Meet our expert Analysts at CES

Request a briefing with the Parks Associates Analysts or a meeting with our Parks Associates Business Development Team to discuss your research needs while at CES 2011 on January 6th.

Farhan Abid, Research Analyst

INDUSTRY EXPERTISE
Home Systems, Energy Management and Smart Grid Technologies, Entertainment Systems, Home Systems Integration Channel, Home Builders

Bill Ablondi, Director, Home Systems Research

INDUSTRY EXPERTISE
Home Systems, Home Controls, Energy Management and Smart Grid, Home Security, Entertainment Systems, Home Systems Integration Channel, Home Builders and Multifamily Executives

Pietro Macchiarella, Research Analyst

IINDUSTRY EXPERTISE
Gaming Content and Services, Game Consoles, Connected Consumer Electronics, 3D TV Technologies and Services, Consumer Storage Products and Services

Laura Allen Phillips, Research Analyst

INDUSTRY EXPERTISE
Digital Media, Online Video, Digital Music, Social Networking, Consumer Storage and “Cloud Media” Services & Technologies

Brett Sappington, Senior Analyst

INDUSTRY EXPERTISE
Residential Broadband Services, Digital Television Services, Value-added Services, Interactive Technology and Services, TV Everywhere, User Interfaces, Set-top Boxes

Kurt Scherf, Vice President, Principal Analyst

INDUSTRY EXPERTISE
Home Networks & Residential Gateways, Home Networking Media (Wi-Fi, G.hn, HomePlug, MoCA, etc.), Set-top Boxes, Connected Consumer Electronics, Consumer Storage Products and Services, Media Server Hardware and Software, Value-added Services, Online Video, Consumers and Digital Entertainment, Digital Home Technical Support Services

Harry Wang, Director, Health & Mobile Product Research

INDUSTRY EXPERTISE
Digital Health Products and Services, Portable and Mobile Access Platforms and Applications, Digital Imaging Products and Services

Heather Way, Research Analyst

INDUSTRY EXPERTISE
Digital Media, Emerging Advertising Technologies, Digital Video Advertising

Interactivity, competitive business models, and value-added services driving expansion of the digital lifestyle

Consumer demand for interactivity in entertainment and control at home is driving adoption in technology products and services, according to Parks Associates analysts at CONNECTIONS. The conference focused on access services, video delivery, online content services, advertising, digital health, digital media, and home systems. Parks Associates forecasts over 400 million households worldwide will have digital television services by 2012.

ADVANCED TELEVISION
Kurt Scherf, Vice President and Principal Analyst, highlighted key developments in advanced television services and discussed future areas of focus, including bandwidth issues and the “interactive experience” enabled by VoD, widgets, and advertising. Currently the lack of easy, high-quality connections between VoD services and the TV is a key inhibitor to the growth of the broadband VoD market. Parks Associates expects to see an increase in products and services aimed at connecting content to platforms in 2008 and beyond.

PORTABLE DEVICES
John Barrett, Director, Research, highlighted recent findings from National Technology Scan 2008, a telephone survey of U.S. households. “In the past year, approximately 45 million households purchased a mobile phone, 29 million purchased a digital camera, and 27 million purchased an MP3 player,” Barrett said. “Portable devices are clearly capturing the consumer's attention right now more so than stationary devices."

BROADBAND
Michael Cai, Director, Broadband and Gaming, spoke about the changes in the broadband market. He predicted the next competitive cycle will center on bundles and value-added services. “Telcos will focus on multiplay bundles and value-added services, forcing a response from cable MSOs,” Cai said. “The increased importance of customer retention will lead to new and more intense rounds of loyalty programs and other customer retention tactics.”

HOME SYSTEMS
Bill Ablondi, Director, Home Systems, highlighted growth in home systems, stressing their expansion into broader markets, including areas such as multiple-dwelling units, which represent new opportunities for digital systems and services. Also, remote home monitoring services offered through telco/MSO service providers will revolutionize the traditional home security business as broadband services disrupt yet another business model. Parks Associates forecasts that self-monitored households will nearly triple to more than 6 million by 2012.

PERSONAL HEALTH
Harry Wang, Director, Research, discussed personal health solutions. Parks Associates predicts this space will achieve $2.5 billion in U.S. device and service revenues by 2012. “There are significant barriers to overcome, but consensus is forming that technology can help empower consumers and health professionals in achieving better care at lower costs,” Wang said. “Now the technology industry must work with the health community to extend adoption to a broader patient population and convince the health ecosystem of the value of personal health technologies.”

Parks Associates analysts present insights on broadband, digital content, advertising, home systems, and digital health at CONNECTIONS™

Parks Associates’ leading analysts will explore the implications of high-speed connections and the exponential growth of digital devices in homes as a kickoff to CONNECTIONS™: The Digital Living Conference and Showcase.

The session Analyst Roundtable: Top Trends to Watch, Tuesday, June 24, will feature analysis of the digital living industry and focus on trends in broadband and access services, video delivery, online content services, advertising, digital health, and home systems.

The session will feature Kurt Scherf, Vice President, Principal Analyst; Bill Ablondi, Director, Home Systems Research; John Barrett, Director, Research; Yuanzhe (Michael) Cai, Director, Broadband & Gaming; and Harry Wang, Senior Analyst.

Consumer habits in entertainment are changing in accordance with this surfeit of new devices and services. As of 2007, 50% of U.S. Internet households were watching short video clips online, and 25% were downloading short video files. DVR household penetration reached over 40% of the U.S. online population in 2007, further increasing the place-shifting aspect of video consumption.

Parks Associates designed Analyst Roundtable: Top Trends to Watch to offer a complete and coherent presentation of these digital markets as well as the perfect primer for CONNECTIONS™.

High-End A/V: Moving to the Masses

by Bill Ablondi, Director, Home Systems Research, Parks Associates

Technology advancements, widespread adoption of broadband Internet access, and consumer desire for enhanced entertainment experiences will drive current high-end entertainment capabilities into mainstream markets.

What is a high-end entertainment system? That question can be answered in a variety of ways. We found that out as we started research for our High-end Entertainment Systems: Analysis and Forecasts market report at the end of 2007. For some people, “high-end” meant systems bought at a specialty retailer, e.g., Bang & Olufsen, Tweeter, or Ultimate Electronics. For others, price determines a high-end entertainment system — $5,000, $10,000, or more for a TV with a 5.1 surround-sound system. On the other hand, audiophiles think of a critical listening room equipped with Krell components and B&W loudspeakers when asked about high-end entertainment. For our report we settled on the following: home theaters and audio systems that are typically installed professionally as opposed to purchased at retail or online and set up by users.

Parks Associates has been conducting research of home systems integrators/installers for over six years in order to understand what people with large budgets want and don’t want. Customers of the home systems integration channel are spending an average of $12,000 to have audio systems installed, $25,000 for home theater installations, and $30,000 or more for whole-house control systems. Clearly they are upper-income households, or they wouldn’t be able to afford these systems. Why does Parks Associates track consumers in this rarified market stratum? This high-end market is a leading indicator of products, services, and capabilities that will succeed in mainstream consumer markets when prices, packaging, and delivery methods match what typical consumers can afford.

Plummeting flat-screen TV prices are a good example of how technology advancements are bringing high-end products to mainstream markets, enticing millions of households to pitch their tube and hang a plasma or LCD TV on the wall. Once the screen is on the wall, adding a multichannel sound system with surround-sound speakers is a natural progression. The next step is a storage system for music, videos, and family pictures, a.k.a. a media server. Finally, once all of this is in place, how about a system for distributing audio and video content to other rooms in the house? How can anyone resist?

As installed home theaters and multiroom audio systems become more affordable, a broader market of consumers at lower income/wealth levels will open up. This trend is evident as we look over results from numerous Parks Associates’ consumer surveys. Ownership of all forms of entertainment systems is extensive, and intentions to purchase larger (40+ inches) flat-panel TVs and multiroom audio systems are high. Parks Associates’ Digital Media Habits II (3Q/07) study revealed that more than 20% of broadband households in the U.S. planned to purchase a flat-screen TV within 12 months and 66% intend to buy one 40 inches in diameter or larger. With this research in mind, we see a natural evolution in the high-end A/V market as systems become more affordable and accessible to a larger base of customers.

As mentioned, the vast majority of current high-end A/V customers are wealthy … they have to be in order to afford the systems. In addition, most installed entertainment systems are currently sold into the new-home construction market or into homes going through a major renovation. This mix will change as wireless, power line, and other “no-new-wires” technologies gain more traction in the market, particularly among home systems integrators who are influential in determining which products and technologies are incorporated in the systems they install.

Most single-family homes in the U.S. are detached units owned by those living in them. However, there are 300,000-350,000 living units built in multiple dwelling units (MDUs) annually added to approximately 18 million existing rental units. This market is sizeable and one that can be better addressed by “no-new-wires” approaches for a couple of reasons. People will be able to take their entertainment systems with them when they move, and those living in units where they can’t open the walls will have an alternative.

Parks Associates’ research of broadband households in its Global Digital Living™ II survey reveals that broadband households are significantly more interested in enhanced TV features, including video-on demand, high-definition channels, and digital video recording (DVR) capability, than are households without broadband access. In addition, younger broadband households have high DVR penetration (50% of those 25-34) compared with older households. These results point to a high propensity for broadband households to upgrade their entertainment systems when they can afford them.

Further in the future (2015-2020), not only will the capabilities of high-end entertainment systems become more affordable to the top 10-15% of households by income level, but they will also become relatively easy to set up by consumers. Parks Associates’ definition of high-end entertainment systems (installed systems) will need to change. The situation is comparable to that of mainframe computers. The capabilities once confined to water-cooled computers in large glass rooms are now in slender laptop PCs we can carry anywhere. Technology changes the market … and our definitions.

This article was published for the 2008 CONNECTIONS™ Conference Industry Insights, the official publication of CONNECTIONS™.

Wireless & Powerline Controls: View From the Channel

Wireless & powerline control technologies have been around for years; adoption among home systems integrators has been limited. What’s the outlook for 2008?

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™.