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Revenues generated through the custom integration/installation channel are projected to grow eight percent to nine percent from 2007 to 2008, based on research conducted jointly by Parks Associates and EH Publishing.
Total channel revenues will reach $9.8 billion in 2007 and grow to more than $11 billion in 2008, driven by technology advancements allowing for more retrofit projects and by the growth in sales of existing dealers.
“Overall the home building industry has softened this year, but the market served by custom installers remains solid,” said Bill Ablondi, Parks Associates’ director of home systems research. “Manufacturers see the opportunity for retrofit jobs through powerline- and wirelessly-enabled nodes, increasing the number of solutions aimed at this segment of the market in 2007.”
Historically, dealers have split their business between new construction (50 percent) and remodeling/retrofit (50 percent). This division of work for dealers is poised to change for two reasons: technology advancements (wireless and powerline) make retrofit projects more feasible to a broader market and there is a high likelihood that new owners of homes will upgrade their entertainment, security and other home systems. On average 1.5 to 2 million new homes are built annually; six to seven million existing homes change ownership every year.
“The overwhelming majority of installing dealers expect their total revenues to grow next year, but at a median growth rate of about eight percent – significantly less than the 14 percent growth rate that dealers reported as the norm for the past three years,” said Daryl Delano, EH Publishing’s research director. “Although this growth has slowed some, the opportunities are increasing and will continue to increase substantially as a result of these advancements in technology.”
