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The Future of Home Integration: Recurring Revenue: Part 3

Let The Competition Begin

April 2011 By George McKechnie, PhD

In Part I, we described the gathering storm that is casting a dark shadow upon the livelihood of independent custom integrators. Major electronic service providers (ESPs) such as Comcast, Verizon and ADT had begun test-marketing wireless home integration packages, using the business model they do so well: inexpensive installation costs plus recurrent monthly service charges.

Other major companies have recently positioned themselves to participate in this huge and lucrative trend by buying up small manufacturers. ATT has acquired Xanboo, a successful maker of surveillance cameras and security peripherals. And smart-home startup 4Home was purchased by Motorola. Existing specialty companies, too, have been jockeying for strategic advantage; Control4 has just announced a strategic alliance with Cisco.

You think home video is a moving target? Prepare for an even more exhilarating ride, as major corporations jockey for their share of the burgeoning wireless home integration market. Let's just make sure that this doesn't occur at our expense.

Pulse Takes the Lead

The biggest news of the moment is ADT, the dominant player in the security business (with revenue 12 times larger than its nearest competitor). While other companies continue to plot, plan and test, ADT has launched a national rollout of Pulse, their new wireless home integration brand. And it's beginning to get some real traction. Take a look at their available features—and then decide for yourself whether Pulse is a competitor you need to worry about:

• Burglary, fire, and carbon monoxide monitoring

• Internet portal to monitor and control system via digital mobile devices

• Integrated scheduling of recurrent events

• Integrated lighting and HVAC monitoring and control

• Medical emergency monitoring

• Energy management and small appliance control

• Water and flood sensors and alert

• Interactive touch screen to control system, with instant news, weather, sports and traffic updates

• Surveillance cameras

Combinations of these features are bundled into three plan levels: Select, Advantage and Premier. Published installation charges range from $749 (for a basic system) to $3,168 or more (for all the above features, but with limited lighting and intrusion control), and monthly fees from $49.99 to $57.99. Understand that ESPs run on recurrent revenue and tend to sell the minimum number of installation devices that will generate the maximum recurrent monthly revenue.

Not Quite An Even Playing Field

 

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