Circuit City's Home Services Foray Raises Eyebrows

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"A lot of these efforts have gone seriously awry," he said from Ambiance's Clifton Park, N.Y., headquarters. "I really question whether they can make it work. Who's going to deal with all the problems? Most of the installations we see by the big retailers are horrible."

Leidig's thoughts reflect those of many digital home and commercial integrators who have seen plenty of partnership promises from big-box retailers die on the vine. While some integrators do form successful partnerships with retailers, others don't see the need. They say the customer service, product choice and installation quality offered by big-box retailers often leave many customers unsatisfied.

"There is a bright side to this, which is the attention a Circuit City can bring to this market," said Pat Walsh, owner of Computer Station of Orlando, an IT solution provider in Orlando, Fla., that recently began a digital home networking and entertainment practice. "They are bound to screw up an installation, which brings us more business. They also charge double what I charge because I'm more nimble and flexible."

Circuit City declined multiple requests to comment.

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Word of the Firedog effort, expected to launch next month, spread two weeks ago after Circuit City CEO Philip Schoonover mentioned the plan during an employee event in Las Vegas. He pitched it as a way to boost revenue and margin on the heels of record digital TV sales, which have lifted the company over the last quarter. Unlike Best Buy's Geek Squad, which focuses on PC and limited network installs, reports say Firedog will have an integrated solution approach for the digital home"combining computing, networking and entertainment products.

Digital integrators say the plan will be difficult to execute, especially when it comes to hiring quality installers. Setting up a stand-alone television is one thing, but properly mounting, calibrating, wiring and integrating a digital TV into a home network is complex.

John Goldenne, president of Digital Home Technologies in Palatine, Ill., as one example, recently received a call from a potential client who said a Best Buy technician walked away from a large-panel TV install because he was not qualified to handle the electrical component. The client is scheduled to visit Digital Home's showroom this week to discuss completing the installation and to buy a new sound system.

"Circuit City might have access to some great displays and other products, but they'll always have problems with the installation. It's hard to find a guy who can do it all," he said. "It's a good concept, but you have to pay good money for good technicians."

That price is something big retailers don't always pay. Several have approached Mike Tangora, president of Tangora Technologies in Delmar, N.Y., but the pay was half the $75 to $95 per hour (much higher for programming) he typically charges. "I don't see how Circuit City can hire qualified techs to perform complicated connected installations," Tangora said, adding that hiring is one of his biggest challenges.

Integrators say those in charge of Firedog should follow a strategy like that of Best Buy, which bought Magnolia Home Theater and AudioVisions because those companies already had developed strong services models.

Circuit City already uses a similar approach with its Builder Services division, which hired integrators with strong backgrounds in new-home installations, said Avi Rosenthal, national program manager for OnQ/Legrand, who works closely with them. "They understand the market and what the builder needs, and they can customize the solution for each builder," Rosenthal said.

Elsewhere, Web-based platforms can help companies of all sizes find qualified integrators, monitor quality, measure customer satisfaction and manage the relationships.

Kevin Gilroy, CEO of OnForce, an online marketplace for services, said his company's platform has enabled dozens of retailers to find qualified integrators for thousands of residential networked entertainment solutions. A third-party quality assurance monitor ranks those installations 15 points higher than the industry average, Gilroy said.

No matter what Circuit City uses to deliver those services, several things are certain in today's market: "Services are an enabler of hardware sales," Gilroy said. "They will have to focus on quality if they are going to get it right."