Electrical contractors at the forefront of their industry understand the need to keep abreast of new trends and technologies. Research demonstrates there are profitable opportunities for contractors who offer electrical services that builders and project owners need, but that are outside the realm of traditional work.
Consider residential automation. The 2006 Consumer Electronics Association (CEA) State of the Builder Technology Market Survey reports that, in 2006, homebuilders significantly increased their offerings in the areas of home automation, automated lighting controls and energy management, all of which can be provided by either electrical contractors or specialty contractors. Despite a sharp reduction in new housing starts in 2006 (down 14 percent from 2005), overall adoption of installed home technology continued to increase, with more builders offering more home technologies (such as residential automation) than ever before.
While the National Association of Home Builders projects the new housing market to decrease another 11 percent in 2007, growth is predicted to continue in the consumer electronics industry in 2007 by 6.5 percent. Discerning electrical contractors may determine this is a place to reclaim revenue lost in the soft building market. Builders may be building fewer houses, but technologies like residential automation can allow ECs on the cutting edge to make more money on each project, especially as homeowners turn to remodels and retrofits to make their current homes more up to date.
Types of automation
Many technologies and devices fit under the umbrella title of “residential automation.” Perhaps the oldest and most established of these integrated technologies is whole-house lighting systems, which dim and/or turn lights on or off or control lights in groups; both ambiance and energy savings are the attractive elements of this feature. Residential automation also includes video and audio distribution systems, with which homeowners may select incoming or stored videos or music for distribution at varying locations and volumes.
On the purely functional side, residential automation also can include security and surveillance systems, through which homeowners can check security zones from anywhere at any time, arm and disarm the system, bypass zones, and send panic messages in an emergency. Similarly, an interfaced camera system can supply views of a person at the front door or pool area as well as monitor a nursery or an elderly parent’s sitting room from anywhere in (or away from) the house.
The modern energy economy and the desire to be more green make the climate control option of residential automation attractive. It allows a user to check the weather forecast and current temperature (indoor and out), then manage thermostat settings and schedule temperature adjustments accordingly. It can manage daylighting and shading devices, as well, such as automatically closing blinds to block direct afternoon sunlight in the summer, and then reopen them to maximize lighting in the morning.
Perhaps the best analogy for the potential of home automation is to compare it to the automation that we all expect in a quality automobile. From the driver’s seat, a user is within an arm’s reach of seamless integrated access to individualized climate zones, a complete distributed and customizable audio system, headlights that come on and off automatically in response to the environment, GPS systems, and remotely controlled locks and windows. In fact, these conveniences no longer impress us; it is only their absence that draws our attention—and irritation. Residential automation firms boast that they can provide that level of convenience, control and security to homeowners.
There are three types of delivery systems for residential automation: powerline carrier systems, wireless and those hardwired with communications cable.
There are multiple powerline carrier systems, including established technologies such as X10 and Universal Powerline Bus (UPB). X10 signals involve short radio frequency (RF) bursts over power lines, which represent digital information. The UPB method transmits digitally encoded information as a series of electrical pulses (called UPB pulses) that are superimposed on top of the normal AC power waveform (sine wave). Both of these systems—but not all powerline carrier systems—are nonproprietary, each with hundreds of compatible devices on the market from multiple manufacturers.
Wireless systems include Z-Wave, an interoperable wireless communication protocol that uses RF wireless transmissions and was developed by the Danish company Zensys. The Z-Wave Alliance is a consortium of more than 125 independent manufacturers who have agreed to build wireless home control products based on the Z-Wave open standard for all types of devices.
Hardwired systems (with structured communications cables) that do not use wireless technology certainly can exist in theory, but in reality, it is hardwired/IP wireless hybrid systems that will dominate in our increasingly Wi-Fi/cell phone/ZigBee-driven world. IP-based systems currently are playing catchup to other pre-existing systems (X10 was developed in 1975), but who doubts that IP/wireless technology is the wave of the future in many areas of life, despite its comparatively recent arrival? IP-based systems include manufacturers and products such as Lifeware, Control4 and Crestron.
Tying it all together
Simple automation (such as devices that require individual dedicated remotes and/or keypads) and automation systems of years past tend to lack sophistication due to insufficient integration. PC-based platforms with graphic interfaces have changed that, making modern automation systems highly integrated, visual and easy to use.
For example, some IP-based systems use Windows Media Center Edition (MCE), which comes preinstalled on a Microsoft Windows Media Center personal computer. It functions out of the box as an all-in-one PC and entertainment center for an entire home. The Windows Media Center offers all of the computing power of Windows (including Windows-based programs, Internet browsing, e-mail access, etc.), while also enabling home digital entertainment on a PC (such as watching DVDs, recording TV, listening to music, sharing digital photos and the like). Using the Media Center Edition, systems such as Lifeware interconnect electronic devices throughout a home to a single brain that users can control from devices, such as a TV screen, an office PC or laptop, PDA, touchpanel or an Xbox 360.
Whatever platform an automation system uses, the quality of its graphics makes all the difference in its appeal and acceptance by users/homeowners.
“The graphic user interface is critical,” said Kerry Moyer, senior director of strategic relationships with the Consumer Electronics Association.
Money on the table
The continuing computer revolution, the Internet boom and the wireless boom have changed the entire landscape for residential automation in recent years. What used to be an exclusive creature comfort for the affluent now is affordable for much of the middle class.
But, few electrical contractors have demonstrated much interest in residential automation systems. That leaves Ralph Peragine, director of technical service with the Long Island-based Smart Home Systems, shaking his head: “[Electrical contractors] need to realize that it is all just low-voltage electrical work.”
“This is an open-ended market,” he said. “Standard installations of our systems easily range from $5,000–$30,000 for materials alone, with many installs costing more than that. Why would an EC want to do all the work of putting in the electrical and low-voltage cable that will service an automation system and then leave the profits of providing the actual system to another contractor?” The 2006 CEA State of the Builder Technology Market Survey reports that the average home automation installation costs more than $7,000.
Similarly, documentation from Lifeware reads, “Other than the building contractor, the electrician is one of the first contractors consulted during the planning of a new home or remodel of an existing one. For this reason, the ability [of the electrical contractor] to upsell its role in the building process to include installation of lighting, distributed audio or even an entire connected home network makes each project more profitable and provides a valuable stream of revenue ... . It’s simply a matter of asking homeowners if they are interested in upgrading [to a home automation system].”
“We would love to work with more electrical contractors,” Peragine said.
“[However,] the systems that we sell are designed to be understandable by entry-level installers. They are accessible, understandable and profitable. And they are not going away, so someone is going to make money off of them,” he said.
Peragine is not alone in his passion. Most residential automation manufacturers and distributors are eager to add additional certified installers. They recognize electrical contractors are an untapped resource, and they believe their industry offers mutually beneficial opportunities to ECs. Training times for certification vary, depending on the manufacturer.
Research supports them in that position. Referring again to the 2006 CEA State of the Builder Technology Market Survey, it is contractors—not builders—who are marketing home technologies to new homebuyers. Statistically speaking, there are simply no builders (0 percent) who proactively market new home technologies, and very few (6 percent) even provide information on home automation to homebuyers upon request. Instead, they rely exclusively on the installation contractors to market and sell home technologies to new homebuyers.
Nonetheless, the overwhelming majority of those same builders (84 percent) say home technologies are important in marketing new homes and that they are having a positive impact on builders’ revenues. More than 40 percent believe home technology offerings increased their revenues, and most agree home technologies have become an indispensable tool for marketing new homes and a necessity for competing in the marketplace.
Though electrical contractors will need to decide for themselves if residential automation is an industry they should pursue, there is profit-making opportunity there. Contractors that need or are seeking additional revenue sources may do well to consider this growing field. EC
MUNYAN is a freelance writer in the Kansas City, Kan. area, specializing in business writing and telecommunications. He can be reached at www.russwrites.com.