Parks Associates Blog

Thursday, December 21, 2006

Mass Market Home Controls … Can Best Buy Make it Happen?

On December 20, 2006, the Associated Press reported that Best Buy will launch a "ConnectedLife.Home" product that is basically an all-in-one kit allowing consumers better control over their digital entertainment and home controls applications (lighting, HVAC, etc.). An HP PC is the central controller of this $15,000 system, which will enable distributed media as well as control and remote monitoring functions. For $19.95 a month, consumers can set up the system for such applications as remote Web camera monitoring and thermostat set-back. (The remote Web camera monitoring application is one that interests us, and we've commented on the role of such players at AT&T in delivering these solutions to end-users in more meaningful and useful ways.)

With the launch of Best Buy's solution, we asked our Director of Home Systems Research - Bill Ablondi - to provide some perspective on this, with an eye on whether this particular initiative helps to drive greater middle-market growth for home controls overall. Bill's comments are below.

Best Buy's ConnectedLife.Home Rings in a New Year for Home Controls
Bill Ablondi, Director of Home Systems Research, Parks Associates

The ability to connect selected systems in the home in control networks has been available for years, but adoption has lagged behind expectations … including ours. So, with the announcement yesterday of Best Buy's ConnectedLife.Home package, does this mean 2007 will be the year of mass-market home controls? Probably not. However, Best Buy's announcement does mean is that the stage is being set for broad-based adoption of connected home systems. The home control market has lacked consumer awareness, not technical capability. Best Buy will help raise awareness among consumers of what intelligent systems can do in a networked environment in the home.

We're preparing to release in January 2007 the results of an in-depth market analysis and competitive assessment of the home controls market: Home Systems: Home Controls Update. The report is based on surveys of home systems installation channels (custom electronic systems designers/integrators and security systems integrators/installers), as well as home builders and consumers. In addition, the research team interviewed principals at the major systems providers, start-ups, OEMs and distributors to compile a holistic view of current market dynamics. This analysis provided the basis for our updated forecasts of the home controls opportunity, broken out by key segments including application, single-family vs. multi-family unit, and new vs. existing homes.

Our research shows that the U.S. market for home controllers reached $3 billion in 2005 and will grow to $3.2 billion in 2006 in the face of a very difficult new home market. Historically, home control systems have been sold into the new home market. This is still the case, but will change dramatically over the next few years as power line and wireless technologies eliminate the need to rewire existing homes in order to provide control and audio/video distribution capabilities. By 2010, we project that more than 30 million households will have a network that bridges numerous products and extends the entertainment experience to multiple rooms in the home. Entertainment applications along with energy management and security systems will drive adoption of home controls. We see multiple "Trojan Horses" for control systems to ride into the home.

Best Buy's $15,000 package is not an impulse buy at the check-out counter. They're targeting home builders, remodelers, and electronic systems installers. Builders have told us that they're on the lookout for new electronic entertainment and control systems to differentiate their homes from competitors. Best Buy's package is a solid offering based on industry-standard products from Microsoft, Intel and, HP and wrapped with a clever software package, LifeWare, from Exceptional Innovation.

At the upcoming 2007 International Consumer Electronics Show, Bill Ablondi will be moderating a panel discussion titled Mass-market Home Controls? Products, Protocols and … the Players! We invite you to attend this session, along with the other sessions on which Parks Associates' analysts are participating. For more information about these sessions, please visit the Parks Associates' Website for a specific schedule.

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