The Construction Boom Continues to Ignite the Structured Wiring Market, Especially Among High-Volume Installers. Still, Many Builders Are Slow to Get On Board.
Structured wiring is finally catching on. Over three quarters of homebuilders now offer the amenity as a standard feature or an optional upgrade, according to the Consumer Electronics Association. The organization says that approximately 58 percent of all new homes come equipped with structured cabling, up from last year's 42 percent.
Considering that roughly 1 million homes are built each year, somebody must be doing brisk business installing copper cable and metal cans. Interestingly, the companies that install large volumes of structured wiring are a mixed lot. The No. 2 and 3 installers, Brink's and Ranger American, are mass-market security companies. No. 1, Ultimate Electronics, is best known as a big-box retailer. And No. 4, S&S Electric, is an electrical contractor. What we consider to be "traditional" home systems integrators make up the rest of TecHome Builder's Top 30 Structured Wiring Dealers.
These dealers report that business is booming, thanks in part to record-breaking housing starts. The National Association of Home Builders (NAHB) expects 1.56 million single-family homes to break ground this year, up from last year's 1.5 million starts. (We excluded multi-dwelling units in this year's Top 30 list).
In some parts of the country, structured wiring is a relatively easy sale. In Southern California, home of Smart Systems Technologies (No. 5 on our list), builders must offer the amenity because their competitors are doing so, reports owner Craig Curran.
In Alabama, on the other hand, "The builders … are slower to embrace a new technology," says Robert Mitchell, president of Interscapes, LLC (No. 28).
Regardless of where dealers are doing business, they tend to agree on one thing: It is important to meet face-to-face with the consumer. While the average Top 30 dealer sells 80 percent of their systems through homebuilders, the real money is made by selling upgrades to the homeowner.
Unfortunately, many homebuilders remain protective of their customers, keeping subcontractors away from the homebuyers. Thankfully, though, the technology industry is providing more and more tools to help structured wiring installers succeed.
This year marks TecHome Builder's second annual listing of high-volume integrators. On the following pages we profile a few of the top players. To be considered for the 2005 ranking, contact jknott@ehpub.com.
5 Touching Every Customer
Smart Systems Technologies, Laguna Niguel, Calif.
Five years ago, Craig Curran and his wife walked into the design center of a new homebuilder to select amenities. "They wanted to talk about tile and cabinets, but did not want to talk about technology," he recalls. "That convinced us we needed to set up a business." This year, Smart Systems Technologies (SST) expects to complete roughly 6,500 structured wiring installations, and the market it still going strong.
Curran attributes much of that success to his insistence on meeting with every client face-to-face. "All they know is that they want a home office and high-speed Internet connections. We solve their needs," he says.
Among builders, the competitive nature of that business helps drive demand, especially in Southern California, where Curran estimates that 85 percent of the new homes constructed this year will have infrastructure wiring, with 75 percent of those as standard. "If it's next door, the builder must offer it and market it," he says.
Like many integrators, Curran says there are still hurdles. With the production builders, Curran must not only work to sell the technology decision-maker, but also the purchasing manager. "It's a cost issue to them. I have to meet directly with the purchasing manager to educate them about structured wiring and talk about it as a necessary backbone, like plumbing," he adds. Another potential sales hurdle is wireless. SST sales staff uses a prepared presentation with clients to inform builders and homeowners that wireless is an enhancement to structured wiring, not a replacement.
For those ready to buy, SST's Web site (www.sstsun.com) offers consumers a detailed step-by-step selection process based on the company's trademarked Structured Universal Network (SUN) packages. Bundled systems include base packages plus a variety of options such as online gaming configuration and outdoor speakers.
19 Security Transition Is Natural
Homesafe Security Systems, Hunt Valley, Md.
Stuart Forchheimer, president of Homesafe Security Systems, saw his entry into structured wiring as a natural progression. Primarily a security provider, Homesafe began installing structured wiring four years ago after experiencing problems with the national security dealer programs.
" We were challenged with generating new sources of income. We had created a machine to install hundreds of security systems per month. Once we analyzed other markets, we realized there was a void of qualified companies providing sales, marketing and low voltage products to the builders in our area. We had already developed procedures for operating a business focused on volume and client satisfaction, so it was a natural fit," says Forchheimer, who expects to complete 2,400 structured wiring installations this year.
Today, Homesafe works with a variety of builders, ranging from large national production builders to the smaller builders who typically build custom homes.
The company has its own design center but tries to utilize each builder's model home or design center as well.
"We have found the best way for [our model home sales] program to work is to let the builder sell homes and Homesafe sell technology," says Forchheimer. "In some situations, we have builders who won't permit their subcontractors to meet with the buyers. Obviously these builders have much lower add-on sales than those builders who allow us to meet with each client individually."
When clients cannot meet at the model or the design center, Homesafe staff will bring the design center to them, taking samples of the products, literature, and other collateral materials. Forchheimer says his company will do "whatever we can to accommodate our builders' clients.
28 Introduce Yourself
Interscapes, LLC, Montgomery, Ala.
In Alabama, you can't be shy. Robert Mitchell, president of Interscapes LLC says the burden is still on him to introduce builders to structured wiring. "The Alabama market is typically behind other markets in the country. The builders here are slower to embrace a new technology," he says. That's why Mitchell doesn't have much spare time these days. When he is not overseeing installations (740 of them last year), he is spending time at the local builders' association meetings, serving on committees. Those meetings are key for introducing himself to builders. Moreover, Mitchell hops in his car on weekends and drives around looking at new home construction. "When I see a home being constructed by a builder I don't know or don't work with, I get the information I need and send him an introductory letter, then call him," he says.
Fortunately, the Alabama market also has an influx of a new generation of younger homebuyers asking for high-speed connectivity, security and modulated video distribution, according to Mitchell. Interscapes attributes about 60 percent of its business to production homes, which average a $1,200 structured wiring package in a 2,000-square-foot home for sale between $175,000 and $225,000. The rest of its business comes from custom builders, where homes can reach up to $1 million and 5,000 square feet. Mitchell offers structured wiring as part of a package in production homes, such as bundling a certain number of drops with security, audio and networking. In custom homes, he typically charges per square foot.
The company has a 5,000-square-foot showroom and uses design centers by larger builders to showcase technology to homeowners.
30 Battling Electricians & Providing Solutions
Questron, Inc., Columbia, Md.
George Hall, president of Questron Inc., never imagined 65 percent of his business would be residential when he started installing commercial phone systems back in 1997. By 2000, client demand led him to begin installing structured wiring.
"We tried to create the ‘need' for structured wiring early on among builders, but the clients did it for us," he says. The demand among homebuyers has helped Hall transition his sales pitch to builders.
Questron, which installed 800 systems last year, works most of the time with production builders, who select from a number of Questron's structured wiring packages. For example, one base package comprises four Cat 5e drops and four coax drops, with a single attic feed of both cables, connected to a Home Director or FutureSmart panel.
Hall's experience in the commercial space has enabled him to compete effectively against his biggest competition: electricians. Panels placed in garages, and daisy-chained wiring to a single outside demarcation point are just a few of the installation blunders Hall encounters by local electricians.
He also uses the Consumer Electronic Association's TechHome Rating System when speaking with builders to educate them on the future obsolescence of a poorly installed structured wiring system.