The personal computer has become a ubiquitous fixture in most homes these days. With falling prices and a growing cache of features that stretches beyond word processing and gaming, the PC is much like the microwave: once a luxury, now a necessity. The image shift hasnt been lost on custom installation dealers, who are increasingly tapping into the potential and power of PC to give their systems a boost.
In an effort to determine to what extend installers are incorporating PC technology into the solutions they offer, Residential Systems teamed up with research firm Park Associates in October 2005 for an installing dealer survey on the topic. With a total of 250 qualified residential systems installers responding, and with an eye on industry eventssuch CEDIA EXPO and EHX 2006it becomes clear that the convergence of consumer electronics with information technology is in full swing among CI dealers.
More than 70 percent of dealers responding to the survey currently offer some form of PC-based solution. Approximately one-third of those who provide these solutions also offer entertainment PCs, while another third offer both entertainment PCs and standard PCs. A final third provide only standard PCs for their projects. Of the 28 percent of dealers who do not currently offer PC-based solutions, nearly 30 percent have plans to do so in the near future. If these plans are fulfilled, 80 percent of dealers will be offering some form of PC-based solution by 2007.
Even with such positive projections, the adoption of PC technology by CI dealers is still in the early stages. Those with more IT experience are more likely to implement PC-based solutions. Meanwhile, dealers currently incorporating PCs into their offerings are typically doing so because they feel that the technology adds value. Many of those not offering PCs as an option, but who plan to in the future, are doing so under a pinch. Manufacturers are angling for integration of PCs into entertainment and control systems, and installers feel that if they dont go along with it, then the competition will (see Figure 1). A significant amount of installers in both campscurrently offering and those planning or considering itare also just trying out the technology to see if it works for them.
It is important for manufacturers to work closely with dealers to understand the features and functions that they require from PCs and related systems. Installers serve customers who demand and are willing to pay for performance, quality, reliability, elegant styling, and most important, ease of use. Manufacturers can take lessons learned in this channel to other markets and broaden the appeal of merged PC-CE systems.
Of the applications supported by PC technology that installers integrate into their solutions, content storage/distribution and control functions rank number one, with security systems and control applications also being zeroed in on. It is yet to be determined, however, what doesnt work and the key tradeoffs installers face when coupling PC solutions with their systems.
Although more than 70 percent of installers offer PC-based solutions, not all actually sell the PCs themselves. More than half of the respondents to the survey that install, connect, or integrate PCs into their systems also sell the PCs, while 44 percent do not sell PCs, but connect or integrate PCs that customers acquired elsewhere or already owned.
Prior research shows that installers have great influence on customers product selection and often make final decisions for their clients, indicating that 44 percent of installers not actually selling PCs are instrumental in which one is actually chosen. Installers participating in the survey listed Dell, Hewlett-Packard, and Alienware most often as their brands of choice among PC manufacturers, with a smaller number of installers selling PCs that they build in-house.
The residential systems industry itself is looking toward solid growth over the next year. Respondents to the survey anticipated 17 percent growth in overall sales in 2005 over 2004. This increase is on top of a 13- to 15-percent increase in 2004 over 2003 sales. The increases come on a wave of new home building that has been occurring across the U.S. over the past few years. In June 2005, dealers reported a 15-17 percent growth in sales for the first half of 2005 versus the first half of 2004.
CI industry sales are also on the rise, even as a cloudy economic future looms. Parks Associatesusing data compiled from past surveys, extensive consumer research, and general industry, such as financial reports and U.S. government dataprojects that the industrys revenue will hit approximately $9.6 billion by the end of 2007 compared with $7.3 billon at the end of 2005.
Currently, there are an estimated 3,200 installing dealers operating across the country. Like the industry itself, this number is set to swell to 4,000 dealers by 2007. Based on survey results, the 2004 average annual revenue per dealer was over $2 million. This is set to increase to $3 million by 2007. Driving this growth is robust consumer demand, expansion into less costly systems thereby broadening the served available market and the mergers/acquisition of dealers to form regional (rather than local) operations that build economies of scale to improve competitiveness.
Llanor Alleyne is managing editor of Residential Systems in New York City.