Integrators Move Beyond AV to Conquer the Connected Home The signs are everywhere. Even on the back of the dollar bill: Novus ordo Seclorum.Lindsey Adler ⋅ Apr 3, 2014 Osbee Industries of Harrison, NY engineered a master plan for this fully integrated home with special emphasis on shade control. To complement the calm, modern aesthetics of the residence, Osbee specified 30 Crestron motorized solar shades that are controllable from any of the nine touchscreens throughout the home or from room-specific, custom-engraved Cameo keypads, often paired with lighting control to minimize wall clutter. The signs are everywhere. Even on the back of the dollar bill: Novus ordo Seclorum. The “new order of the ages” is the de facto state of the custom installation business. While there has been a significant level of pessimism from veterans of the industry, the dramatic changes that CI continues to experience, may offer unbounded opportunities. The biggest challenge is quite simply being able to admit that the old way of doing business is no longer viable, and that it’s time to embrace the new, uncertain future. Manufacturers across a broad spectrum of automated technologies for the home have noticed these changes in various ways, and they are working to support AV integrators as they evolve and branch out from their traditional area of expertise. “It’s hard to be a one-trick pony today,” said Ralph Maniscalco, director of marketing and communications for Honeywell Security Group. Honeywell is a great example of a manufacturer that evolved from a security-only business by adding lifestyle technology to its services. Coupling the company’s Vista security platform with its Tuxedo touchpanel, Honeywell is able to control Z-Wave-enabled devices for temperature, door locks, shades, and lighting. Hunter Douglas’ Duette honeycomb shades feature air pockets to boost energy efficiency while enhancing the home décor. Although it remains firmly committed to selling security products itself, IC Realtime sees its custom integrator dealers gravitating toward a more diverse assortment of technologies, including security, which was once outsourced to others. ”In a dramatic fashion we have seen a tremendous amount of growth in the CEDIA channel; we continue to put the vast majority of our R&D money into that space,” said Matt Sailor, CEO, IC Realtime. “The day of the integrator doing one task–like purely security or purely theater–is gone.” Controlling the Connected Home Most AV control systems manufacturers now offer a full breadth of automated technology, including lighting control, energy management, automated shades, and security to help drive dealers to succeed with more than just audio and video. “Bringing in products and services like shades, security, and IT allows the dealer to become a one-stop- shop for their customers and also increases the complete invoice total.” said Paul Williams, Control4 VP of security and communications products. The range of potential product categories is really up to the dealer and to what extent they want their services to reach. “Energy management, solar panels, smart appliances, HVAC systems, shades, lighting controls–all of these categories should be on the dealers’ list to become specialists of,” said Tom Barnett, Crestron director of residential marketing. “The leaders in integration will be total home technology experts. They will be able to command premium prices because custom integrators are highly customer-centric and uphold a high level of customer satisfaction. They should be able stay competitive because they can offer their knowledge and expertise through a single point of contact for the whole home, instead of a myriad of companies making subsystems work, but integrating very little.” Dealers can help grow their business by offering homebuilders and their customers a broad product portfolio that includes central vacuum systems. Potentially, broad-based consumer media coverage of connected home devices and the “internet of things” could serve as a boon to the much more customized and high-end capabilities that CIs offer. Demand is further boosted by other external industry factors, as Joe Lautner, director of control category, Core Brands, described. “The post-recession snapback in the new home construction and retrofit contracting markets and the new broad-market control offerings from telcos, ISPs, and home improvement retailers has generated a new and additional demand for smart home control solutions,” he said. As consumers continue to gain awareness of the possibilities for technology in their homes, integrators have the opportunity to introduce their clients to these non-AV product categories early on in the design process, Lautner advised. “After all, if the dealer is offering a solution that controls lighting, shades, security, energy, and the like, it’s only logical that they begin to offer the actual attachments themselves,” he said. “So the first step for a dealer is to offer a smart home control solution. The second step is to offer the attachments. The two go hand in hand.” All of these factors are being fully driven by consumers that hungrily consume technology. What started with integrated and programmable remotes and touchscreens, has transformed into an end-user expectation for an experience involving mobile and on-wall touchscreens for lighting, scenes, HVAC, audio, video, home theater, shading, pool/spa, surveillance cameras, alarms, etc. Lutron’s new line of battery-powered shades is a great solution for integrators that are new to automated window treatments. “Integrators must embrace this integrated approach to remain competitive,” observed Reid Cram, director of marketing communications for Vantage Controls. Vantage has experienced an “exponential growth in requests for software drivers to integrate equipment across the spectrum of home and commercial systems,” Cram said. In response, his company is adding to its software integration driver libraries. Expanding driver development is also a strategy RTI is employing to help dealers adapt. “We didn’t want to require that our dealers become software engineers in order to program and install our equipment, so we have worked very hard to offer a library of pre-written and tested two-way drivers for a spectrum of products, not just AV, but lighting, security, HVAC, and more,” said Pete Baker, VP sales and marketing. RTI builds its own two-way drivers in addition to the RTI Driver Development program, which enables dealers to build their own. From Savant’s perspective, the integrator is tasked with aggregating and organizing all of these segments together to create the connected home for clients. “Making this all happen and giving the customer an interface that is tailored to their needs defines the role of the integrator today,” Savant general manager Jim Carroll said. Mark Walters, chairman of the Z-Wave Alliance, recognizes a shift from luxury-type AV control system installations to an emphasis on energy savings, security, and ROI. The control systems of course are what tie all the technology together, but the sales conversation has shifted, he said. “More and more home control and automation set-ups are getting started through the installation of a few devices, such as a door lock, a thermostat by the home security provider or by the telco provider,” Walters said. “There is a large market: over 6.5 million installed, home automation-enabled security panels, for further integration and expansion.” Securing the Connected Home Perhaps the strongest bridge to integrator expansion comes from the security market. Automation has been a major crossover point between AV and security because the technology supports integration of both and because homeowners generally prefer to work with as few installation professionals as possible, noted Duane Paulson, senior vice president product and market development, Linear. “Traditionally, setting up a multi-room audio system or mounting a TV and speakers would have nothing to do with security,” Paulson said. “But with home control technologies like Z-Wave providing a platform to integrate AV, security, HVAC, access control, and more, and do it affordably, the opportunities for integrators will increase.” The demand for IP video has really driven the two industries together, according to Robert Melendez, director, automation channel, for Lilin. In January, Lilin announced the integration of its IP products with Control4 systems, via an Extra Vegetables driver. Based off the success that the security provider has had with Control4 driver interoperability, it also has developed custom drivers/modules to provide the same interoperability with other automation platforms, such as Savant, Crestron, AMX, RTI, and URC. The Lilin networked video recorders (NVR) can be controlled directly from an automation interface. “When installing an automation system into a home, we see that surveillance and/or security is usually the first request brought to the table, and the last to be ‘trimmed off’ when downsizing,” Melendez said. Despite the new skills that custom integrators taking on security might have to learn, they’re generally better prepared than security integrators moving to other disciplines. “[AV integrators] have the skillset to do what a normal security company can do, with the additional advantage of being able to provide a customized and sophisticated approach,” noted Larry Goldman, Kwikset North American sales and business development manager. “In other words, they are in a terrific position to serve their customers’ needs and give them exactly what they’re looking for.” Goldman sees many AV integrators working with security companies as sub contractors, and managing the jobs as the general contractors. “Well-rounded and trained AV companies are the ones with the competencies to install it all,” he said. The NP36 network patroller from Pakedge facilitates the BakPak cloud management service to view, manage, and maintain network functionality, including issuing alerts when a problem arises. On the periphery of security systems, automated locks may make the biggest impression on homeowners’ preception of integrated technology. After all, they interact with the front door of their house nearly every day. “It’s the first and last device the homeowner uses,” said Jason Williams, general manger, Yale Residential. Williams has observed growing interest in Yale products, especially in the CEDIA channel. He credited Control4 in helping to drive this growth when it started offering locks into its platform a few years ago. Now other manufacturers, including Crestron, Clare Controls, and Leviton have kept pace with their own partnerships. As a result, more dealers are selling locks on a regular basis, he said. With security features often the first concern for homeowners, these technologies can serve as a step toward selling further automation services. This factor, along with some of the different skills necessary for security installation make a compelling case for partnering with security professionals in the local market, or investing in a dedicated staff for security. Lutron has observed many security professionals looking to offer their clients a more integrated solution, including lights and shades. “As a result, we are now working with several alarm panel companies to make that integration as seamless as possible,” said Michael Smith, vice president, residential, Lutron. “Additionally, Lutron’s new line of battery-powered shades is a great solution for integrators who are new to automated window treatments. It keeps them current with home automation trends and helps increase the amount of each sale.” Hunter Douglas is also taking the partnership approach by matching AV integrators with trained shading professionals. “The best projects are when an AV integrator works alongside a window treatment professional,” said Paul Kenline, Hunter Douglas’ product and brand manager for automated systems. The designer-friendly nature of Hunter Douglas products supports this collaboration. “You wouldn’t call a plumber for electrical work, in the same way, you wouldn’t call an AV integrator for home fashions advice, especially at the window,” Kenline said. “It’s not just about covering a window with a simple roller shade. Hunter Douglas has dozens of product lines and hundreds of options from which to choose.” Creating the Backbone The increase in connected devices around the home has created a necessity for strong networking solutions to form the backbone for residential systems. Nick Phillips, VP sales and marketing for Pakedge Device and Software summed it up well. “The fact that Pakedge exists right now is the clearest indicator that the network is one of the biggest concerns,” he said. Not only does Pakedge exist, but the California-based networking technology provider is celebrating 10 years in business. Over the years, Phillips said there’s been a gradual ramp in business from custom integrators–its only sales channel– and the last five or six years, “things have really accelerated,” he observed. Sarah Fleishman, director of marketing for Access Networks, pointed to research by Strategy Analytics indicating some four billion Wi-Fi-enabled devices in use worldwide, predicting that this will grow to over seven billion by 2017. “If the home network was a category that could be largely overlooked 10 years ago, today’s integrators are no longer afforded this choice,” she said. The transformation of the custom install business presents an opportunity for recurring monthly revenue (RMR), which ihiji uses as a model for its networking service, offering many benefits for both the integrator and their customers, noted Michael Maniscalco, ihiji’s VP of technical operations. To support its RMR business model, ihiji instructs CEDIA courses on the subject, offers various free webinars on service contracts, and has created a contract template as a resource kit to help integrators take advantage of the model. IP networking solutions provide another angle for recurring revenue opportunities for Luxul, with their inherent upgrade paths. “Now with a reasonable infrastructure investment, an integrator can easily deliver only the solutions the customer needs, while having the ability to easily add more capabilities and services later on,” Luxul VP of marketing Clark Roundy said. “This upgrade path, along with more IP-based solutions, gives the integrator an abundance of opportunity to not only increase their business through new customers but leverage old ones for additional services.” Roundy recommends that AV integrators increase IP competence with themselves personally and within their organization. A foundation with IP devices opens the door for opportunities well beyond networking services. Above and Beyond the Obvious AV control, energy management, lighting, shading, security, and home networking is a pretty extensive list of technologies integrators can reach for when servicing the technology needs of today’s homeowners. But there’s still more. Just during the past 10 to 12 months, Electrolux Central Vacuum Systems has experienced “significant growth,” from AV integrators, according to Larry Hartley, senior director of sales. “Much of this is due to an expanding dealer network, especially custom installation companies. Many recognize that the resurgence in residential construction offers excellent opportunities to grow their business, even more so if they can offer homebuilders and their customers a broad product portfolio that includes central vacuum systems.” Kwikset’s SmartCode 914 wirelessly communicates with other devices in the home and can be controlled remotely. Cellular signal booster manufacturer Wilson Electronics began aggressively targeting custom integration professionals with the launch of the Wilson Custom Installer (WCI) program in 2012., Wilson’s managing director of strategic markets, Joe Banos, cited tremendous growth and awareness from integrators as a result, with 2,500 participants in the program. “Once integrators realize that offering boosters gives them another product to upsell into an existing project and that installation and understanding of the product is no more difficult than, say, a satellite TV system, then they’re very excited to start bringing solutions to people who need them,” he said. “They also find that their customers have a need for better cell coverage and signal strength indoors, as available cell signal in a home has now become ‘the fourth utility’ right along with water, electricity, and Wi-Fi.” Linear is one of the largest manufacturers of personal emergency reporting systems (PERS), for those integrators with opportunities to support home healthcare services for clients. “We have a strategic business unit dedicated solely to health and wellness technologies, which represent a major growth segment as our population ages and uses technology to stay at home later in life,” Paulson said. As custom AV integrators look to new product channels to grow their businesses and consumers are eager to automate their lifestyles more and more, the breadth of technologies integrated into the home continues to expand. With that extension, the opportunities for custom installers grows as well. Manufacturers and industry associations are working to sustain these new prospects through various training, support services, and new products. As new ground is charted in the industry, new resources and other assistance is available to help advance the business. “Without question, education and training are key,” said Kwikset’s Goldman. “Basically, integrators need to get themselves educated and determine what training opportunities are open to them in order to understand the automated space, as well as what new products are available.” Even a little a friendly advice is always available from within this tight-knit industry. IC Realtime’s Sailor encourages dealers to “Embrace multiple levels of technology. Try to become fluent in all things. If you stay still, you are sure to get run over.” Lindsey Adler is associate editor of Residential Systems, Systems Contractor News, and Healthcare AV. SubscribeFor more stories like this, and to keep up to date with all our market leading news, features and analysis, sign up to our newsletter here.