CES 2007: Digital Home Growth Puts CES On VAR Radar

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Next week, Russ Stover, owner of home theater provider Digitainment, will spend four long days in Las Vegas. He will walk the aisles of the Consumer Electronics Show floor until his feet hurt and listen to countless pitches from sales and marketing types in countless vendor booths.

And by the end of the week, he'll have viewed hundreds of products and gathered a small mountain of brochures and data sheets, most of which will get piled up on a shelf in his office and then eventually get filed in the wastebasket. After all this work, Stover may only add one or two new products to the short list he recommends to his customers.

It is happening more and more, say Stover and other solution providers. Yes, consumer electronics products are becoming more critical to the solutions they build for their small-business and home networking customers. But sorting through the vendor hype and technobuzz also is becoming a monumental task.

"There are hundreds of incredible technology ideas at CES that will never get off the ground because they don't deliver the functionality that our customers want," Stover said.

Stover's strategy is to keep his product line small and manageable. And it's working: Digitainment's revenue has grown nearly 2,400 percent in the past three years. Stover said the key to continued success in 2007 will be to remain focused on a simple set of products that deliver good value for his customers.

"I call myself a 'practophile,' " he said. "I want great audio and video at an affordable price. My message to vendors: Give me something I can use, not a bunch of specs and numbers."

Solution providers are facing a consumer electronics onslaught. More products by the vendors and more promises by the big-box retailers are translating into more choices as they search for ways to take advantage of the growing opportunity while also managing the sometimes unrealistic expectations of consumers and small-business customers.

Some integrators such as Digitainment are dealing by limiting their product sets, some are taking advantage of the integration opportunities these products provide and are even forming partnerships with other solution providers to add to their core competencies. SMB-focused VARs are expanding into the home market, systems integrators are partnering with system builders, and some integrators are saying 'no thanks' to basic projects in order to move up the food chain.

"We don't want to do $2,500 cookie-cutter systems anymore," said Gerard Lynch, president of Newburyport, Mass.-based digital integrator System Seven, who said he's sick of competing with the Geek Squad. "We need to move forward and on to more complex systems."

Whichever tack they take, solution providers say 2007 promises to be a year of continued adaptation.

NEXT: Fighting misinformation

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