Home Theatre, HDTV Services Thrive Despite Downturn

Don't count the flat screen TV home theatre installation market out yet, even with the bad news from the likes of Circuit City and Best Buy.

New data for the third quarter ended Sept. 30 from services marketplace OnForce shows the services rates for consumer electronics services is holding steady. OnForce, based in Lexington, Mass., releases its services marketplace index, a barometer of services and installation rates for consumer electronics and IT solutions, every quarter.

The OnForce hourly rates CE index for the third quarter ended Sept. 30 stayed steady at 1.35, this despite Circuit City filing for bankruptcy protection and Best Buy warning of a drop in profits due to weakening consumer spending. Not only that, OnForce saw a 20 percent increase in Home Theatre installs from the second quarter to the third quarter.

Peter Cannone, CEO of OnForce, said he sees the market for flat screen TVs and home theatre install services holding up in the critical fourth quarter holiday selling season. "Home theatre installs for Q4 early on is tracking way ahead of Q3," he said, noting that 50 percent of the work orders going through the company's services marketplace on Friday were home theatre installs.

The upbeat OnForce assessment comes with Circuit City recently filing for Chapter 11 bankruptcy protection and Best Buy warning of a drop in profits due to weakening consumer spending. Best Buy CEO Brad Anderson calls it the "the most difficult climate" the top CE retailer has ever seen.

Cannone however, said he sees consumers buying value-oriented flat screen TVs from chains like Target and WalMart rather than higher priced, larger flat screen models from the likes of Best Buy and Circuit City. One of the most popular models, Cannone said, are Vizio flat screen HDTVs.

"With the difficult economic times, people are looking at staying home and are going out and replacing their TV," he said. "Consumer electronics remains one of our highest volume categories." CE, in fact, is the third highest volume category for OnForce behind PC desktop services and Point of Sale services.

Seth Kaplan, owner of Kaplan Computers, a North Easton, Mass-based solution provider that does home theatre installs with OnForce, said he has seen no fall off in home theatre installs and he expects a strong fourth quarter. What's more, he said, his CE home theatre install services are higher than those for computer repair, network services or server installation. Often the home theatre installs are a flat fee. He said a wall mounted installation comes in at $200 to $300 per job.

"I don't see that price per job dropping," said Kaplan, confirming that consumers are buying value-priced flat screen HDTVs from the likes of Target and others. "And I don't see the volume of home theatre jobs decreasing. I haven't seen any downward trend."

Kaplan said he sees a convergence of home theatre and computer services work propelled by products like Microsoft's Media Center systems.

Cannone said he still sees "a ton of opportunity" in home theatre installation. "If you're doing IT services you can do CE services," he said. " It's a great opportunity for VARs." He urged VARs to reinvent themselves and take advantage of the home theatre installation services opportunity.

"Those VARs that are nimble and adapt to change are the ones that are going to thrive in these tough times," he said.

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