CE Pro 100 Tops $1.4B in Sales
New mass-market business models converge with traditional integration and local custom retail to create a dynamic CE Pro 100.
A first glance at this year’s CE Pro 100 might lead an outsider to think custom installation is no longer a cottage industry of entrepreneurs. For the most part, that conclusion would be wrong, even though some very large companies are now in the business of installing home automation and home theater systems.
When the CE Pro 100 was introduced 14 years ago, the largest company on the list did $5 million in installation revenues. My how things have changed! In 2011, there are 35 companies on the list with more than $5 million.
The confluence of large retailers and security companies mixed with traditional A/V installation companies has changed the profile of the CE Pro 100 dramatically since back in 1999. This year, the average company is $14 million.
Of course, if you subtract out the top three companies, the average falls to $5.5 million, but that’s still quite a leap from years ago. (The highest previous average revenue figure for the CE Pro 100 was $7.4 million 2007 at the height of the housing boom.)
This year, the CE Pro 100 is led by mammoth Best Buy, which has a CE Pro estimated installation revenue from its Geek Squad, Magnolia Home Theater and Audio Visions divisions of a remarkable $680 million. That does not include Geek Squad computer repair, but is just multi-subsystem installations … from hang-and-bang flat-panels jobs to large integrated systems.
At the same time, last year’s No. 1 company, ADT, saw a huge jump in estimated home automation revenues with the introduction of its Pulse system. Likewise, this year’s No. 3 company, Vivint, had its custom revenues grow ten-fold as marketing and installation of its entry-level home control system hit their stride.
Just as in past years, when large regional custom retailers first appeared on the list, then security companies, and now a large national retailer with an installation operation, naysayers will argue that the list does not represent “custom installation.”
However, many entrepreneurial integrators on the list are offering identical products and services at their most basic level as the large players are offering. Many local integrators do simple flat-panel installations and limited lighting and HVAC control tied in with a security panel.
Top 10 Traditional Custom A/V Integrators
1. Audio Command
2. Audio Video Systems
3. Vision Systems Automation
4. Engineered Environments
5. Audio Interiors
6. Cyber Sound
7. DSI Entertainment Systems
8. Performance Imaging
Click here to download entire CE Pro 100 list.
Analyzing Key Metrics
In total, the CE Pro 100 reports 2011 revenues of an astonishing $1.4 billion, or $1,448,094,322 to be exact. We can’t really talk in terms of percentage increases for revenues, installations and employees over previous years, because it would not truly be an apples-to-apples comparison.
Indeed, the data show an uptick of more than 100 percent in 2011 vs. 2010, but that figure is swayed by the Best Buy entry. Still, there are the two key metrics from the CE Pro 100 that integrators - no matter how big - need to track: revenue per installation and revenue per employee.
Top 6 Custom Retailers
(Installation Revenue Only)
1. Best Buy/Geek Squad/Magnolia/AudioVisions
2. Abt Electronics
3. Just One Touch/Video & Audio Center
5. Hifi House
6. World Wide Stereo
Click here to download entire CE Pro 100 list.
Revenue Per Employee: One of the bellwether statistics in the industry is revenue per employee. Many integrators look carefully at this metric when determining the health of their businesses. Over the years, this piece of data has continued to fall as dealers install lower-priced systems.
For 2011, traditional custom integrators continued a turnaround for the second year in row. The average revenue per employee in 2011 was $174,174 (excluding data from Best Buy, ADT and Vivint). That’s up 17 percent from last year, and a remarkable 24 percent over two years.
Remember, the CE Pro 100 revenue number does not include recurring monthly revenue derived from monitoring of security accounts. Of course, subsidized systems sacrifice upfront payment in return for the long-term commitment of a monitoring contract, which turns that subsidization into profit after a certain point in time.
So in terms of this list, as more subsidized companies participate, this metric will have less relevance and may be dropped from future editions of the CE Pro 100. The list also does include commercial revenues. Meanwhile, the median number of employees fell from 22 to 20 as integrators stayed lean.
Number of Installations: Looking at the total number of installations, there was quite a jump, led primarily by the top three companies. Overall, the CE Pro 100 performed an estimated 345,694 installations. That includes estimates for public companies Best Buy and ADT and a verified 153,094 installations from the other 98 companies on the list.
CE Pro has estimated that Best Buy and its entities performed 119,500 installations, while ADT did at least 73,100 installations from its Pulse (Advantage and Premier only) and Custom Home Division combined.
However, with many large players this year skewing the average higher, a more accurate snapshot of a typical CE Pro 100 company might be to look at the median number of installations. Median represents the number in which half the respondents are above and half are below. In this case, it is 130 installations per company.
Top 5 Security/Structured Wiring Based Integrators
1. ADT Security Services
3. Guardian Protection
4. Accent Electronic Systems Integrators
5. Crime Prevention Security Systems & Custom Home Entertainment
Click here to download entire CE Pro 100 list.
Revenue Per Installation: The number of jobs did not translate into higher-paying installations in 2010. Indeed, just the opposite. Average revenue per installation fell 42 percent, from $7,211 to $4,189. That trend is not surprising given the prolific number of jobs from the top three companies. It is likely to continue as the public becomes even more accustomed to subsidized home automation models from alarm companies adding HVAC and lighting control to their security packages.
Geographic Trends: Five years ago, the CE Pro 100 was rife with members from the states with explosive growth in new home construction - namely Nevada, Arizona, Florida and California. Since the collapse of the housing market, integrators have been forced to market their services to existing homeowners. Logically, this means the CE Pro 100 should be migrating to represent companies located in more populous states versus high-growth states.
Indeed, California has the most representation on the list, with 18 members. It makes sense, since the Golden State still has lots of wealth despite the housing doldrums. Next, the tri-state area of New York/New Jersey/Connecticut with 14, followed by 10 integrators from Florida. Other areas with strong representation include Texas (eight), Illinois (five) and Arizona (five).
Predictions for 2012: Optimism abounds for the coming year. Only two companies anticipate a worse 2012 than 2011. Another 10 are expecting a “flat” year in terms of revenue, while another four declined to speculate. That means 84 companies in the group are bullish on 2012. Identical to last year, the average revenue increase predicted by those integrators is 15 percent for next year.
Buying Groups: For the first time, the CE Pro 100 identifies the A/V buying groups to which the companies belong. There are 21 members of the Home Technology Specialists of America, 20 members of BrandSource’s Home Entertainment Source, three members of the PRO Group and one member of Specialty Electronics Nationwide.
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Jason Knott is Chief Content Officer for Emerald Expositions Connected Brands. Jason has covered low-voltage electronics as an editor since 1990, serving as editor and publisher of Security Sales & Integration. He joined CE Pro in 2000 and serves as Editor-in-Chief of that brand. 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 has been a member of the CEDIA Business Working Group since 2010. Jason graduated from the University of Southern California. Have a suggestion or a topic you want to read more about? Email Jason at email@example.com
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