by Bill Ablondi, Director, Home Systems Research, Parks Associates
Whole-home control systems are typically found in high-end, new homes – detached single-family homes and multiple dwelling units (condos, co-ops, and apartments). In a good year for homes, builders start 1.2 to 1.5 million homes, with about 300,000 in MDUs. In a good year. The past year was not a good year for homebuilding, and prospects are not looking good for another couple of years. Therefore, what about the market for controls in existing homes … the other 100+ million?
The retrofit market has traditionally been a tough one to tackle. Installing control systems meant cutting holes in walls, pulling wires through tough-to-reach places, and, most importantly, keeping customers pleased during the disruption. Parks Associates and EH Publishing’s research of home systems integrators/installers has consistently indicated that about 50% of the typical home systems integrator’s revenues are generated from new construction; 50% from existing homes (retrofit projects). Our 4Q07 Channel Monitor survey revealed that the percentage for control systems is slightly weighted toward new homes (53%).
Based on these findings, one might conclude that there is considerable activity targeting the existing home market. However, consider the lopsided ratios: more than 99% of all homes in the U.S. are existing homes, not newly built, but existing homes account for only 47% of integrators’ control revenues. Further, Parks Associates’ consumer research indicates that fewer than 7% of all households have any form of electronic controls. Clearly there is an opportunity here. An opportunity, that is, if several conditions can be met: 1) there is demand for home controls, 2) they can be installed without a major disruption, and 3) the price is right.
Creating demand needs to be the sole subject of another article ; for now, the focus is on available solutions, in particular powerline and wireless control systems requiring no new wires to be pulled through walls.
Products incorporating Echelon’s LonWorks or PCS’s UPB powerline technologies, ZigBee and Z-Wave wireless technologies, or SmartLabs’ INSTEON powerline/wireless technology have been around for years. Many of these products are very affordable when compared to high-end home controls from AMX, Crestron, and Lutron. Are home systems integrators/installers aware of these technologies, and if so, what do they think about them with respect to their control projects?
These are some of the questions we posed to dealers in our 1Q07 and 1Q08 Channel Monitor surveys. First, are they aware of these technologies? Figure 1 compares results from these surveys for selected technologies. Awareness of ZigBee and Z-Wave wireless technologies has increased significantly; Z-Wave nearly doubled in awareness level over the period. These increases are not surprising given the marketing efforts from the alliances behind these technologies. UPB (Universal Powerline Bus) from PCS (Powerline Control Systems) scored high in familiarity on the 2008 survey and has been a favorite of some integrators as a complement to their wired control systems for several years.
Few dealers are very familiar with INSTEON, a dual-mesh, powerline/wireless technology from SmartLabs, and LonWorks from Echelon. INSTEON has been popular as a do-it-yourself (DIY) technology with products available on the SmartLabs’ SmartHome website. LonWorks is popular in commercial and MDU installations in Europe and Asia, but it has launched a Digital Home initiative aimed at residential markets. We expect to see awareness of HomePlug C&C to increase during 2008 as the HomePlug Powerline Alliance plans to approve the final specification in 3Q08.
We asked dealers, in addition to their awareness of the technologies, about their opinions on using these technologies in solutions for their customers. A common theme across all technologies was dealer uncertainty about the capabilities of these approaches. We think that the underlying cause of uncertainty is resistance to change. Dealers are familiar with traditional wired systems; change requires new learning and risks potential failure in some applications. New learning coupled with risk is a huge hurdle for any business to overcome.
Often new technological approaches are adopted by those seeking to differentiate their business and/or offerings from incumbents. The home systems integration channel is growing with entrepreneurs from the ranks of IT VARs, electrical contractors, and security dealers. In addition, the retail installer Geek Squad has said it is eyeing the market for control systems; other, similar firms are also interested.
The Bottom Line: there are more than a 100 million homes in the U.S. alone not taking advantage of the convenience and savings (energy & money) home controls offer. Affordable, retrofit-ready wireless and powerline controls are a couple of pieces to the puzzle that is the retrofit market.
This article was published for the 2008 CONNECTIONS™ Conference Industry Insights, the official publication of CONNECTIONS™.
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