Points of Confluence in the Resi Market
In the residential systems market, certain systems are bringing security dealers and electronic systems contractors into the same circle.
Traditionally, security dealers and electronic systems contractors (ESCs) have operated in different circles, and there hasn’t been much cross-selling of systems that are germane to each industry.
While residential security technicians typically install several systems per week and a median project value is $3,400 — ESC technicians, also labeled “A/V contractors” or “custom electronics installers,” may work on a single project for weeks at a time and their median project value is $10,000. Beyond the small number of security dealers who successfully operate a custom residential division within their security business, few others routinely take on such systems — and few ESCs install security systems as well.
It may seem as though these two industries have little in common, but that is changing. Their business models differ significantly; however, security dealers and ESCs are finding common ground with systems such as residential video, home healthcare and intercoms, among other categories.
We now know this through a study conducted by Indianapolis-based Custom Electronic Design & Installation Association (CEDIA), which SDM supported through collaboration on the survey base and by publication of the results in this and the next few issues. The study, “Size and Scope of the U.S. Residential Electronic Systems Installation Market 2011,” provides a benchmark for the future measurement of the convergence activity. The research was conducted in the third quarter of 2011 and it spanned installing dealers from five different groups including SDM’s subscribers as representative of security contractors. (Of interest is the fact that among survey respondents, 18 percent of ESCs who are CEDIA members and 3 percent of ESCs who are non-CEDIA members indicated that security/alarm installation is their primary business.)
From the study, we know that 65 percent of security dealers and 69 percent of ESCs indicate they sell residential web cams/IP video cameras. Security dealers, however, earn an average of 23 percent of their residential revenue from video cameras, whereas it only constitutes 7 percent on average of an ESC’s revenue. Similarly, both industries say they are involved selling alarms, intercom and distributed audio systems.
Where the convergence becomes apparent is when the study’s respondents were asked about which new product categories they plan to start offering within the next 24 months. Two of the top three products/systems selected by both groups were the same: Home health monitoring systems and Web cams/IP video cameras. Not only that, but 10 percent of ESCs plan to offer security alarm systems, and 12 percent of security dealers plan to offer home theater/media rooms. CEDIA looks forward to additional annual studies that will indicate the level at which convergence is taking place in the residential market.
Look for the February 2012 issue of SDM which will feature more results from CEDIA’s study, focusing on business costs and revenues.