Lennar Embraces Best Buy, Exceptional Innovation, ConnectedLife.Home
Best Buy is going to sell a packaged solution of Media Center plus home automation by Lifeware. Literally, it's a package -- a box that is shipped to the customer and later installed by Best Buy. We have all the details and plenty of opinions on the matter.
Best Buy is going to sell a packaged solution of Media Center plus home automation. Literally, it's a package -- a box. A customer walks into a Best Buy store, delights in the demo, buys the package, and waits for its arrival in a big box about four-foot square. [Correction: four-foot-cubed, as many pointed out]
The package costs $15,000.
For that you get a z560 Digital Entertainment Center (a Media Center PC) from HP, Lifeware home automation software from Exceptional Innovation, one Xbox 360 (which doubles as a Media Center Extender), two Panasonic wireless cameras, one communicating thermostat from Residential Control systems, Ethernet/powerline adapters from Corinex, and assorted devices -- five dimmers, five switches, two keypads--that communicate over the powerline via Insteon technology.
It also comes with installation -- mostly. When the box arrives, the first step is for the homeowner to get the high-voltage gear (12 Insteon powerline products) installed. Best Buy, of course, warns the consumers to hire an electrician for the task, but I assume many consumers will tackle that task on their own. (Note: CE Pro and its parent company EH Publishing recommend that only licensed electricians install high-voltage .... blah blah blah ...)
When the switches are in place, the customer calls a special 800-number, a Best Buy integrator is dispatched, the rest of the gear is installed and configured, the customer is trained on the system, and the household revels in the integrated media/automation experience.
In fact, they can even tap into the experience from afar with a $19.95/monthly fee. From any Web browser, they can pull up the Lifeware software and control the home, check what the kids are watching, even view recorded TV shows -- sans audio for now, but that's coming soon. (We don't need no stinkin' Slingbox.)
The remote-access software is a branded version of gotomypc.com, but the price is the same.
Behind the Scenes
Sounds simple, doesn't it? In fact, a lot of effort went into assembling the package and the entire program.
The program is called ConnectedLife.Home. (How are we going to abbreviate thatone? CL.H? We already refuse to put the pipe in "Life|ware.") It's part of the Best Buy for Business group, and it's headed by Chris Mauzy, who used to run the builder program for Ultimate Electronics.
Unlike most installation companies, Best Buy aims its offering at the retrofit market. "This extends way beyond new homes. Our qualifying question is: Do you have electricity?" Mauzy says, adding that a broadband connection sure makes the system more enjoyable.
Best Buy jumped through hoops (not literally, like Circuit City's Firedog installers) to assemble a stable, robust solution that requires no new wires. The first bit of business was the WAN/LAN network--a critical component for distributed entertainment, and a nice thing to have for the not-required-but-recommended Internet connection. The ConnectedLife team tested virtually every flavor of wireless and powerline technology and settled on the AnyWire Ethernet/powerline solution from Corinex, featuring technology by DS2, a competitor of HomePlug.
Corinex boasts rates of up to 200 Mbps. Actual throughput is more like 50ish Mbps, but still not bad.
"The big reason for using Corinex was the great communications between the Xbox and Media Center," Mauzy says.
Many powerline solutions in the U.S. require a phase coupler to bridge the two phases in a home. ConnectedLife installers test each home's network to ensure adequate speed and coverage, plugging in a phase coupler if necessary. Mauzy says only about 10 percent of homes need it.
The Insteon lighting devices were similarly tested and, well, everyone knows that Panasonic's IP-enabled surveillance cameras are darn good.
Best Buy selected the RCS thermostat because "It's the least invasive," Mauzy says. It's one of the few hardwired communicating thermostats (via RS-485) that can replace an existing thermostat, without the need to run an extra Cat 5 or other cable. It works over the same four conductors used by standard thermostats.
Besides, Mauzy says, "We did some test marketing and customers liked the aesthetics. The 'indiglo' blue is cool."
Most importantly, perhaps, the Insteon devices, RCS thermostat and Panasonic cameras are supported natively in Exceptional Innovation's Lifeware software. And Lifeware was selected because of its ease of configuration and use, EI's expertise in and commitment to Media Center, and the company's resources to support not only its Lifeware software but the entire Media Center ecosystem.
As for HP, its z560 is relatively affordable, and HP was EI's first Lifeware partner.
So the homeowners have their lighting gear installed. What then? They call the special 800-number and an installation is scheduled. Best Buy will go anywhere. "Anywhere?" I ask, pointing out that my own little rural getaway has a street address of "last house on the left."
Anywhere, Mauzy assures me.
Who's doing the installations? Right now, Best Buy has about 27 "very strong" integration specialists, says Mauzy. They are well trained and very experienced, he claims.
How are 27 installers going to cover the entire country? "Planes, trains, anything it takes," Mauzy says. Doesn't sound like a very profitable business model, I suggest, but Mauzy assures me Best Buy will scale the program when necessary.
Eventually, Best Buy will be in a position to hire entry-level technicians for the installations, once all of the kinks are worked out, and best practices established. That's a key tenet of the program--using technicians that are well trained on the ConnectedLife system, but not necessarily experts in the custom electronics field. Specialists are available at all times to assist by phone or "virtually in person" through a remote connection to the local PC. (No broadband? Best Buy provides all installers with a cell-based modem for the connection).
Bottom line: Best Buy wanted a limited solution that could be sold in a bundle, installed in a day, and serviced remotely.
"The most important thing for Best Buy was to have a repeatable solution," says Mike Seamons, vice president of marketing for Exceptional Innovation, which helped orchestrate the ConnectedLife program. "There's no whole-house audio or security, they can't 'bring their own' Media Center, and they can't substitute one product for another. It's a very set package with very specific capabilities, which is just what Best Buy wanted."
The installation is pretty simple. (The hardest part might be finding the house, considering it could take a plane ride or a long drive to a remote cabin with an address like "last house on the left." Don't tempt me ....)
The installer connects the thermostat and cameras, sets up the powerline network with the Corinex plug-in adapters, hooks the Xbox 360 to a remote TV, connects the HP Media Center to the customer's A/V receiver or directly to the speakers, and then configures the machine.
Configuration is fairly painless compared to the usual process of optimizing a Media Center PC for media-centric functions. If you buy an off-the-shelf Media Center, there are dozens of things you should do to make it work like a Media Center should--things like clearing out the added junk that can undermine the PC's performance, updating all the drivers, altering the default power settings, and so on.
Exceptional Innovation worked with HP to create a DVD that automates these tasks. Insert disk, let it run.
Then comes the installation and configuration of the Lifeware software, made very simple because 1) it's optimized for the ConnectedLife package and 2) the installer will have done it over and over again.
Audio and video settings are established based on the customer's own gear. Lighting scenes are programmed according to user preferences. Insteon keypads are configured to mimic the scenes. And the network is set up for sharing music, photos and video with other PCs in the home.
Then comes the training. Installers spend about two hours with the customers, walking them through the automation system and the inherent capabilities of Media Center -- from slideshow creation to Internet radio through Online Spotlight.
Part of the DVD initiation process entails loading stock images and tunes into the Media Center. "Best Buy owns the tunes, of course," Mauzy says, deflecting a visit from the DRM police.
Having the content in place makes the lesson compelling and oh so simple.
Once they've lived with their system for some time, the customers are bound to want more, perhaps additional light switches or an extra Xbox 360. These things are handled easily through the ConnectedLife call center. The customer places the order, Best Buy ships it out, the customer or electrician installs it, and then Best Buy configures the new add-ons remotely.
Sure consumers can buy their own Insteon light switches for $40 and up, but they won't be able to tie them into the Lifeware automation system. For that, they'll pay $99 apiece for the product, the licensing and the remote programming. Best Buy is lovin' it. "You can add these devices to a system without a truck roll," Mauzy says.
Again, very simple, very low-maintenance.
Now if the customer wants to add a Russound multiroom audio system to the mix, for example, that's an entirely different story.
It wouldn't be handled by the ConnectedLife group. But it very well may be done through one of Best Buy's other businesses. And Best Buy has a whole lot of other businesses.
There's Best Buy's store-based installers -- mostly the folks who install products purchased at the store, like plasma TVs and surround sound systems. Then there's Magnolia Hi Fi, which handles everything from basic home theaters to really high-end home theaters and often full-blown high-end home control systems.
Then there's the really, really custom business which is still emerging. It started with the acquisition of California-based Audiovisions in late 2005 and is expected to grow from there. Best Buy for New Homes targets new-home developments.
And don't forget Best Buy's Geek Squad. After all, there's a Media Center PC involved. Shouldn't the PC guys take over? (Geek Squad could use the action after Best Buy's girlie girl Eq-Life stores with Geek Squad inside closed.)
Not so fast. Mauzy admits that Best Buy is still working out the logistics on ConnectedLife upgrades. Media Center solutions are a tricky thing, requiring both PC and CE competencies. (Mauzy says Geek Squad will do the Vista upgrades for customers that buy into the ConnectedLife program pre-Vista.)
Test Bed in California
Best Buy isn't going into ConnectedLife blindly. The company already has performed somewhat of a test run for the program.
In Rancho Cordova, near Sacramento, Calif., Best Buy has installed a ConnectedLife-like package for some 116 homes for homebuilder Lennar Corp., with 50 more to go.
There, the retailer honed its ConnectedLife package and process, says Mauzy.
While the first big gig for ConnectedLife was a new-home community, Mauzy still insists the program is geared to the retrofit market -- not that they'd turn down opportunities like Lennar's.
Would that put them in conflict with the new-construction group, Best Buy for New Homes? Hard to say. Remember that the ConnectedLife program is part of Best Buy for Business. My gut tells me these two groups might eventually merge.
Hitting the Road
Like any good initiative, ConnectedLife needs a traveling show-home. Bam, it's got one. The decked-out RV, code-named Griswold, is traveling the country, showing the world what a ConnectedLife home can do. You can see it at CES, where Best Buy will be selling $15,000 packages to show attendees.
Best Buy also is a part of the NextGen home at CES.
What About the Independent Lifeware Dealer?
For its part, Exceptional Innovation will do its darndest to feed new business to its independent certified dealers, of which there are currently about 550. Seamons explains there will be several "hooks" to encourage customers to explore the potential of their underutilized system, and to hire an integrator for upgrades.
Within the Media Center and Lifeware environments, there will be urgings to "see what else your system can do," says Seamons. He expects also that customers will take it upon themselves to visit EI's Web site, where again they will see all the goodies they're missing and then click the tab that says "Finding a Dealer," whereupon their vitals will be entered and ultimately forwarded to a certified Lifeware dealer in the area.
The ConnectedLife package includes a one-year subscription to LifeSupport, EI's customer support service. I assume any contact with EI's tech support might yield interest in additional services provided by ... you guessed it ... your local Lifeware dealer.
Sounds pretty reasonable for said dealer, but EI recognizes it will be tough sell. In a long, preemptive letter to dealers, EI CEO Seale Moorer writes, predictably:
Lifeware is poised to enable dealers to address a customer base that have already made their first investment in an automated home. ... By giving the mainstream consumer a taste of the potential of a digital entertainment and home automation solution, we are in effect creating a 'farm club' of consumers that are complementary to the CEDIA channel and ultimately feed new clients to Lifeware dealers.
He assures dealers that Best Buy's EI bundle is not a DIY product, and that the version of software sold by Best Buy has "limited functionality and a finite number of devices that it supports."
Besides, although Moorer doesn't say this, the HP z560 in the ConnectedLife package is the consumer version of the Media Center, not the more robust z565 available to the custom channel.
How WILL Dealers React? How SHOULD They?
Will independent Lifeware dealers buy EI's party line? Initially no, of course. I've never come across a dealer that rejoices when one of their vendors opens up a cross-town rival, much less a big-box retailer.
Eventually they'll come around.
Generally, I profess there's enough business to go around. Home automation has something like a 3% penetration rate in the U.S. Awareness? Nobody knows what home automation is. Few people understand what a Media Center PC can do. And most citizens don't even realize there's an army of professionals out there that actually install this stuff.
If Best Buy is going to spend millions of dollars promoting these applications -- and advocating professional installation -- great for us!
I sat in a room with EI's Mike Seamons and Best Buy's Chris Mauzy. I can say that when Seamons emphasized that upgrade opportunities would be passed to independent Lifeware dealers, Mauzy didn't cringe. The money for Best Buy comes from a one-day installation that grosses $15,000, and selling/configuring extra light switches by phone, no truck roll required.
"I see it as a win for integrators," Seamons says. He and CEO Moorer say a lot of things like that, but I try not to quote the platitudes. Dealers see right through it.
But seriously, custom installers, do you really feel threatened by an organization that ships a box of products to customers, asks them to find their own electrician to install the light switches, and offers little customization? I think not.
At the same time, do you think there's something to learn from the ConnectedLife strategy? I won't do the math here, lest end-users read this story, but you know the wholesale prices of the goods in the ConnectedLife box. You know it only takes one person one day to install. Sounds to me like an OK business model that not enough dealers pursue.
What is Custom? CE Pro editor Jason Knott asks in a recent editorial. Often times, it's a losing proposition, because you cannot predict your profits. How many seminars have you attended where the instructor beseeches, "You need predictable, replicable packages"? Yet so few are doing it.
At the same time, so few integrators are actually targeting the retrofit market. Sure, they'll take on the jobs, but the 98% of the 100 million+ homes on the market today that are not automated surely are underserved by this channel.
Best Buy is on to something. Mauzy tells me that the company will wholesale the ConnectedLife packages to integrators who are interested. But there's no reason that dealers can't create their own versions.
Will ConnectedLife Succeed?
Can Best Buy pull it off? That's a good question. While I understand that the Best Buy for New Homes program is doing pretty well, the retailer has a history of failures in the integration business.
I have surmised that the problems stemmed from two things: 1) too much customization and 2) ill-conceived installation strategies.
In theory, ConnectedLife overcomes these two obstacles, but can Best Buy resist the temptation to stray from its original mission? How can you turn down a customer request to add audio to the package, for example? And when the customer does come back for more, what will Best Buy do with the leads? I have a funny feeling it could get ugly with the various Best Buy installation factions -- I count six including ConnectedLife -- jockeying for the business.
Say the leads do go to independent Lifeware dealers. Who gets blamed when something goes awry? It's an age-old problem in this business.
And let's just say the program is wildly successful and Best Buy can't hire qualified installers fast enough. Will they farm out the business to third-party installers, a strategy that has failed them in the past?
Despite all this, I think Best Buy just might pull this one off. Certainly, it is one of the retailer's more sensible installation initiatives in the past several years.
The real question is this: Why have I spent so much darn energy on this lengthy article? I confess I didn't mean to. It just got away from me. But really I believe that ConnectedLife, whether or not Best Buy can pull it off, sets a great example for home systems integrators, especially during a homebuilding lull: Attack the retrofit market, and do it with a cookie-cutter system.
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Julie Jacobson is founding editor of CE Pro, the leading media brand for the home-technology channel. She has covered the smart-home industry since 1994, long before there was much of an Internet, let alone an Internet of things. Currently she studies, speaks, writes and rabble-rouses in the areas of home automation, security, networked A/V, wellness-related technology, biophilic design, and the business of home technology. Julie majored in Economics at the University of Michigan, spent a year abroad at Cambridge University, and earned an MBA from the University of Texas at Austin. She is a recipient of the annual CTA TechHome Leadership Award, and a CEDIA Fellows honoree. A washed-up Ultimate Frisbee player, Julie currently resides in San Antonio, Texas and sometimes St. Paul, Minn. Follow on Twitter: @juliejacobson Email Julie at email@example.com
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