The Disney House of the Future dazzled homeowners when it opened in 1957. This year, and into the near future, it will take the right business model for electronic home system contractors to hit the right mix of lifestyle and technology.
Photo Courtesy of Disneyland/Yesterland Archive 

Just envision the business opportunities in the house of the future.

You won’t find traditional furniture styles or old-fashioned appliances. Everything is ultra-modern, a blending of lifestyle and technology. Step up to the home’s four equal wings “floating” above the beautifully landscaped grounds and waterfalls. Enter the ultra-modern dining and family room, a comfortable place where the family plays, rests and dines. Check out the media room, with its giant, wall-mounted television screen. Then step out back to view the sleek and multi-functional outdoor living space.

Holy Jetsons! Want music? Just spin the latest record on that hot $79 Hi-Fi player. Or watch the Bing Crosby TV Show, sponsored by Edsel automobiles, on an enormous 14 inch CRT display.

Whoa. What time is this? It’s 1957 and you are visiting Disney’s Yesterland and, ironically, its House of the Future exhibit, where hundreds of thousands of John and Janes, and their two perfect children, caught a glimpse of what was to come down the road during the late 1950s and 1960s.

Today, that road goes through Las Vegas and this month’s Consumer Electronics Show, where the NextGen Home, encouraged in large part by the U.S. Department of Energy (DOE), moved from last year’s low-rent convention parking lot to a comfy South Hall indoor location. Among sponsors: Savant Systems, Carrier, Leviton, Whirlpool, Kwikset, and SunBright TV. Like the House of the Future 55 years ago, walking NextGen was an experience; it fact, iShowMedia, its producer, insists on calling it the NextGen Home Experience.

And, the moneybags at DOE showcased it as the Energy Miser Home, where there are practical and affordable actions that homeowners or their electronic system contractors (ESC) can take to lower energy costs while evolving with smarter systems, appliances, and devices. NextGen (at www.nextgenhome.com) emphasized two overarching opportunities for ESCs that go beyond home security and traditional home automation: the growing allure for home energy management and control as well as the emergence of aging-in-place products and services. Both have the potential for recurring monthly revenue (RMR) in addition to design and installation revenue.

These and other trends were covered more generally in a December 2011 smartHOME report, Crystal Balling 2012: Part One

What happens within the consumer electronics industry as the connected home and sensorization takes over will impact electronic home system contractors and the wants and needs of their homeowner clients.
Photo Courtesy of CEA 

Now it’s time to microscope inside some business, homeowner, competition, and technology trends that will make an ESC difference, to varying degrees, and help companies squeeze more out the future now.

In an all-encompassing way, Lee Rainie, director of the Pew Research Center's Internet & American Life Project, firmly believes many things have transformed the worlds of networked individuals. But he sees three critical pillars: the spread of broadband; the rise of mobile connectivity; and the emergence of technological social networks. All will play a role this year and into the near term as ESCs adjust to myriad issues.

For example, in a ground-breaking and detailed white paper report, Indianapolis-based Custom Electronic Design & Installation Association (CEDIA) visualized where its members should be in 2016 when “the connected home truly arrives,” predicts the just released report.

“We created the ESC of 2016 white paper to serve as a tentative road map illustrating potential opportunities and threats for our members that will emerge over the next four to five years.” says the association’s Senior Director of Emerging Trends Dave Pedigo.

He adds that, for some, “the business model will change, move more toward IP and application-based products. Installation will not go away, nor will design.” But there are diverse challenges that many ESCs will face.

Profit margins. CEDIA members are accustomed to receiving a fair profit wherever they add value. Those profits are gradually eroding, partly due to consumer expectations of lower price points.

What’s the niche? The CEDIA member of 2016 must decide the market niche (price range) they are in and optimize their businesses to provide “best-in-class” systems and services, whether high margin/low volume (the traditional model) or low margin/high volume.

Competition. Most ESCs must become the trusted provider for all electronic technology in the home. If the scope of work is limited, other providers could take control of that client and provide a full-service offering, contends the report.

This can include firms such as Verizon, Comcast/Xfinity, Time Warner, and Canada’s Rogers Communications. Home technology firms, which in the past specialized in home area networks (HAN) and home computers, are branching out to full home services, including security and automation.

So, while Wi-Fi, cable modems, and DSL — stitched together with routers — are an essential part of many HANs, the home IT folks, ranging from Best Buy’s Geek Squad and Comcast/Infinity’s Signature support to small businesses, are evolving into security and connected home systems beyond computers.

A member of CEDIA, Bill Weingarten, president of HomeTech, Evanston, Ill., sees moving into alarm panels and home systems as a “natural transition. The smart home is really two worlds colliding.” His firm has been watching home automation for many years from the perspective of computer service support on a residential level. “The computer side continues to become less expensive and moving to the cloud. Full service makes more business sense” as HomeTech and others aim at moving from just networking to the heart of the home at the panel.

There needs to be “an optimal blend of technical competence and value for money to the end customer because of the complexity and inter-connectedness of current technology as well as increasing price pressure from very large consumer electronics companies, according to the CEDIA white paper.

Supply it all. So there will be increased demand for a “one-stop shop” type of contractor that can handle low-voltage and high-voltage needs. This is especially true as many traditional custom installations transition to turnkey jobs and customers expect shorter installation timelines.

Service is a growing opportunity, too. This is particularly important to note as ESCs increase profitability of their services to offset the decline in product margins, according to ESCs in 2016.

Many industry observers believe that home energy management and controls, as a monitoring service, will blow past the plateau of home security monitoring. And, the next step after that is aging-in-place and home healthcare monitoring.

But, if a home alarm panel could talk, alright some do, it would quote Mark Twain: The reports of my death are greatly exaggerated.

Says Bill Graham, senior vice president at Guardian Protection Services, Warrendale, Pa., “There is obviously emergence of new technologies on the security panel bringing more affordable services to the homeowner.”

Ironically, as home systems further diversify, with more complex systems moving beyond the typical luxury home market, as more home and mobile devices connect in, those workhorse alarm panels become even more critical as a multifunctional hub, according to Tricia Parks, chief executive officer at Dallas-based Parks Associates, who recently previewed research for smartHOME Magazine of what U.S. broadband householders want.

Home security and monitoring service ranked on top as “most appealing,” according to the Parks survey of 2,500 heads of households. It out-polled energy management and control. And since there are more so-called enthusiasts, naturally, for IP concepts among broadband households, security services such as alarm monitoring, video monitoring, and remote control and access also out-polled various levels of home energy monitoring.

“Bundling will make an even greater impact,” says Parks.

And, while home security alarm monitoring may, in the long run, play a lessor role when homeowners justify their investment in more all-encompassing home systems, the alarm panel will nonetheless naturally get smarter, more “talkative” across systems and devices, and more functional thanks in large part to myriad apps downloaded directly to the panel or indirectly through smartphones and other mobile devices.

It’s a matter of change, which can be seen, as one example, in the evolution of APX Alarm into Vivint in Provo, Utah. According to JT Hwang, Vivint’s chief information officer, “back in 2007, we recognized that putting in a panel means not just security but an opportunity to provide more services.”

Using Go!Control panels from 2GIG Technologies of Carlsbad, Calif., Vivint redefined itself by enlarging its home automation and security services while increasing its recurring monthly revenue per account. Another company, Tendril of Boulder, Colo., is helping Vivint close the alarm panel loop “by giving out customers energy use data” for greater homeowner control, says Hwang, who suggests a next step for his company is alternative energy with home solar.

The panel also eases implementation of wired and wireless home area networking choices. Adds Hwang, “Our panels now have nine radios inside” for a diversity of applications. “And we are looking at more.”

Paul Dawes from iControl Networks of Redwood City, Calif., also sees value in broadband home management that expands the interactive services and recurring monthly revenue from panels. The OpenHome platform is the firm’s broadband home management software solution that enables broadband service providers and home security companies to deliver low-cost, high value interactive services.

Rich Matthews of Lutron Electronics of Coopersburg, Pa., points out how his firm has evolved from lighting to embrace a broader definition of home energy management. “It’s a growth opportunity for us and our installer base to consider anything that manages and monitors energy in a residence.”

At CES 2012, Lutron shared booth space with NRG Energy, better known as the Texas utility, Reliant Energy. NRG showed smart energy technology. Matthews matches such changes to the changes roiling through the industry more generally. “It’s all aimed at increasing the penetration into the homeowner market through use of interactive services. They [the homeowner] truly want these services.”

The bottom line, according to Matthews, is “to create a stickier customer.”

Within the CEDIA white paper report, its members, who are subject matter experts, discuss specifics the future stickiness including:

  • Distributed Audio
  • System Integration and Control
  • The Internet of Things
  • Robotics
  • Home Theater and Media Room Design
  • Digital Home Health
  • Smart Meters and Energy Monitoring
  • Software as a Service and Cloud Media Streaming
  • Retrofit Wiring and Wireless Mesh Networks
  • Remote Diagnostics
  • Home Office and Collaboration

For more information, go to www.cedia.org. The ESC of 2016 white paper is available exclusively to CEDIA members at no cost. Top level findings are shared in an emerging trends video at http://www.cediacrosspoint.com/content/esc-2016-executive-summary

“There is a move to more Internet-based sensors,” contends Pedigo. Take pressure sensors inside of beds that can Tweet a warning message to a parent’s guardian. Or home flooring containing sensors to learn and then alert to potentially troubling movement of homeowners who may need assistance.

Shawn DuBravac, Consumer Electronics Association (CEA) chief economist, agrees with Pedigo. It’s the “sensorization of things, we are building devices with more sensors” in myriad devices or around them. For example, Kinect is a “plastic box of sensors.” There are ski goggles with built in sensors that can record every ski run you take, he says. But, expect office buildings and plants to also employ more sensors that learn movement and patterns and can alert to abnormal routines.

Overall, says DuBravac, the biggest trends at the Consumer Electronics Show 2012 center around the presence of computer power in non-computing devices; interfaces and the evolution of devices back to simplification; and the prevalence of customization and personalization.

That’s all part of the “emerging of the intuitive home,” says Pedigo, who sees an important aspect as personalization, not only overall with the home and its family needs, but also drilling down to the differences of individual members of the household and their guests. This may already be playing out in the shift from home theaters to streaming audio and video in the various rooms to meet individual wants.

When considering the evolution of the home panel, Jay Kenny, vice president of marketing at alarm.com of Vienna, Va., sees development of operating systems for the home in which “security becomes an integral part.” The future? A panel which learns from the homeowner’s presence and preferences. “The system creates rules of which the homeowner can accept or not” as it adjusts along the way.

Kenny references BeClose, also of Vienna, Va. Using discreet wireless sensors placed in the home, BeClose tracks a senior’s daily routine. It allows others to check up at any time using a private, secure Web page. And, if there are any disruptions to daily life, there is an alert in real-time by phone, e-mail or text message.

Such wireless sensor networks (WSN) consist of spatially distributed autonomous sensors to monitor physical or environmental conditions, such as temperature, sound, vibration, pressure, motion or pollutants and to cooperatively pass their data through the network to a main location. The more modern networks are bi-directional, also enabling control of sensor activity. It’s a solid guess that WSNs are the real future of the smart, connected home with ESCs being the installers of the infrastructure, controls, and alarms.

While smartphones and their myriad apps were major tech pillars at CES 2012, CEDIA’s Pedigo see more. “No doubt, thin screen and smart TVs were among the most viewed products in Las Vegas this month, and these TVs can act like a computer with Internet and control panel features,” points out the CEDIA executive, who also sees consumer-oriented tablets – also a CES darling – and traditional home automation wall and table touchscreens as valuable into the future.

No doubt, there is significant impact from Internet Protocol and the Web as well as the amazing attraction for mobility, especially with those smartphones.

Dwight Sears, president of Silent Guard, Somerset, Ky., says, “We’re seeing more customers choosing many of our interactive services. Take security, for example; customers are now able to remotely access their GE installed security system through Alarm.com. They’re able to arm, disarm, and check their history, control lighting and even their thermostat from a smart device. Expect more this year,” he predicts.

This year and into the future, technology and the folks that design its application, install and service it have a greater ability to also move among home, small business and corporate clients.