© 2011 EH PUBLISHING Home Technology Integrators Understanding the Channel Julie Jacobson Editor, Co-Founder CE Pro/EH Publishing CABA Digital Home Forum

© 2011 EH PUBLISHING About Us CE Pro –Launched 1994 –40,000 print subscribers –700k pv per month CEPro.com –Audience: Low-voltage integrators Custom Electronics specialists Security dealers Audio, video, other low-voltage installers EH Publishing –CE Pro (trade) –Electronic House (consumer) –Commercial integrator –Electronic House Expo –Research –Plus: Robotics, Pro Sound, Logistics

© 2011 EH PUBLISHING Agenda The people: Understanding the CE pro The custom business: size, scope Distribution: How CE pros buy product Growth areas for CE pros National coverage Installer networks and DIY Why and how to work with CE pros

© 2011 EH PUBLISHING What is a CE Pro? Custom –Specifies, sells, installs, integrates and services Electronics … specifically for the home –Home automation –Home theater –Distributed audio and video –Lighting control –Security –Energy management –Remote home monitoring & management –Home networks –Telecom Professional –High touch –Long-term service contracts

© 2011 EH PUBLISHING What is a CE Pro? AKA… Custom Electronics Professional (CE Pro) Home Systems Integrator CEDIA Dealer Home Automation Professional Electronic Systems Contractor (ESC) Custom Installer A/V Specialist Low-Voltage Guy Home Technology Integrator D/I (Dealer/Installer) CI (Custom Installer)

© 2011 EH PUBLISHING CE Pro Purchasing Power # of firms $ value of product purchased "Market Size" billed value of installations ,500$4.8 billion$12 billion ,637$5.3 billion$13.5 billion ,173$6.3 billion$15.7 billion ,119$5.5 billion$13.7 billion Source: © EH Publishing 2010 Custom Electronics Installation Business Survey (CEIB)

© 2011 EH PUBLISHING Company Revenues 2010e Revenues 2010e% Integrators < $250k30% $250k - $500k18% $500k - $1M15% $1M - $2.5M20% $2.5M - $5M10% $5M - $10M4% > $10M3% MEDIAN $567,000 AVERAGE $1,602,500 Source: © EH Publishing CEIB 2010

© 2011 EH PUBLISHING Typical Job Size & Volume 2010e2011e MEDIAN2535 AVERAGE e2011e MEDIAN$15,000$17,500 AVERAGE$26,676$34,631 Revenue Per Installation Number of Installations Source: © EH Publishing CEIB 2010

© 2011 EH PUBLISHING Reach Dedicated CE pros touch more than 1.3 million homes per year --- Larger community touches 5 million+ --- Very long term relationships Customers for life Source: © EH Publishing CEIB 2010

© 2011 EH PUBLISHING Business Sectors High-end integrators [2,000- 3,000 dealers] –Low-volume, high-cost installations –5-20 homes/year –$50,000+ installations –Install : highly integrated, all subsystems, extensive home theaters Mainstream integrators [8,000 – 12,000 dealers] – homes/year –$8k - $40k installations –Install: “mass customization”, all subsystems; modest theaters High-volume integrators [2,000 – 3,000 dealers] –300 – 12,000+ homes/year –$2k - $10k installations –Install: infrastructure wiring, security, distributed audio, lighting control, energy management, surround sound systems Shift expected due to ADT, others entering home control business Source: © EH Publishing

© 2011 EH PUBLISHING Business Sectors Home theater specialists [3,000 – 5,000 dealers] –5 – 25 homes/year –$10k - $1,00,000+ –Install types: Mostly single-room theaters, from fairly modest to ultra-high end High-volume specialists [50,000-75,000 dealers] –Single area of expertise but other low-voltage attachments –Security dealers –Electrical Contractors –AV Retail –IT Source: © EH Publishing

© 2011 EH PUBLISHING How they Buy Percentage of Products Bought Through: –Direct from Manufacturers40%47% –Distributors4642 –Electronics/Appliance Retailers96 –Building/Home Supply Retailers66 Source: © EH Publishing (older data)

© 2011 EH PUBLISHING CE Pro Growth Markets Product/ServiceUnlikely Somewhat Likely LikelyVery Likely Higher-end control systems18%28%31%24% Wireless Installations11%28%39%22% Streaming Media22%24%33%21% Entry-level control systems18%32%33%17% Managed/remote services25%34%26%15% Energy Management41%33%17%10% Video Conferencing47%30%13%9% Gaming46%29%18%7% Home Healthcare Tech51%27%15%7% In which of the following areas will your company likely see growth in the next 12 months? Source: © EH Publishing CEIB 2010

© 2011 EH PUBLISHING Why CE Pros are Good for DH Vendors Touch million+ homes/year CE Pros can spec products (or highly influential) Technical competency in key categories Reduce tech support burden on vendors High touch, customers for life Ensures optimal consumer experience, from install to training the customer Access to and influence with homebuilders, developers, architects, interior designers, others Excellent feedback for product development

© 2011 EH PUBLISHING National Coverage Buying Groups –Home Technology Specialists of America (HTSA) –Pro Group –Home Entertainment Specialists/BrandSource –Specialty Electronics Nationwide (SEN) Distributors –AVAD –Worthington –DDG –ADI –Many more…

© 2011 EH PUBLISHING National Coverage Retail –Best Buy/Geek Squad –Circuit City/Firedog –Ultimate Electronics Other –Security installers such as ADT, Vivint (APX), monitoring companies –Electrical contractors –Meter installers such as Meter Solutions (Vivint)

© 2011 EH PUBLISHING National Coverage Installer networks –Sears/ServiceLive –Zip Express –Service Magic –N.E.W. –OnForce –InstallerNet –Installs Inc.

© 2011 EH PUBLISHING Example: ServiceLive

© 2011 EH PUBLISHING Describe Project

© 2011 EH PUBLISHING Describe Project

© 2011 EH PUBLISHING Compare/Select the Pros

© 2011 EH PUBLISHING Getting it Done Either bid is accepted or prices offered Discuss with pros Select pro Fund account Arrange install After job is completed, release funds Rank the installer

© 2011 EH PUBLISHING DIY? Ain’t gonna happen But wait … –FrontPoint Security

© 2011 EH PUBLISHING Repeat: Why CE Pros are Good for DH Vendors Touch million+ homes/year CE Pros can spec products (or highly influential) Technical competency in key categories Reduce tech support burden on vendors High touch, customers for life Ensures optimal consumer experience, from install to training the customer Access to and influence with homebuilders, developers, architects, interior designers, others Excellent feedback for product development

© 2011 EH PUBLISHING Working with CE Pros: Advice Recurring Revenue?! Training Dealer programs –Marketing, financing, community Explore distribution Industry trade shows & associations –CEDIA, CEA, EHX Form factors: Think equipment rack & entertainment centers

© 2011 EH PUBLISHING Thank You Julie Jacobson Editor, Co-Founder CE Pro/EH Publishing CABA Digital Home Forum