Best Buy Dips Toes Into Home Automation Pool

"There's the argument that greater visibility raises all boats," said Gordon Van Zuiden, CEO of home integrator CyberManor in Los Gatos, Calif., located about seven miles from the new Santa Clara Magnolia showroom, which is scheduled to open along with a store in Santa Monica this month. Both stores will include fully-networked "experience centers" focused on Exceptional Innovation's Life|ware solutions and related products from other vendors.

"But we really won't compete against anyone on a Life|ware solution, unless it's an established AMX or Crestron dealer. Magnolia's good at doing single-room integration, but I'd think whole-house systems are a whole other story," Van Zuiden said.

Slide Show: Walk through the Life|wareinstallation in the Magnolia store

Exceptional Innovation, Westerville, Ohio, launched its Microsoft XP-based Life|ware system for control of applications such as lighting, heating, security, window shades and entertainment, a little more than a year ago. The company recently released a new version of its main software platform and next month plans to deliver several key hardware components, including the Life|storage digital media server, Life|point touch panels and Life|controller Web Services-enabled controller.

The play with Magnolia is significant because it introduces a relatively complex control system that requires customization and deep services into a retail environment with heavy marketing clout and high visibility. While the two California stores will serve as a testing ground, the solution could eventually be sold through Magnolia's 21 stand-alone stores and possibly in its Best Buy locations, although that seems unlikely in the near future. Hewlett-Packard is also supporting the marketing initiative with hopes of selling more of its Digital Entertainment media PCs and flat-panel displays as Life|ware tie-ins.

While Exceptional Innovation says it has certified over 400 independent integrators, it has found a high-profile dealer with nationwide reach in Magnolia, said Mike Seamons, EI's director of sales and marketing.

"Obviously Magnolia is a great example of a custom integration company that is scaling in size across the country," Seamons said. "They have the ability to show Life|ware in the context of an explicable retail space. We're using these stores to understand the customer response. Our real focus is to get people to understand the opportunities for the digital living world."

Magnolia will receive the same pricing and licensing structure as any other Life|ware premium dealer, Seamons said. He does not think a possible expansion of Life|ware sales through additional Magnolia stores will affect independent Life|ware dealers.

"Life|ware is not a single product line, where the solution is the same from one integrator to the next," he said. "It's a solution that's totally based on the flavor that the dealer delivers. There are very specific configurations. Dealers can say they compete against another because they can do it their own way."

Mike Tamson, project manager at Audio Video Interiors in Bakersfield, Calif., said the Magnolia deal won't affect his company since California is so big and demand for integrated home solutions is so strong. The price of a mid-level Life|ware solution, about $5,000, and the complexity of the installation also plays to the strengths of sophisticated integrators, not retail outlets, he said.

"Your average consumer is not going to understand something like that," he said. "California is as big as some countries so two stores doesn't worry us. That leaves a lot of room for a lot of sales." Although Audio Video Interiors is listed on the EI Web site as a Life|ware dealer, the company has yet to include the system as one of its offerings. Tamson said his company has been too busy working on other products and projects, including a remodeling of its showroom. But Tamson is looking forward to doing more with Life|ware, saying it has one of the best control interfaces he has seen. "We're trying to get some builders and other customers interested in it, but it takes time," he said.

Lou Kings, convergence solutions manager at Magnolia, based in Kent, Wash., said the chain picked up the Life|ware system based on its "impressive integration" with the Microsoft Media Center platform. The chain had been selling Media Center PCs several years ago but with limited success because it took the sales staff time to get used to the new platform. But once Sony introduced its Digital Living System, an optimized home entertainment PC that includes an external 200-disc CD changer, the sales staff gained a more hands-on understanding of Media Center capabilities. Kings' interest in Life|ware piqued by Hewlett-Packard's new Z565 Digital Entertainment Centers, which are stamped as "Life|ware Certified."

"[Life|ware] is a sophisticated platform," Kings said. "It's all about putting it in their [salespeople and installers] hands, training them, having them watch the video and ask questions. We were all impressed with the way Life|ware ties into the home subsystems." Magnolia is approaching Life|ware as a full solutions sale. In the experience center, which replicates the different rooms of a digitally-enabled home, products such as Lutron lighting controls, Aprilaire thermostats, speakers and distributed audio solutions from B&K and SpeakerCraft, HP's Digital Entertainment Centers and media servers from Niveus Media, to name a few products, will all tie into the Life|ware system.

Seamons is pushing digital integrators to take the same approach. Those that include Life|ware as part of a connected solution in their showrooms can receive up to five additional points on product sales, Seamons said.

Van Zuiden has set up a Life|ware solution in his showroom but said he doesn't care about the extra points, emphasizing how Life|ware is just one part of a fully-integrated home solution. "The margin boosts don't mean anything to me," Van Zuiden said, adding that he'll be checking out the Magnolia showroom as soon as it opens. "Reliability, stability, ease of use, and ultimate customer satisfaction are worth hundreds of points."

Kings agrees and thinks that's why Magnolia and Life|ware make a good fit.

"You'd be amazed at the amount of customers coming in who are very proud of their homes and continuously investing in it by remodeling or infrastructure upgrades," Kings said, noting that Magnolia's average sale is around $5,000, with mid-level home entertainment solutions reaching $15,000. "When they find a solution they can use and live with everyday, the value of that goes up. So when we install anything the level of customer service has to be very high. We'll do anything we have to do to support them."