What We Should Learn From Control4's Pakedge Acquisition

2/16/2016 9:53:00 AM
When I started in this industry back in 1998, our company’s main distributed audio solution was Elan. And it was primarily that: a distributed audio solution. I can remember crouching behind racks, beanie-connecting Cat-5 connectors together and always being somewhat amazed when the Z100 keypad button on the other side of the house lit up to the correct color and started playing a CD.

Over time, things progressed to RS-232 with bi-directional control that could display a radio station’s call letters (or the actual song playing on satellite radio!) and it was akin to magic.

Automation was still relatively in its infancy. If we wanted to add lighting control to an audio system, the only way was by adding a separate Lutron Radio RA system and then using the Lutron RA IR adapter to deliver very basic, one-way control. If we wanted to add HVAC control it was via an Aprilaire thermostat with protocol adapter. Still, there was a real thrill when you’d first plug that thing in and see the actual current temperature populate on your controller.

 

But when I first saw a Control4 system running an iPhone app at CEDIA to control an entire home, I knew that integration had moved to the next level.

That stuff is all child’s play today, and full control and feedback is expected of even the most entry-level systems. Everyone carries a smart phone in his or her pocket and people take connected devices for granted, and just expect them to work.

Our industry has long transitioned away from the days of standalone, self-contained, one-brand solutions into devices that have to communicate across a variety of platforms and devices, often in environments where they are competing for attention and bandwidth amidst an unknown amount of traffic with devices of varying “noise.” The network has become less an ethereal, tangential connection of random switches and cables and more a highly managed, critical lynchpin to the successful operation of a modern home. And the days of throwing in any off-the-shelf router, knowing how to set up a static IP, and enabling some port forwarding no longer makes you a “network expert.”

By now you’ve likely heard that Control4 acquired Pakedge Device & Software at the end of January for a cool $32.7 million. (And I hope someone got a celebration Ferrari out of that; I’m looking at you, Victor Pak!) The only thing really surprising about this news is that no automation company decided to do it sooner.

Sure, as a publicly traded company (CTRL on Nasdaq) looking to increase profits to shareholders, purchasing Pakedge looks like it offers Control4 the ability to add to the bottom line as it purchases an already profitable company. Further, there is relatively little overlap between the two companies’ dealer bases: of 1,700 Pakedge dealers and 4,700 Control4 dealers, only 560 currently do both.

We often sell customers on the idea of having only one finger to point when something isn’t working. Instead of a, “Well, the electrician pulled this cable, and the cable company terminated the ends, and…” we prefer providing delivering an end-to-end solution: we pulled the cable, we terminated the wire, we installed the backend, we connected the gear—we’ll stand behind the whole thing. (At least until the cable box comes up and betrays us Jon Snow style…)

Control4’s purchase of Pakedge shows not only an understanding of the market, but also a commitment to this space and the same appreciation of the importance of providing dealers and end users a more complete solution and experience.

As a Control4 dealer, I can tell you that the majority of the time when there is a system issue, it is often network related. Purchasing a premium, enterprise-class networking solution to fold under the Control4 umbrella will ensure incredibly tight and reliable integration, and even better product support. There will be no more ping-ponging between, “Sounds like a network issue…” on one call, and “Sounds like a controller issue…” on another. The two companies will now have tech support channels working directly together to solve the issue.

The next step is for us as an industry to embrace the reality that the network is now as integral to the system as any other component, and to start giving the network configuration the same level of care and concern that we do to programming and trimming racks. And just as we’ve gotten customers to understand the need to step up to higher-performing gear in other areas, as an industry we need to start positioning and selling the network for what it is: the crucial backbone to the solid and stable performance of virtually every device in the home.

People likely still won’t understand the need for a $700 router, managed switches, and wireless controller. They do understand Netflix buffering and Wi-Fi dead spots and having to reboot to get things working again. And if they are coming to us, they also likely understand that premium brands deliver premium performance with premium back-end service and support. (If you have yet to experience Pakedge’s phenomenal support, check out this blog on a recent experience I had.)
  
As we move toward the Internet of Everything, more and more devices will be connected, and the importance of the home’s network—and the demands placed on our critical installed systems—will only grow. And while this acquisition doesn’t mean that all Pakedge dealers have to use Control4—or that all Control4 dealers have to use Pakedge—it does create an incredibly powerful and compelling synergy.

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