Integrators, builders and vendors form successful partnerships to bring new technologies to fickle production home market
If there's one dark cloud over the home integration landscape, many integrators say it's the production home market, brought down by higher interest rates and inventory gluts. Integrators Nick McCullough and Frank DeFilippis of Link Your House strongly disagree.
The production home outlook looks especially rosy to digital integrator Link Your House, thanks to the strong partnerships the company has established with a builder and several major technology vendors. They've banded together to deliver connected technologies in new homes—part of the 3,500-unit Carter Grove Plantation development in Cartersville, Ga.—priced between $280,000 and $400,000.
In the past, these types of control, automation, networking and product offerings were cost-prohibitive and mainly targeted at the luxury home market. "This shows it's no longer just for the rich and famous. You hear about the CEDIA installers putting in expensive home entertainment centers and high-end control and automation systems into luxury homes, and that's the last you hear of it," said McCullough, president of Link Your House. "But the real excitement comes from the integration of full, affordable digital home systems. Digital integrators could be doing more of those through partnerships with companies that believe in you and what you're doing."
The major companies involved in this partnership include Grace Ventures, a Marietta, Ga.-based builder of about 135 homes a year, and Intel's digital home division. Link Your House is contracted to provide a standard wiring package—including CAT5E for telephone and data, RG-6 for cable TV drops, A/V and RG-59 for plasmas and surround sound and future pipe conduit—to 65 homes in the first phase of construction.
"That's a very advanced system for homes in this price range," said DeFilippis, Link Your House's director of marketing and sales development.
The standard wiring package is priced at about $2,200 and includes the wiring infrastructure for three zones of multiroom audio, high-definition flat panel and 5.1 surround sound in the living room, an entertainment PC, HVAC automation, six cable TV drops, automated lighting and temperature control, wireless Internet access throughout the house, and a home security system. A basic security system, including two keypads, a siren, smoke detectors, and door and window contacts also is included.
Upgrades are available, such as a dedicated AOpen Microsoft Media Center PC, based on Intel's Dual Core Mobile Viiv platform for entertainment functionality, such as managing and distributing digital files, and Embedded Automation's mControl software for all control and automation. Other upgrades include whole-house audio; advanced automation, security and lighting control; a 42-inch plasma display; flush-mount wireless access point in the second-floor ceiling; surge protector and lightening arrestor; network switch; and surround sound system. All home control communications is based on the Zensys wireless networking technology and Z-Wave-enabled devices, such as lighting, heating and security components.
"Link Your House searched for robust products at attractive prices that could fit the budget of people who are buying production homes," said Bill Davidson, Intel's digital home marketing manager, who worked closely with Link Your House on the project. "They're trailblazers in a lot of ways. Not everyone has the recipe for this type of package, especially one that also works so well for the builder."
Link Your House, for example, plans to sell the automation package, which includes the PC, two Z-Wave enabled thermostats and four light switches, to the builder for about $3,500. The builder then can mark it up to the homeowner. The homeowner then can write into the mortgage almost anything built into the infrastructure of the home and included in the appraisal.
"In the end, the homeowner is paying a 5 [percent] to 10 percent premium, but the advantage is it's already integrated in their home and is guaranteed compatible and code-compliant," DeFilippis said. "We try to be aggressive but not greedy. In the end, the homeowner gets a very fair price for having the latest technology installed in their home."
Intel was one of the first vendors several years ago to establish a digital home initiative and one of the few to provide integrators with a full range of demo, marketing and sales tools to support their projects. Davidson said he is willing to listen to and help any integrator with a well-defined proposal.
"These are the types of forward-looking projects we like to try," Davidson said, who also helped introduce Link Your House to other vendors who offered different types of support for the project. "We're not ready to spend a million dollars to support them, but we are willing to invest tens of thousands of dollars to make them work."
Link Your House also is partnering closely with Rhino Mounts, Wayne-Dalton garage-door systems, Leviton electrical components and Genesys cable.
McCullough met Eric Love, president of Grace Ventures, while he was installing control and connected entertainment technologies into Love's home. Love thought similar technologies would fit well in the units he had planned for the Carter Grove project and asked McCullough and his team to come up with a proposal. A short while later, DeFilippis met Davidson at CMP Media's XChange Tech Connect conference, outlined the proposal and secured Intel's commitment.
Under Davidson's charge, Intel donated two of the AOpen systems and marketing literature that now sit in the Carter Grove model home. Intel also helped pay for the production of a marketing video that shows Love talking about the homes and how the technology is used. The video, Love said, is a great marketing tool because he runs it from the Viiv PC, which gives his sales people the opportunity to impress the potential homeowner with a hands-on demonstration of what the entire system can do.
"It's not as hard a sell if you can actually show them how technology can benefit their lifestyles. Putting an advertisement in the paper is great, but if people can't feel and touch the product they'll never go past the ad," Love said. "You have to let them play with the system so they can see how it works."
Builders are usually reluctant to partner with integrators because of an inherent fear of schedule delays and an unfamiliarity of home technologies. Love, however, said the technology—as long as it's easy to learn, easy to use, useful and reliable—helps differentiate his homes from all the others being built in the area. Love said he usually sells houses in this price range to couples buying their second home or baby boomers looking to downsize because they are familiar with technology and understand the benefits of a digital home. "In the next five years, you'll see an acceleration of technologies integrated into new homes," he said. "People will be looking for it in the homes they buy."
It's a well-known secret that builders often take a healthy cut of the products integrators install and sell to new homeowners, even forcing the integrators to give away the wiring packages or to sell them at a minimum. Grace Ventures and Link Your House worked out a deal that works well for both sides. Grace Ventures showcases the technology products in its model homes and markets them on its Web site. In return, the builder gets a cut of all the products it's involved in selling.
"It's really not about the money," Love said. "I'm a technology type of guy, so I understand what it can do for the homeowners. It also gives me an advantage, a sales tool."
During the closing, the new homeowner receives literature about the technology, along with a contact for Link Your House, which is then free to sell products and services to the homeowner without involvement from the builder.
Link Your House also receives the customer information from Grace Ventures and is allowed to include its contact information on the security panel and low-voltage enclosures.
"This gives us a distinct advantage, but we still have to call on the homeowner. We have to be aggressive salespeople," DeFilippis said. "We want the homeowner to know that we were the partner that installed the wire and the ones they need to call to activate the security system. There's plenty of opportunity to make money."
And, as all those involved said, it takes strong partnerships to make those opportunities happen.
"With a little help with marketing and other support, we can get these technologies and solution out in front of the consumers because not all of them know about this stuff, especially where the integration fits in," McCullough said. "The manufacturers can help us because they have the resources. I'd love to work together to help more integrators land deals like this one."