Case Study: Live Wire
But that will soon change if all goes as planned. Efficient recently became one of the first large electrical contractors/system installers to take on electrical supply manufacturer Leviton's LEAP media server, a small-footprint 120-Gbyte Linux-based server that fits neatly in the company's Structured Media Enclosure. Retailing at less than $2,000, the server is designed to safely store and distribute digital video, music and photo files throughout the home.
"Most people wonder what structured wiring is all about," says Tom Burkett, a division manager at Efficient, located just off the Strip in the shadows of the Stratosphere Hotel. "This product is a big break in the market. It will provide years of upsell."
At least that's what those behind the creation, distribution, sale and installation of LEAP hope. The basis of that hope is a good lesson to vendors and digital integrators of how innovative, open-minded companies can sell a relatively unknown concept to a new market.
Dedicated Devices (DDI), Boise, Idaho, developed the server several years ago as an alternative to expensive media servers such as AMX's Max and Kaleidescape's Kaleidescape System, both of which retail for more than $20,000 and integrate into control systems costing much more, says David Belove, DDI's vice president of marketing and sales. DDI initially aimed the server at the production-home construction market as a way to drive volume and gain market recognition. "It's designed to be easy to use and easy to support," Belove says. "We'd rather have fewer features and make it easier than have more features and make it complicated. That's where Leviton comes in. They tested the hell out of it."
DDI approached Leviton because it needed a progressive vendor with solid brand recognition among builders and a broad reach to a variety of installers, including security, electrical and voice/data. In the past, a number of server manufacturers had approached Leviton—which already manufactured routers and switches—but they had all failed to correctly answer the first question, "Does it have a fan?", Ian Hendler, director of Leviton's Integrated Networks, says. "If so, end of discussion because it would overheat in the box. DDI said, 'Of course it doesn't have one.' "
What also sold Hendler was LEAP's secure and stable Linux platform. "What we wanted was an appliance, not a PC," Hendler says, explaining that most builders, contractors and custom system installers turn and run when they hear the word "PC" mentioned as a home technology infrastructure. "What impressed me about DDI was their keen understanding of the channel, and that the server ran Linux," he says, adding that Leviton, Little Neck, N.Y., provides training and distribution through about a dozen national and regional partners. "That way it would be so stable and easy to use and install that the installers or homeowner wouldn't muck up the system. It needed to work so well that, hopefully, you can forget about it."
Leviton eventually wants to expand its traditional customer base to include more PC-centric integrators, Hendler says. He hopes those future partnerships will help the company develop more home technology products that can drive recurring services revenue for its partners. "The way the market is going to grow is through service agreements," Hendler says. "Installers can then make money selling services such as virus and security updates, system maintenance ... DDI provides a platform to grow these services."
For now, though, Efficient Electric provides a perfect launching pad, Hendler says. While most electrical contractors, as well as most players in the home building industry, "tend to be reactionary, Efficient is leading edge," he says. A $58 million company with 600 employees, Efficient developed a custom integration division several years ago, focusing on high-end control and automation systems for homes costing $1 million and more. But the company also has a strong business wiring homes and condos in the $300,000 range, a market with homeowners who are more likely to buy products based on new open-standard technologies as opposed to more expensive legacy technologies. Out of the 1,000 homes it works on a month, Burkett says about 600 of those include CAT5 wiring. He expects many of those customers want or will want a cost-effective media server. On top of that, there are those miles of CAT5 sitting unused in thousands of homes that are ripe for LEAP and other digital and entertainment products. The secret to Efficient's potential success, Burkett and Hendler believe, is its marketing capabilities. Unlike most contractors and installers, Efficient has an active database on all of its customers that keeps its six-person marketing team up to date on what was and could be installed. The team recently started a direct-mail and phone campaign suggesting product updates to homeowners. Efficient also stations a salesperson on the floor of KB Home's Las Vegas showroom, which generates about $500,000 in additional sales each month.
Efficient engineers also conduct walk-throughs with new customers, educating them on the capabilities of their CAT5 wiring and the products they can attach to it. A recent walk-through yielded about $4,000 in upsell, including stereo components, speakers and an HVAC system. "The customer trusts us," Burkett says. "They're glad to have someone who can direct them."
Efficient also sells flat-panel TVs, IP-based security cameras and systems. The problem is the company can't keep on top of all of the new technologies hitting the streets as fast as it would like. "We have to sit back and wait for (the vendors) to bring it to us," Burkett says. "But that's OK because everything starts with the wiring."