Best Buy: A Brief History of Integration

We've recently reported on the lawsuit by Dallas-based Powell Protection Systems against Best Buy. For those interested in the history of custom installation at the big-box retailer, we have snippets from the past 6 years.

I never had faith in Best Buy's custom business in the early days, when the company was trying to get third-party IT providers to install A/V gear. Today, Best Buy has its own team of installers and I hear from local integrators that the retailer is definitely making an impact in certain markets, winning some very good jobs against dedicated low-voltage integrators.

What's your experience in the markets where Best Buy's custom business operates? Comment at the end of this article.

June 14, 2000
Best Buy hires Greg Farmer as vice president, In-Home Installation Services. According to the press release, "In this newly created position, Farmer will be responsible for the continued expansion of the current in-home installation business and the focus on broadband customer solutions."

Best Buy hired Farmer from Bell Atlantic Communication and Construction Services, Inc. (BACCSI), where he implemented a structured-wiring and home systems installation program that dissolved a couple of years after launch.

During his tenure at BACCSI, Farmer worked with DecisionOne, a national provider of IT-related services that performed BACCSI installations when Bell Atlantic's own employees went on strike. DecisionOne would go on to perform installations for Best Buy.

Fall, 2001
Jeff Pagano is hired as the first employee in for Greg Farmer's team. "I was already at Best Buy. I wanted to work with that group," said Pagano in an Oct. 6, 2001, interview with CE Pro.

Pagano came from Best Buy's In-Home Installation group, which installed basic home theaters and satellite for the retailer.

Sept. 4, 2002
Best Buy's renamed custom group, Networked Home Solutions (NHS), has its coming-out party in the Twin Cities, participating in a local Parade of Homes with builder M.W. Johnson Construction.

NHS offers "Lifestyle Series" packages called Music Lover, Movie Buff, Computer Whiz and Ultimate Entertainment Enthusiast.

The plan is to roll out the program in both Minneapolis and Dallas, using DecisionOne, as the low-voltage installer.

Oct. 2002
Best Buy Acquires Geek Squad. After some discussion of incorporating the geeks into the custom installation initiative, Best Buy ultimately decided to keep them out of that business.

Jan. 28, 2003
Best Buy and homebuilder William Ryan Homes, Inc. announce an agreement to provide Best Buy's Networked Home Solutions in seven William Ryan communities throughout the Dallas area. According to the Best Buy press release, "Beginning this month, a base structured wiring network that allows for maximum versatility with home technology will be standard in more than 200 homes with a target of 1,000 homes in the next five years."

The press release does not indicate who will do the installations but does say that Best Buy is requiring its "In Home Integration" technicians to have an HTI+ (Home Technology Integrator) certification from CompTIA. The requirement "ensures Best Buy that work will be done by knowledgeable and accredited technicians who understand systems integration and can consistently deliver professional results to our customers."

This deal would ultimately lead in a lawsuit against Best Buy filed by Powell, a local integrator brought into the project (more below).

Feb. 2003
Best Buy is featured in a Parade of Homes in the Twin Cities. I wrote an editorial about the unsightly installations:

Justifiably or not, the mess tells me, as a prospective home buyer, that the builders and contractors don't take technology seriously. Never mind that the cabling in the structured wiring cabinet was immaculate -- that's not what customers see. Instead, they see a hodgepodge of mismatched devices shoved into spaces originally built for books and knickknacks. In some cases, there were not even cable-management holes drilled into "desks," leaving wads of cable cascading over the front of the desktop.

Summer 2003
Decision One is phased out of the NHS program and Best Buy appoints a replacement company with a similar profile--Black Box Corp. The press release says, "Black Box/Best Buy will roll out this new service initially in the Dallas area beginning in July 2003. Other targeted areas will follow with a goal of providing complete services throughout the United States."

March 2004
A Best Buy spokesperson says, "The good news is that Networked Home Solutions has been a great success and we are therefore weaving it in to our core business, and out of New Business Development."

Best Buy CEO Brad Anderson tells Reuters that the retailer performed 6,500 installations in 2003 working with home builders.
Reuters reports, "Best Buy, which expects to lose money on the business venture in the short term, is using it to gain experience for the future when homeowners are expected to add more networking and entertainment products in areas such as the kitchen, Anderson said. 'The primary reason we are in this right now is to learn.'"

April 2005
Best Buy acquires custom integration firm Audiovisions, but does not issue a press release on the deal. Later, CE Pro learns the retailer paid $7 million for the integrator, which had 2005 revenues of $7.43 million.

2005/2006
Dallas integrator Powell Protection Systems sues Best Buy for $126 million, claiming the retailer promised to deliver new business from area homebuilders, but did nothing more than usurp one of the integrator's existing customers.

The case goes to trial Oct. 17.

Summer 2006
Best Buy no longer subcontracts out its installation labor, and has yet another name for its custom division: Best Buy for New Homes.

Tim Wirtz, formerly Best Buy's National Sales Manager, Commercial Sales Builder Channel (he left the company in August of this year), tells CE Pro that Best Buy "has really solidified what we feel is a top-quality offering. ... We started out dipping our toe in the water, using third-party contractors for everything that we did. This past year, we really finalized on the products and packages ... and most important, because of customer service and competencies, brought all installation in-house."

While builder-related efforts are particularly strong in Best Buy's backyard of Minneapolis/St. Paul, the company has made inroads nationwide including California, Florida, Denver and Columbus, Ohio. Participating builders include Centex Homes, Brookfield Homes, Pulte Homes, Lennar, Ryland Homes and US Home, according to the company's Web site.

After conversations with integrators, especially here in the Twin Cities, it appears that Best Buy is indeed having a major impact in the custom business.

November 2007
Best Buy and Audiovisions are exhibiting at the Electronic House Expo and will participate in the Business Valuation Summit.

It appears more Best Buy acquisitions are in the offing.