How Cyber Sound Leverages Apple to Thrive in Down Market
Cyber Sound found a good way to expand its potential customer base: leverage Apple by adding Savant as its main home automation offering.
It sounds like an impossible feat: an established integration company decides to radically change its product lines, make a major investment in a new showroom, and shift away from its reliance on certain traditional professional trade partners while maintaining its high-end stature and revenues in the local market.
Jon Summer, president of Cyber Sound in Scottsdale, Ariz., just performed this delicate dance.
For nearly a decade, the area around Phoenix was one of the hottest new housing markets in the nation. New home permits in the area ranged from 44,000 to over 65,000 from 2000-06. But the bottom fell out. The number of new permits in 2010 fell to just over 8,000. As a result, integration companies were dropping like flies.
Cyber Sound was one of those companies beholden to homebuilders, earning most of its revenue from them. But two years ago, the market circumstances forced Summer to conduct a thorough analysis of the company, including its product mix, relationships with various professional trades, and its overall market presence.
Company: Cyber Sound
Location: Scottsdale, Ariz.
Principals: Jon Summer, president
Revenues (2010): $9.8 million
Years in Business: 16
Number of Employees: 56
Specialty: Home Automation
Top Brands: Savant, Lutron, B&W, DPI, Samsung, Trufig, James Loudspeaker
FYI (one piece of advice to another dealer): Stay current
The conclusion was that Cyber Sound needed to shed the local market’s doldrums by changing its product lines, moving away from builders to focus on architects, interior designers and Realtors, and maintain its presence in high-voltage electrical and security.
The changes have allowed Cyber Sound to re-energize itself (and its new trade partners) and strengthen its position at the high-end in the Scottsdale market with only a dent in revenues from the market peak. The company earned $9.8 million in 2010, just 5 percent lower than its $10.3 million in earnings back in 2007 when the homebuilding market in Phoenix was hot and heavy. The momentum has led to an elaborate 3,300-square-foot showroom expansion.
Targeting Interior Design vs. Builders
Previously, the company always focused on working with high-end residential homebuilders. “The most difficult challenge we have these days is our system prices have shrunk in dollars yet the complexity remains the same,” says Summer. “We are spending less time programming but expectations are higher. It is tough to do the same revenue with people spending much less on product. We have to get far more.”
At the same time he was looking for efficiencies and maintaining all of its solid builder relationships, Summer needed to jump-start business with architects and interior designers. It was against that backdrop he decided to switch his primary control brand to Savant.
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The company first started playing with Savant two-and-a-half years ago “under the radar.” Vice president Jason Beatty put a system in his own home along with a few project managers’ houses.
“It went in smoother than expected, programmed easier than expected, and performed better than we expected. And the cool factor was way more than we expected,” recalls Summer. So, just over a year ago, the company made the switch.
“Our current success is due to the fact that we have Savant and nobody else does,” says Summer flatly. “We have Apple and we brand the heck out of it. Everyone is so sick of other automation manufacturer horror stories that it’s a breath of fresh air. Clients are just super excited about it. We all know what Apple has done, and there is a huge opportunity to take [the business of] all of the major builders and architects because of that product and our reputation. Together, it works.”
Photos: Inside Cyber Sound’s Success
Cyber Sound decided to look at other control options when its clients tired of the ongoing maintenance required of such complex systems. The company wanted greater simplicity and fewer options in order to stay profitable. It still maintains about 10 percent of its control business with Control4.
“But we were looking for a hot new product and we were looking for reliability. Savant has brought us both,” he adds.
Jason has covered low-voltage electronics as an editor since 1990. He joined EH Publishing in 2000, and before that served as publisher and editor of Security Sales, a leading magazine for the security industry. He served as chairman of the Security Industry Association’s Education Committee from 2000-2004 and sat on the board of that association from 1998-2002. He is also a former board member of the Alarm Industry Research and Educational Foundation. He is currently a member of the CEDIA Education Action Team for Electronic Systems Business. Jason graduated from the University of Southern California. Have a suggestion or a topic you want to read more about? Email Jason at [email protected]
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