Amazon is Taking Your Homebuilders…

“The enemy of my enemy is my friend”
—The Arthashastra, 4th Century B.C.

It all started about a year ago. Lennar struck a deal with Amazon to deliver an entirely new smart home solution; a solution devoid of traditional structured cabling or CEDIA-level integrators. Solutions that nevertheless sounded great on marketing videos and brought in new homebuyers in droves.

Fast forward 12 months and it’s clear that Amazon isn’t going anywhere anytime soon. They’ve since inked deals with other major national builders and displaced large integrators in the process.

Also by Henry Clifford: Predicting The Year Ahead After CEDIA 2018

I started hearing about integrators across the United States losing homebuilder customers to Amazon six months ago. My friends in different markets all said the same thing. The builder went for a lower price and homebuyers were coming back to them anyway after the fact because they weren’t happy with the finished product. Initially I shrugged it off. No big deal, we’d seen this movie before; a huge corporation decides to come play in the CI channel, loses its shirt, and goes whimpering away six months later.

This time it feels different.

Consumers love the convenience of Amazon and have gotten used to having products delivered dirt cheap in 24 hours. Seeing the Amazon logo on a new home inspires confidence and builders are paying next to nothing for their solutions. A standard home technology package in a $400,000 home a few years ago might’ve paid out $2000. The same package in today’s dollars goes for well under $1000 and includes an Amazon in-home consultation. It only works because Amazon is willing to subsidize these offerings in the name of selling more Prime subscriptions. The average CI company doesn’t have that kind of scale or luxury.

Never fear, help is on the way!

I love this industry and it’s great to see we’re not sitting on our hands. Earlier this year Control4 introduced their CA-1 platform ($350), Alarm.com released their Hub ($125) and Qolsys rolled out the IQPanel 2 ($400) in an effort to strike back at Amazon. As we compare approaches in the production building market, I can’t help but feel we need a solution that allows us to complete our work in one visit, where we’re preferably bringing the connection into the home with us.

Alarm.com launched its builder program in April with some groundbreaking features. Alarm.com is a pay-to-play subscription service that tends to turn off home builders. They typically want to see a product installation and one-year warranty without any fees beyond that. Effective immediately, Alarm.com is offering an automation-only plan for 36 months at $0 monthly. As long as participating dealers are able to convert 40 percent of those subscribers to paying security clients within that 36-month period, they get to stay in the program. I don’t know about you, but I see this program having serious legs for integrators pondering their next steps with production homebuilders. The first big announcement aligns D.R. Horton with this new Alarm.com program and squarely pushes back on Amazon’s efforts to become the vendor of record for technology in the home.

Also by Henry Clifford: Hands On With Alarm.com’s 8-Channel Stream Video Recorder with HDMI Output

In order for our industry to thrive and grow, we need to be seen as the manager of the home technology experience. By offering solutions like Control4’s CA-1 or Alarm.com’s builder program in tandem with the Qolsys IQ Panel/Hub, you get to a seat at the table with a powerful engine to generate recurring monthly revenue (RMR).

Are you doing production builder work? What’s your Amazon strategy?

Stay frosty and see you in the field.