Home Sweet Home

Scott Herrema, CEO of Littleton, Colo.-based Eclipse Microcomputer Systems, began tapping this market three years ago when he went looking for a way to grow his business beyond the small-business clients he was serving. Now, home projects represent a sizable portion of Eclipse's top line,$300,000 of its $1.8 million annual revenue in 2002.

Herrema recently completed a home networking solution for Craig and Donia Andersen of Fort Collins, Colo., that allows the couple to control their whole house's lighting and entertainment systems from a touch-screen remote control. Herrema installed structured wiring throughout the Andersen's home, consisting of Category 5 Ethernet wires that connect the home's lights, audiovisual equipment and computers to a central server. So, when the Andersens want to watch a movie, the push of one button dims the lights, closes the blinds, and turns on the television and DVD player.

"A large home and a small business have a lot in common," said Herrema. These include similar phone systems, network systems and phone and data components. "A lot of the home automation solutions are the same [as] in the commercial small-business space."

In addition to home entertainment, solution providers can leverage their skills outfitting home offices, said Avi Rosenthal, CEO of Boca Raton, Fla.-based Integrator Concepts. With the rise of telecommuting and the growth of home offices, those who work at home want the technology and connectivity they are used to in the workplace, he said.

Home office users need business-quality printers, computers, LANs and wireless networks, as well as software to remotely access their work computers from home. Integrators also are setting up elaborate home security systems, which they say are very similar to the security systems demanded by their business customers.

"People %85 want to be as productive at home as at work," said Rosenthal. And for solution providers, he said, "The experience in setting up these technologies [for businesses] translates very well into setting them up in peoples' homes."

Herrema said that there are a couple of added benefits to serving the home integration market,the products generally carry higher margins than small-business products, and there are many more products for solution providers to install.

Forrester Research predicts that by 2010 there will be more than 14 billion consumer devices capable of being networked, and 95 percent of these will be products other than computers. Home networking will be a $12.5 billion market next year, according to research organization Cahners In-Stat/MDR.

After many years of working as a traditional solution provider, Rosenthal entered the home integration market in 1996 after being unable to find a local company to design technology solutions for the house he was building.

It's a good market to get into for those who have IT experience but don't necessarily want to stay focused on serving only business clients, he said. In addition, strong home sales fueled by low interest rates have been a real boon to his business, he said. "This is the only sector of the economy now that is not hurting," Rosenthal added.

There has been a considerable increase in the number of IT professionals coming over from the tech business market into the home space, said Dan Quigley, executive vice president of the applications division at Lantronix, an Irvine, Calif.-based vendor that provides home automation software and hardware for connecting consumer devices to a home network.

"Solution providers and integrators are key to the consumer market," Quigley said, "and they get the opportunity to sell support and service plans throughout the life of the product in the home."

Within the market, home entertainment systems are an ideal opportunity, solution providers say, because many traditional IT products and solutions for business carry over easily into the home. In addition, as the price of entertainment products drops and their quality rises, users are becoming more interested in complex home theaters, projection systems and high-quality audio solutions.

Kevin Hourihan, president of integrator Cyber Home Networks, Stormville, N.Y., said his company has seen success installing home theaters since he began focusing on the home market three years ago. "We do a lot of home theater systems for people finishing their basements," said Hourihan, who started out working in the industrial automation industry. He said Cyber Home Networks even builds speakers into walls and installs theater seating.

Jim Davis, senior director of home entertainment at vendor InFocus, Wilsonville, Ore., said that for the first time he is starting to see a small number of integrators looking at the home market as a great place to sell his company's projectors. "Integrators have the technical staff. They know how to install projectors, and they need to make only a few minor modifications to install them in a home. It's not a huge infrastructure investment for them," he said.

Solution providers also are wiring entire homes for audio and video distribution. They say that products from vendors such as Escient, Indianapolis; Home Director, Durham, N.C.; and Onkyo, Upper Saddle River, N.J., can turn any home computer into a music server, and CDs, music files and radio station presets that are stored on the computer can be accessed from any room in the house. This opens the door to personalized media distribution, as the audio and video preferences of every family member can be stored and easily accessed.

Once entertainment and data products are set up, integrators can use home automation software and the home's network to make the devices communicate with each other.

"Home automation software allows you to integrate %85 the items in a home to control things, and products can interact with each other," Integrator Concepts' Rosenthal said. "For example, when I disarm my [home's] security system, my lights come on automatically."

The software also can be configured to recognize the identity of someone entering the house based on their security code, he said, automatically adjusting the home's lights, temperature and music to the person's preference.

A further benefit of home automation software is that, like the system Eclipse built for the Andersen family in Fort Collins, it allows the home owner to control every element of the house from a single remote control, such as a Smart Display, Tablet PC, PDA or touch screen.

Said Rosenthal: "The software allows each house to have a central brain,a computer or Web tablet. From there, you can control the lights, security [and] home entertainment."

Vendors have come out with several easy-to-configure home automation software products, such as Premise Home Control software from Lantronix and United Home software from Listman Home Technologies, Atlanta.

Solution providers say the need for such software will likely become even more pressing, as everyday devices such as light fixtures and toaster ovens increasingly boast IP addresses and the ability to connect to a network and interact with other household fixtures and appliances.

Other new products for the home market are continually being rolled out.

Last week, for example, Walnut, Calif.-based ViewSonic began selling its Airpanel Smart Display, a cordless LCD that connects wirelessly to a PC, which the vendor said will allow users to control home automation software or remotely access applications on a PC.

In addition to serving as a home control, the Smart Display also can be used to check e-mail or access the Internet from anywhere in the home, said David Feldman, ViewSonic product manager for mobile and wireless products.

ViewSonic said it is working with ISVs to develop speech-recognition ability and other features to further broaden the Smart Display's use in the home.

Also last week, Belkin, Compton, Calif., introduced a line of wireless networking products,including a router, access point and network cards,that run on the 802.11g draft standard.

Research firm Parks Associates estimates that approximately 20 percent of new homes contain some kind of structured wiring, which is at the heart of nearly every new home networking solution.

Eclipse's Herrema said a structured wiring system has more advantages than simply controlling the audiovisual systems. "You can set moods for the lights. For example, the party mood function dims the lights and turns on the music," he said. "We do a lot of these in peoples' second homes. When they leave the home, they push 'Away' on the remote, and it dims the lights and temperature. Before returning to the home, they can tell the house to warm up via the Internet or cell phone."

Other connectivity options include the Home Phone Network standard, which transmits data via a home's existing telephone wiring through its telephone jacks. Data also can be transmitted through a home's electrical wiring, based on the HomePlug specification.

Integrators also are using wireless networks to provide computer connectivity throughout a home, although for bandwidth-hungry audiovisual data, wired networks are still the preferred option. Integrators say that the nascent 802.11g wireless standard may offer the bandwidth required for additional audiovisual solutions. However, until the standard is finalized, which is planned for later this year, or until other solutions become more robust, most integrators say they are sticking with wired solutions.

In addition to a wide range of channel-friendly vendors supporting home integration work, solution providers also point to the Custom Electronic Design and Installation Association (CEDIA) as a source of information and contacts about the market. Home integrators also stress the need to work closely with home builders, citing them as the largest source of business.