Looming Connected TV Platforms Seen Among Threats to Custom Install Models

Specialty electronics dealers have to rethink their value to customers because it’s going to be changing based on “what products we sell and what services we provide,” Daniels said. Disruptive technologies are impacting dealers’ businesses “at a much faster pace” than in the past, and product life cycles are shrinking, Daniels noted. Dealers need to stop doing things the way they always have “to maintain a sustainable business,” he said, encouraging fellow retailers to “acknowledge the threats and find opportunities.” Unless integrators accept that the way they run their business today is going to be “radically different” from the way they run their businesses five years from now, they're going to have a very difficult time “adapting and competing,” Daniels said.

Daniels cited four examples of disruptive technologies that are going to have “big impacts” on the custom installation business in the next few years, including programmable thermostats, LED lighting control, connected TV platforms and advanced wiring products. Already the Nest thermostat at $250 does “way more things than any of the technologies that we're out there deploying in our customers’ houses, and it happens to be really cool looking,” he said. Typical controllable thermostats installed today by integrators don’t have cool appeal, he added. The Nest’s $1 app allows homeowners to do energy management, “and any idiot can install it,” he said.

Lighting, an area that’s integral to integrators’ home control solutions today, is also undergoing significant change, he said. While integrators in the room indicated they thought lighting control would remain an important part of their income stream in five years, Daniels challenged that assumption with an example from the future. “If any idiot can install a $100 light bulb and control it off an app,” and the bulb doesn’t require the infrastructure that current lighting control systems do -- including panels located in a low-voltage room, dimming modules, control points or programming expertise -- “do we have a viable business model in five years selling $100,000 lighting systems?” he asked. “Maybe, maybe not.”

Daniels recently visited the Philips Innovation Group in Amsterdam and said a key Philips initiative is “how to turn the $1 light bulb into a $50 light bulb” by converting to LED technology, making the bulbs “smart,” “making them work off ZigBee” and distributing them widely through Lowe’s “and every other store you can name.” In the near future, consumers will take light bulbs out of a box, plug them in, and be able to change light colors and dimming levels -- all without the need for a pricey control system, he said. “It’s mass-market,” Daniels said, “and the mass market is now driving the high end of our marketplace.” The iPad and apps today are the driving forces behind what integrators’ customers “accept as technology that can be deployed easily in their homes,” he said.

Daniels said Philips doesn’t see high-end companies like Lutron as lighting control competition for the future. Instead, Westinghouse and Siemens -- “multi-billion-dollar companies selling light bulbs -- are who they consider to be the lighting control competition for the next five years,” he said. How that will play out in the custom electronics market remains to be seen, but it will have an impact, Daniels said. “Whether it’s on the $50,000 or the $1 million project … that we don’t know yet."

Daniels raised the specter of the long-rumored Apple TV as another disruptive technology that could threaten integrators’ business model in the near future. Should a product like that hit the market, “Not only do I not make any money selling televisions, there’s a potential I'm not going to make any money selling anything that has to do with connecting to a television anymore,” he said. Daniels referred to Apple, Samsung and Sony as all trying to “get control of content,” and in doing so, the companies will use TV hardware as “a loss leader,” he predicted. That could leave integrators “marginalized,” he said.

An Apple TV or a Samsung Global TV with built-in cable tuner, satellite tuner and streaming content -- all integrated on one platform that works on every networked appliance and TV in the house - “replaces the need for the type of hardware integrators sell today,” he said. Such a product could be a year or two away, and then, “what do they need that $20,000 worth of [video] switching gear for?” he said. Today it takes specialists like Azione members to deploy networked video systems in homes, but that revenue stream “may be going away really, really quickly,” he said.

HDBaseT connectivity also played into Daniels’ fear of the future. “Anybody can design a system that takes one cable” to connect to A/V systems throughout the house, he said. If enough manufacturers adopt HDBaseT, then consumers “don’t need our prewire teams, our engineering, our design or our complexity anymore because they can do it with one wire that’s sold at Lowe’s and everywhere else,” he said. While HDBaseT offers opportunities for integrators, it may also “marginalize the need for us from an engineering and infrastructure basis” for custom electronics products, Daniels said. As a result, integrators should think about potential changes in prewiring needs and how that affects hiring practices in the future, he said.

Azione Unlimited Conference Notebook

Sharp will preview WiSA (Wireless Speaker & Audio) home theater technology in a Blu-ray player at the Azione Unlimited conference in St. Louis Friday, said Richard Glikes, Azione president. Sharp reportedly made a similar presentation at the Home Technology Specialists Association meeting last week in San Antonio. Glikes touted the fledgling technology as the kind of product category for which Azione wants to serve as a “launch vehicle” to lend a level of exclusivity to the channel. While there have been reports that Sharp, a founding member of WiSA, could launch a WiSA-equipped Blu-ray player at the CEDIA Expo in September, Anthony Favia, senior product marketing manager for Sharp’s Home Entertainment Group, told us the company is in an “exploratory” stage only. On the status of WiSA product introductions from other association members, WiSA Association President Jim Venable told us: “Commercialization of the WiSA technology is well under way and we expect to see a number of products launched by the end of this year.” WiSA-equipped gear will include transmitter and receiver products “across a variety of consumer electronics categories such as loudspeakers, Blu-ray Disc players, and DTVs,” he said.