10.20.2009 — When Russound’s acquisition of Colorado vNet was first reported, Russound CEO Charlie Porritt talked about the value of being a control manufacturer.

One of Russound’s goals is to offer controls solutions for security, lighting and thermostats. “This acquisition immediately gives us access to offering home control through a company that we will own and control, and the ability to merge some of that control technology into Russound products," he said.

Now that the acquisition is complete, it’ll be interesting to see how Colorado vNet evolves under Russound and how Russound fits in the home automation market.

Product Mix

“Colorado vNet appears to have a fine lighting and multiroom audio solution, [but] I’m not sure they have the kind of complete product line necessary to compete against other established companies,” says David Rodarte, NuVo CEO.

He speculates that Russound will have to invest “significantly more dollars into the business than the cost of the acquisition.” Russound hasn’t revealed the terms of the acquisition.

In general, Russound’s acquisition of Colorado vNet is good for the automation market, says Glen Mella, Control4 president and COO. He calls it “another validation of the current market opportunity for home automation and control,” adding that Control4 has great respect for Colorado vNet products and is “pleased to see them maintain operations.”

Going to Market

How Colorado vNet maintains operations under Russound, though, will be tracked closely. The two companies “have employed markedly different go-to-market strategies to date,” Rodarte points out.

“Colorado vNet employed a dealer-direct business model, while Russound has been focused on a strong distributor channel," Rodarte adds. "It will be interesting to see how the customer bases of both companies respond to this acquisition and the resulting go-to-market strategy of the combined entity.”

Porritt has said that the two organizations will remain separate in terms of sales and distribution.

Industry Shakeup?

There’s also the question of whether or not Russound is burning essential bridges. With the acquisition of Colorado vNet, “Russound would appear to be preparing to compete directly against the same automation companies with whom it historically has cooperated in terms of product compatibility,” Rodarte says.

"Will they and automation companies continue to play nice, will they both erect barriers to compatibility, or will they try to do both?”

HomeLogic is one automation manufacturer that integrates Russound products. Joe Lautner, VP of sales, says it isn’t phased by the acquisition. “With our sister company ELAN, we look forward to maintaining our relationship with Russound and continuing to work with them as appropriate.”

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Russound will acquire Colorado vNet. Terms of the deal were undisclosed.