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The April 2, 2002 Issue Provided by System Dynamics Inc.
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EHexpo: Window Blinds, Central Vacuums and Home Networking?

What's Hot at Electronic House Expo

To learn more about what's hot for home system integrators, we spent three days at Electronic House Expo (EHX) in Orlando. This show is mainly targeted to the group we've previously called "broadband plumbers". In industry jargon, they refer to their realm as "low voltage companies".

Central Vacuum system --> Click for larger pictureSolar Shading Systems booth --> Click for larger pictureBig changes are happening in this industry. Many of its members come from backgrounds in home security, while some have specialized on installing home theatre. Today, they are faced with customer demands that span the range from low tech items like central vacuums and electronically controlled blinds to home networks, with multiple PCs, routers, software and all the complexity those entail. Add in systems such as structured wiring, distributed audio and video, telecommunications, energy management and lighting control and you begin to see the diverse range of products and services these folks need to stay abreast of.

To keep pace with all these changes, their trade organization, the Home Automation & Networking Association (HANA) merged in January with the Consumer Electronics Association (CEA) to work on publicizing the Tech Home Rating System (see bbhr last month) and creating training curricula and certification to provide knowledgeable, well-prepared personnel. ( )

To promote knowledge of this broad field, the groups are backing a new Computing Technology Industry Association (CompTIA) certification for Residential Services Integrators (RSI's). This baseline certification will provide an overview of home electronics services and systems and allow specialists to understand how their area integrates with the bigger picture. This is key since the industry has found that the number one criterion for selecting a home technology supplier/installer is "completeness of offerings". ( )

Tim Herbert, Director of Research for CEA, shared extensive details from his consumer survey work regarding home networks, broadband access and drivers for the "intelligent/networked home". A few items of interest:

  • over 92% of cable and DSL users are satisified with their ISP as compared to only 68% of dial-up users who report satisfaction
  • "no single application will drive consumers to home automation/networking in large numbers" so give up looking for THE killer app
  • the vast majority of homes with PC networks (86%) have done their own installation
  • for support during the installation process, 57% of survey households had called the ISP and 43% called the manufacturer of the networking product (people made multiple support calls)
  • three major challenges for broader penetration of "the intelligent/networked home" are complexity, skepticism and reliability.

PC Networking and Support

(l to r) Sammy Saloum, Avi Rosenthal, Gordon Van Zuiden, Julie Jacobson --> Click for larger picturePC networking and support is the area that is the newest for this industry. Julie Jacobsen, Editor, Home Networking News, moderated a panel to help home technology providers who are not yet performing this function figure out whether they should develop in-house capabilites or subcontract it out. ( )

The three panelists represented a diverse spectrum, including one targeting and catering to high net worth households, one going directly for the mass market, and one still evaluating what to do.

All agreed that broadband sharing is the number one driver for home networking and that integrators must be prepared to handle this part of their customers' needs.

cyberManor - "We are your trusted IT source"

Gordon Van Zuiden, CEO of cyberManor has chosen to focus on high-income individuals who want a "doctor for their IT" and are willing to pay for this attention. His jobs are generally custom and go after the same kinds of individuals whom CEDIA has addressed (the high end custom home theatre group). Because Gordon's company specializes in the data aspects of the e-home, 100% of his jobs include residential gateways.

cyberManor also handles "LAN in a van" jobs which are less involved. His rates are $125/hour for an on-site engineer and $75/hour for wiring and termination activities. His product mark-ups are from 30-75% to provide sufficient margin from these jobs to warrant the time spent. This is key since one of the biggest pitfalls of participating in this business are all the customer demands that can take time and erode profitability. The other big pitfalls are staff turnover and the training needed to keep up with the inexorable advance of technology. ( )

CompUSA - Tackling the mass market

CompUSA's slogan is "where America buys technology". Sammy Saloum, Director, Business Development and Strategic Alliances for their Technical Services division, opened our eyes to the huge participation this company already has in field service and installation.

In his talk and a subsequent meeting with him, we learned that:

  • Services is CompUSA's most rapidly growing division.
  • They have over 2000 certified field technicians and 20 field service teams nationwide, covering 92% of the US population.
  • They do 50% of their work for other companies, thru their Global Service Solutions group.
  • They average 17,000-20,000 network-related installs per month.

So why has this retailer moved so aggressively into services? We heard four reasons, which together make a pretty compelling story.

  • One of the key reasons is to prevent returns. CEA's research found that 13% of those who buy products associated with home networking end up returning them, generally because they are unable to make them work. Most of these are not product problems but the inability of the user to manage the installation process. PC installation also prevents PC returns.
  • Customers who have a positive experience with their CompUSA installation are likely to go back to the store for additional purchases, so service promotes more customer loyalty and product sales.
  • The margins on services are higher than the margins on products.
  • During a service event, technicians sometimes notice things that provide an on-site sales opportunity. Sammy told us "the tech is like a doctor. When he says you need more memory, it's like the doctor saying you need surgery."

In contrast to cyberManor's hourly pricing for service, CompUSA has tiered pricing for different kinds of service events so that the customer knows what the service price will be.

CompUSA does a lot of OEM service for other companies, including cable MSOs. Though the truck may say AT&T or Time Warner, CompUSA personnel might actually be the ones making the visit or handling the phone calls. ( )

Homeworks Automation

Avi Rosenthal's company Homeworks Automation (HWA) currently handles in-home installation for several broadband providers. If the customer runs into a problem after the installation, the first service call generally comes to Avi's company since they were the human face of the broadband provider to the customer. Many of these calls can be resolved on the telephone. If not, they refer the call to the appropriate channel, depending on the symptoms.

If the customer wants and needs on-site support, they send a technician and bill for the service. They have not aggressively addressed the service and maintenance business however, until they resolve how to do it without succumbing to the issues such as turnover, training, etc. referred to above. They are evaluating whether to ramp up to handle more service themselves or to sub-contract it out. Our sense was that HWA is far from alone in working on whether and how to address the services opportunity. ( )

More Technology Players

Since EH Expo is geared for home system integrators, it's a place where technology providers come to show off their latest wares and convince integrators to use their systems. Many of the vendors also had displays at the International Builders' Show (see last month's BBHR ). We had the opportunity to meet with additional players in the home electronics value chain this time.

  • CorAccess Companion 6 --> Click for larger pictureIn our IBS article, we mentioned the cute display offered by CorAccess, and wished we'd taken a picture of it. We saw the Companion 6 TouchPoint again at EHX and were glad to see it featured in other booths on the show floor as a wall-mounted controller for lighting, home theatre, HVAC and more. ( )
  • GreyFox "can" with telephone, data and video modules --> Click for larger pictureBefore the show, we speculated that structured cabling systems vendors might use a "lock-in" strategy to force users to expand with components from the same vendor. We were particularly interested in talking with Greyfox Systems since they were one of the home networking pioneers and developed the modules used by many vendors. Greyfox has entered the market as a competitor with their own branded cabling system and many of their former OEM customers are now building their own modules. However, many systems continue to use the same module design. The picture shows a Greyfox enclosure with telephone, video and data modules.
  • Closeup of GreyFox module --> Click for larger pictureKevin Santelli of Greyfox showed us one of their video modules and assured us that the Greyfox modules will fit in structured cabling enclosures from many other companies including GE SMART and UStec. ( )
  • Jay McLellan with OmniPro II home controller --> Click for larger pictureHome Automation, Inc. was founded in 1985 and is another industry old-timer and pioneer in integrated home automation systems. We met with Jay McLellan, president of HAI who showed us their OmniPro II - their sixth-generation controller - which integrates security, HVAC (heating and air conditioning) and lighting control. It includes interfaces to touchscreen displays and PDAs. The new model has an Ethernet port so a web browser can reach its control and monitoring features from a PC or PDA in the home or from the Internet. ( )
  • Gary Allen with Digital Closet enclosure --> Click for larger pictureMany of the systems we saw are designed mainly for the "new build" or major remodeling situation. Digital Closet showed us their system which is for retrofitting existing homes (their Web site says "How do you transport a 30-year old home into the 21st century?"). Digital Closet is a brand name for TII Network Technologies, a long-time player in surge-protection equipment. Gary Allen, their VP of sales, showed us the Digital Closet enclosure including whole-home surge protection, a residential gateway, and a HPNA-based phoneline networking system. ( )
  • Alejandra Rutledge showing Compaq iPAQ home networking products --> Click for larger pictureCompaq has a small and entrepreneurial group, the Access Business Group, which has responsibility for consumer products. Alejandra Rutledge, Product Marketing Manager for Interconnected Products, showed us their line of consumer networking products. We especially liked the iPAQ-branded 5-port Ethernet switch and Wi-Fi to USB adapter. ( )

Networked Audio and Video

"Networked audio" started in two very different places. One was prompted by folks who love digital music but became tired of sitting in front of a PC to access and listen to their growing audio collection. The other came from custom integrators who created systems with speakers in multiple rooms and the ability to control what music played where. Our visits with Turtle Beach and GE SMART showed us evolutions of these two thrusts. As technology and user interface design continue to progress, we expect the capabilities of such systems to meld closer together.

The PC music phenomenon is particularly widespread in younger age groups. A recent Parks Associates study found that in U.S. households with Internet access, 81% of respondents in the 18-24 age group "have downloaded MP3 files onto home computers, storing on average approximately 350 clips, songs, and files." Although that figure decreases to 40% in the 45-54 age group, the trend is clear.

Our discussions with Texas Instruments provided another piece of the puzzle--one plausible way by which the plethora of audio, video and PC products will be interconnected.

Turtle Beach AudioTron - A Networked Jukebox for the Listening Room

Seth Dotterer with AudioTron --> Click for larger pictureAlthough it has been on the market for more than a year, and some readers had pointed us to it, we hadn't seen AudioTron's device in person until EHX. Seth Dotterer, Director of Marketing at Voyetra Turtle Beach, described how the unit works in a networked home.

The Audiotron is a network appliance designed to access music stored on PC hard drives and play selections in a listening room. Packaged as a stereo component to fit in the family entertainment center, it connects to the home network with HPNA (phoneline) or Ethernet, and has both analog and digital outputs for the home theater system. It finds all the music stored on computer hard drives (it handles MP3, WMA and WAV digital music file formats) and builds a consolidated index of up to 35,000 titles. It can be controlled from its front panel, from a remote control, or from a PC interface. The current model doesn't support UPnP but we expect that'll be added soon as UPnP catches on (see below). AudioTron is priced for the consumer market at less than $300. ( ) ( )

In our January 21 issue, we discussed the Escient Convergence FireBall, which won the "Best of CES" award for home audio. While the AudioTron is for people who are already used to "ripping" files on a PC, the FireBall is an "all in one" system that interfaces with CD jukeboxes, rips CDs, stores music files on its own hard drive, and burns CDs on its built-in drive. The FireBall has a nice user interface - it uses the TV screen and an Internet database to provide background information on each CD. But at $2000, we think it's best suited for those who already have CD jukeboxes, aren't comfortable with the PC, and have deep pockets. ( )

GE SMART Introduces UPnP Loudspeakers

GE SMART has a multi-part story. It took some discussion time for us to understand the various pieces they have been showing and why Microsoft has joined GE and SMART in this venture. GE SMART now has four product lines - structured wiring, lighting controls, integrated home controls, and networked A/V - which can be mixed and matched for a new or existing home.

Mike Braithwaite showing GE SMART's networked loudspeakers --> Click for larger pictureWe found the networked loudspeakers particularly interesting as a sign of things to come. We asked Mike Braithwaite, Managing Director of the Audio-Video Product Group, why they were showing what looked like ordinary wall-mounted loudspeakers. He explained that the speakers are actually networked loudspeakers with wired or wireless connections. They have a slot for a network module and are offered without a module, with a built-in wired Ethernet module, and with a built-in wireless Wi-Fi module. The network module includes (naturally) all of the Microsoft audio CODECs.

Most interestingly, the speakers operate as UPnP-compliant devices in a home network. GE SMART is also making a UPnP "real-time encoding module" to connect to an audio source - it has standard RCA jacks on one side and an Ethernet connection on the other. So you'll be able to use a UPnP controller to say "connect the audio output from my home entertainment center to the loudspeakers in the dining room" - the controller could be a PC or other UPnP control point which might in the future be a wall-mounted display or a webpad.

This is the first consumer A/V device we've seen with UPnP built-in. Its a great example of a not-so-distant future where all the consumer electronics devices can be controlled from anywhere in the house over the broadband network.

GE SMART's current series of networked loudspeakers is targeted to integrators - companies that build them in as part of a whole-home distributed audio system. Mike told us that they will soon announce stand-alone speakers for the end user. ( )

Networked High-Definition Video - IEEE 1394b and VHN

Before we left for Orlando, one of our friends told us we should check out what Mitsubishi was doing. Lee Ratliff of Texas Instruments was in their booth to show networked high definition (HD) video over IEEE 1394b.

As we look at how the various devices in the home are connected today, we see IEEE 1394 (also called "FireWire" or "iLink") as the digital video standard used for digital camcorders; most of today's PCs have built-in ports for 1394 to enable your PC and camcorder to communicate. But 1394 is designed only for short distances up to 4.5 meters and uses special connectors and cables. Meanwhile, your other PC communications usually happen over Ethernet with category 5E cabling.

TI's demonstration was all about 1394b, a new standard, which can operate up to 100 meters, and can use standard Category 5 cabling or fiber. The demonstration provides one plausible mechanism by which the physical interconnection of audio, video and data might all come together.

Mitsubishi D-VHS HDTV VCR and CAT5 cable with IEEE 1394b --> Click for larger pictureIn the demonstration, a Mitsubishi HS-HD2000U D-VHS HDTV VCR (shown on top of a TV) records and plays HD video in the D-VHS standard, and interfaces with IEEE 1394. Behind the VCR was a prototype TI box which converts 1394 to 1394b and connects it to the CAT5 cable shown running overhead.

Lee Ratliff of TI pointing to 1394 cable --> Click for larger pictureThe other end of the CAT5 cable is connected to another TI box, which converts 1394b back to 1394 and connects to the back of a large-screen high-definition Mitsubishi TV set.

Lee told us that 1394b can operate at up to 3.2 Gbps over fiber and at 100 Mbps over CAT5. Over CAT5, 60 Mbps is available for isochronous data such as video; since each D-VHS HD streams requires 28.2 Mbps, a single CAT5 can carry two simultaneous HD streams or a single HD stream and several standard-definition streams (up to 7 Mbps each). At the same time, 20 Mbps is available for other applications. We asked about operating over CAT 5e and were told that 1394b would probably be able to operate much faster than over CAT 5, but there isn't as yet a spec for 1394b over 5e.

TI claims to be the leader in supplying chips for 1394, and is developing the chips for 1394b. Samples will be available by the end of 2002, and production quantities by mid-2003. TI expects to see consumer products based on 1394b on the market before the end of 2003. While the Mitsubishi/TI demo was focused on HD video, we suspect that the 1394 interfaces on today's equipment will be replaced with 1394b when the chips are available, so that the port on a PC could be used for a full network connection, not just for camcorders. ( ) ( )

But 1394 is only the physical transport part of the story. In the January 21 issue, we wrote about Versatile Home Network (VHN), a new standard being developed by the EIA and the CEA. VHN defines a complete standard for a "home intranet" and is built upon 1394b and UPnP. At CES we talked with Gary Paxinos of MetroLink, Chairman of the CEA R7.4 VHN committee, and we later talked on the telephone with Bill Rose, the Chairman of CEA's R7 Home Networking Committee. We're watching VHN closely: if the PC and consumer electronics industries both adopt VHN, we'll see the interconnection of PCs, camcorders, HD cable boxes, HD VCRs, and digital TVs and more over a common network. ( )