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Wanted for Sale in the UK! New Homes With New Technology (1/10/2004)

A CEDIA panel discussion

When will custom install technology make a significant breakthrough into large-volume, new-build housing developments? It has happened in the US already, so why not here? And precisely how much longer will the industry have to wait?

With these questions at the forefront of its mind, CEDIA took the custom install message to house builders at this year's Expo, looking for answers. Working in partnership with Building Homes magazine, CEDIA put together a headline event, The House Builder's Forum. This event centred on a panel discussion featuring senior figures from both the house building industry and from within CEDIA, chaired by Building Homes editor Jo Smit, and taking place in front of an audience drawn from across the custom installation industry.

Housebuilders Forum panel

In the house builders corner was Paul Slater, Group Technical Manager at David Wilson Homes, Simon Hambleton, Group Buyer at Antler Homes and Jean Atkins, Group Marketing Director at Country & Metropolitan Homes - all companies who have professed to some 'dabbling' with home technology in the recent past. Aiming to persuade the house builders of the benefits that a more concerted approach might bring, were CEDIA US past President Jeff Hoover, CEDIA US Board Member, Michael Heiss, and CEDIA UK's Chairman Stephen Gough.

The UK market

Looking at the market conditions in the UK, the case for home technology adoption is, indeed, persuasive. The initial price for the whole-house installation of structured wiring is low. Equally, the cost of the A/V, lighting, security system and other technology that can then be fitted into a property is itself getting more attractive by the day. Consumer interest in custom install, especially in the areas of home cinema and multi-room audio, is growing in tandem with the rising use of broadband, digital systems and wireless communications technology.

As expectations rise, technology will be required to deliver - factors which will continue to put pressure on house builders. As indeed will regulatory changes. The upcoming Part Q of the Building Regulations, currently in draft form, will for the first time, bring electronic communications services under the regulations, and will require that all homes be fitted with cable ducting as standard.

The US market

When the situation here is compared to that in the US however, it becomes clear that UK house builders have some serious ground to make up. Fully-structured wiring, home networking of computers, home cinema, multiroom audio and TV distribution are commonplace in homes priced at US$1 million or more. In fact, as Jeff Hoover pointed out in his opening statement to the Forum, "Selling a new one million dollar home without these features would be like selling a house without electricity - there is now a client expectation that if they are spending a million dollars on a house, they shouldn't even have to ask if it has these features."

He added, "It is five or six years since we've had to go out and persuade a higher-end house builder to include these elements within a property. US house builders now commonly re-name and market the family rooms in large houses as 'media rooms'. Even entry-level homes at US$100,000 now include Cat 5 cabling and some form of networking as standard."

Hoover explained the driving force behind this development. "Large companies like Microsoft and Cisco, together with major retailers saw the opportunity to drive new services and sales direct into people's homes sales, but only if the cabling infrastructure was there. It became in their interest to help builders put the wiring in place. This provided them with the platform to generate sales of bundled services and products down the pipe, directly into the home."

The change in attitude of US house builders was summed up by Michael Heiss. "Initially US house builders saw incorporating technology as an irritation. Then, they saw it as a necessity because they did not want to be out-marketed by developers on nearby sites in the same area. Finally, they saw it as an opportunity to make money through selling product as optional extras on the back of a structured wiring system."

Michael Hiess - "Opportunity to make money"

How does this compare with the UK situation? As Stephen Gough put it, "Infrastructure wiring installations are not only being taken up by niche builders but are now being installed as standard by forward-thinking national developers who have the foresight to see the wiring as a benefit, and therefore an increase to the property value. In Scotland, Hometech Integration, the company I work for, currently wires 80% of all new-build apartment dwellings, and our conversion rate is almost 40%."

House builders' concerns

So what did the house builders have to say on the subject, particularly the unconvinced? The issue of cost and perceived value definitely remains a factor. "All house builders have to watch their costs" said Jean Atkins. "We need to be convinced of the true value of the technology before we agree to put it in. So, of course, we want it low-hassle, low-cost and maximum value - I'm afraid at the moment we still see the cost as frightening." That said, they are aware that lifestyle changes, particularly the growth in popularity of home cinema systems, are changing things.

"We simply cannot afford to put wiring into a home at £2000, £3000 or £4000 a time when we are building 6000 units" added Paul Slater. "At the same time, we have to make sure that we are giving people what they want. Today, very few people actively go out to buy an automated home. First and foremost, it is location that sells properties, followed by the right design, the right layout, etc."

Paul Slater - "We have to make sure that we are giving people what they want."

Opportunities

As far as the developers were concerned, the 'optional extras' route is likely to be the most productive one for custom installation companies to follow. "It will not be a core product in the current market" continued Paul Slater. "But, it could easily be a viable upgrade option for customers who can see the benefits of the technology as installed in, for example, a David Wilson Homes Expressions Centre."

This view was supported by both Jean Atkins and Simon Hambleton. They agreed that developers were open to an approach where, at a low initial cost, a bespoke options centre or show home could be equipped with a high level of home technology. Then, if the take up on a sixty-home development around the show home was around 20-30%, the initial investment on the part of the custom installer would be rewarded, and the house builder would be persuaded of its added value.

"Training of the sales personnel is key to the success of such an installation" said Simon Hambleton. "On developments where we have show homes with a degree of home technology, we are working closely with the custom installer to ensure our sales staff are well-informed and supported." Michael Heiss added, "There is always a service element to such work as well. This represents a huge opportunity for the custom installation company to boost their own revenue stream and build a productive on-going relationship with the house builder."

Simon Hambleton - "Training of sales personnel is key to success"

Working together

According to Stephen Gough, "In such circumstances, teaming up with other CEDIA companies to provide national coverage is an approach that can work. Using electrical contractors to do the 'first fix' wiring, managed by the CEDIA member or members involved, ensures that there is no hold-up in the timing of the construction work. It also brings a degree of comfort factor to the house builder. That's been our finding in working with house builders. A professional team approach right through from the design and installation to the marketing, sales and after sales service of the technology does get results."

Stephen Gough - "A professional team approach"

On this optimistic note, and following a number of positive contributions to the debate from the audience, the Forum drew to a close. As an Expo first, it proved to be an enlightening session, and an initiative which CEDIA is keen to build on in the future. The organisation is committed to continuing dialogue with house builders directly and with the House Builders Federation in efforts to build awareness of custom install and overcome resistance to the technology from this important sector of the market.

For more information, please contact CEDIA.

www.cedia.co.uk