want consumer electronics? However, building electronics were making a strong move prior to the recession. The desire is still there, it’s just a question of affordability. HVAC, lighting and shade control are the prime movers. In high-end homes, media traffic control has been a big draw. It’s easy to get lots of free media at a computer, but not so easy (or inexpensive) to route it around the house in high def.”
Audio Video Design is a CEDIA award winner and has garnered numerous installation accolades, including most recently two awards from the local builders association. “Technology just keeps changing and more or less improving and until it slows down, everything we do will keep changing and avoid standardization, which is bad,” said Smith. “POTS are history and I wouldn’t be so foolish as to predict which current technology will be the standard bearer in 20 years but fiber optic is clearly (pun intended) the leader for long distance communication and HDMI is taking a dominant position in video.”
Greg Simmons, vice president of Eagle Sentry in Las Vegas also made the move from a traditional security company into the realm of full solutions provider specializing in audio-video, energy management and automation in addition to security.
“It makes so much sense; why should we be selling security only?” Simmons queried. “We are moving away from that. You have to be a full solutions provider to succeed in this market and we have to provide solutions that are reliable and can’t be interrupted.”
Security doesn’t lead the dance
Simmons said the perception of what the market wants has changed. “Before, security was the lead-in to home installations,” he said. “Now, rather than just security, it’s about low-voltage, structured cabling and not just audio either. It’s about fully integrating and automating the home and that applies to both production homes as well as the custom-luxury market.”
Simmons said the retrofit market has seen increased activity in the Las Vegas area. “The customer wants to have lighting control, HVAC management and a lot of the demand is tied to, of course, ways to help the customer control energy costs. So security is only one part of the big picture.” Founded in 1986 as a security installation and monitoring company, Eagle Sentry capitalized on the building boom and became a full service low voltage contractor, forging relationships with builders and general contractors.
Casey Wood, marketing director for Paragon Technology Group in Glenwood Springs, Colo., said their clients want high-end integrated systems with remote accessibility and control.
“More and more we are talking to customers about energy efficient products,” explained Wood. “The lighting systems we offer (many from Lutron) decrease electricity usage by setting the lights to lower levels depending on the time of day. The solar shades we install reduce solar gain in any room, allowing the climate control system to maintain a more consistent temperature. We are also able to integrate occupancy information from the security system to cue the Energy Management System to make lighting or climate adjustments.”
Even though new construction hasn’t been at its best and witnessed a decrease, homeowners looking to do some technological and cost-saving revamping still have possibilities. Residential systems have moved into convenience form factors with energy efficiency and lighting leading the way. Security is important, but it’s part of a package, a full-service one, that integrators will find most success in implementing.