Why GAFA’s Interest in the Smart Home Actually Presents Significant Opportunity
GAFA's (Google, Apple, Facebook, Amazon) entrance into the smart home market presents two big changes for integrators: more customers but less product revenue.
A controversial blog post that surfaced on CE Pro last week has grabbed the attention of the industry. Bruno Napoli, the founder of Krika, published his piece alluding to the “doom” currently facing home technology specialists as a result of “GAFA” (Google, Apple, Facebook, Amazon) stepping onto the smart home field.
To no one’s surprise, the article has sparked some heated debate in the comments section, as well as across various industry forums and groups.
Bruno, who I happen to know personally, has told me that the intent of his piece was a positive one. In spite of its dire tone, his message is not one of inevitable annihilation of our industry as whole. Rather, Bruno perceives GAFA’s entrance into the smart home as a massive opportunity for those who are willing to adapt, and an only existential threat to those who aren’t.
Some readers agree wholeheartedly with the article’s message, touting a message of “adapt or die.”
Others seem to be dismissing the article’s message outright, derisively arguing that doom-and-gloomers said the same thing when Z-Wave and X-10 came out (hardly apt analogies I might add).
These arguments, of course, represent the extremes. Many industry veterans, myself included, come down somewhere in the middle: being decidedly bullish on the long term prospects for home tech pros but still willing to engage in a conversation about the potential threats that GAFA’s entrance into the smart home represents.
GAFA Will Create More Smart-Home Customers...
As with most market threats, this new reality also presents ample opportunities. GAFA’s marketing budgets will bring a substantial amount of attention to the smart home, often from consumers who may have otherwise had little awareness.
Let’s not forget that many of these consumers will have their interest in a connected home piqued, but will have no stomach for doing it themselves. And even those who attempt to go it alone will be greeted with a confusing landscape full of fractious standards and conflicting ecosystems.
As a result, many of these consumers will seek out an experienced professional for help navigating this new breed of smart home products. Just as our clients do now, these consumers will need help with product selection, installation, setup and training.
Perhaps most significantly however, in light of the speed with which the market is evolving, these consumers will need help with the ongoing management of their connected lives. The market demand for such “Technology Managers” is only going to grow.
... And Push Integrators Toward Service Revenue
In spite of these growing opportunities, however, let’s not delude ourselves into believing that GAFA’s market entrance won’t upset the applecart in some segments of the market.
While certain product categories like architectural speakers, home theater, panelized lighting and automated shades remain the sole domain of home technology specialists, many others are under substantial pressure from GAFA.
However, this downward pricing pressure on products can easily be offset by growing service revenue and RMR streams. Developing a service strategy to meet the market’s growing need can generate predictable cash flow with high profit margins. Putting these plans in place, and backing them with offerings like 24/7 availability and proactive support, also cements the market’s perception of you as more than an installer, but an ongoing service provider they will increasingly need.
We are seeing these strategies work with integrators serving various market segments all over the country. But effective pricing strategies to meet the new market realities don’t stop with managing home technology.
It doesn’t take a large leap of faith to imagine that the CEDIA market could ride this new wave of smart home awareness into becoming full-service technology managers, offering management of personal tech like computers and phones as well. No one is better positioned to do this than the CEDIA integrator.
And while this is a model that needs to be approached carefully, OneVision’s previous life as an integration firm proved that it works, riding it to $100k+ a month in recurring revenue.
Now is the time to develop strategies for meeting the growing demand that GAFA is bringing to the smart home. As an industry, we are extremely well positioned to leverage their efforts to our advantage.
Our hard-earned expertise is becoming an increasingly valuable asset, and the high-touch, personalized service we can provide never commoditize. By acknowledging the significance of GAFA’s entrance into the market we can fully leverage the opportunities it presents.
For more information about service and using it to create RMR, visit www.onevisionresources.com/blog.
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