Vivint, Best Buy, ADT Top CE Pro 100 List of Smart-Home Integrators of 2017
CE Pro's 2017 list of the highest revenue custom installation companies saw a whopping 24 percent increase in revenues over the last year, led by smart-home giants Vivint, Best Buy and ADT.
For the second year in a row, Vivint Smart Home tops the list of the CE Pro 100, followed closely behind by Best Buy and ADT.
CE Pro's 2017 list of the highest revenue custom installation companies saw a whopping 24 percent increase in revenues over the last year. The cumulative revenues of the group equal $2.6 billion. That is up $500 million from the $2.1 billion reported by last year's list. And the giants are leading the growth.
In 2016, Vivint grew its revenues by an amazing $104.2 million, from $653.7 million to $757.9 million. Best Buy also had a strong year, earning $39.4 billion in total domestic revenues in FY 2016, up just over 3.3 percent from last year. ADT reported $501.7 million in revenue, a mind-numbing growth of $368 million, or 260 percent, from the year before.
Let's take a look at what the big guys are doing to stay on top of the food chain year after year.
No. 1 — Vivint
The Provo, Utah-based company Vivint has successfully migrated from its original security-centric roots to a home-automation package as its base offering for customers including security, lighting control and thermostat control.
Today’s Vivint customers routinely add on automated smart locks, doorbell cameras, garage door control, video surveillance cameras, voice control and more.
The company is also a recurring monthly revenue (RMR) monitoring juggernaut with services like tornado alerts, flood alerts and weather alerts. In 2016, Vivint grew its revenues by an $104.2 million, from $653.7 million to $757.9 million.
No. 2 — Best Buy
Best Buy also had a strong year, earning $39.4 billion in total domestic revenues in FY 2016. That's just over 3.3 percent from last year. Its online revenues spiked by 13 percent domestically.
The company has 1,026 physical stores and 125,000 total employees. Its stock price has risen 435 percent since the end of 2012 when it was just $11.29 per share to $49.15/share at press time.
For the CE Pro 100, Best Buy’s custom installation revenues are estimated, since the public company does not break out its actual installation revenues. But according to chairman and CEO Hubert Joly, one of the primary reasons for Best Buy’s bottom line boost of $148 million in FY 2016 was due to a rate increase for its Geek Squad installation service.
Best Buy’s “Services” division, which represents 5 percent of total revenues, includes its consultation, design, delivery, installation, setup, protection plans, repair, technical support and educational classes. While the company reported a drop in its services revenues last year, it was primarily due to a fall in extended warranty sales for smartphones, according to the annual report.
Among the “growth pillars” of the company’s Best Buy 2020 initiative are to “provide services and solutions that solve real customer needs and help us build deeper customer relationships — for example, by meeting the significant technical support needs of our customers and providing more complete solutions such as security monitoring and home automation services as well as the associated products,” according to the annual report.
Best Buy also plans to expand its in home advisor (IHA) program to more markets. In the IHA program, customers receive a free in-home consultation with an experienced technology advisor who can identify their needs, design personalized solutions and become a resource. Also, among the emerging product categories the company’s has targeted for growth is the connected home where it aims to provide “a more compelling experience to our customers” via Magnolia and Geek Squad.
Speaking to investors in November 2016, Joly noted, “Emerging categories are gaining traction in part due to our ability to physically showcase products and offer expert help to customers. In connected home, we’re seeing strengths in home automation including security, lighting, and video monitoring. Drones are also becoming a more meaningful part of the business and virtual reality products hit all of our stores during the third quarter with new, dedicated virtual reality departments in more than 700 stores.”
In the annual report, Joly says, “We will explore a number of initiatives in FY17, including developing more consultative selling approaches and providing a richer set of services to our customers. We will also pursue growth opportunities around key, growing product categories. A critical component of our growth efforts is our services capabilities, including the Geek Squad. While it may not yet be visible in our quarterly financial results, we are making progress in this area.”
At the same time, Best Buy reports a strong 4.7 percent increase in sales for its consumer electronics, which includes demand for 4K TVs. The company no longer has standalone Magnolia Audio Video stores, but has Magnolia Home Theater/ Design Centers, plus 630 Samsung and 380 Sony home theater “store-within-a-store” locations.
For the CE Pro 100 listing, we are using one-third of Best Buy’s total $1.95 billion revenues from its Services division. That equates to $650.1 million estimate, or about a $9 million gain over last year. According to an article in Time, Joly cited data that its 20,000+ Geek Squad technicians made an amazing 5 million in-home calls last year. The company also changed 1,100 of its 4,000 Geek Squad “Geekmobiles” vehicles from the Volkswagen Beetle to the Toyota Prius C.
No. 3 — ADT
Coming at No. 3 for 2016 is the “new” ADT reporting $501.7 million in revenue for the CE Pro 100, a very large growth of $368 million, or 260 percent. Meanwhile, the company’s number of multi-subsystem installations grew 64 percent to 788,250, up from 482,000 in 2015. It now has more than 2 million ADT Pulse customers.
The venerable 142-year-old security giant went from being a public company to a private company in February 2016 when it was acquired by Apollo Global Management for a deal valued at about $6.9 billion. The buyout combined under one roof ADT, Protection 1 and ASG Security.
At sale time, the combined company had more than 6 million customers, total revenues of $3.3 billion, and RMR of $315 million. ADT has built strong momentum for its ADT Pulse home automation system, which attracts a higher monthly monitoring fee.
Prior to the buyout, the company reported 75 percent of all new clients were opting for Pulse, and many existing alarm subscribers were converting the Pulse, which includes lighting and thermostat control, with options for video surveillance, smart locks, garage door control and other functions.
2019 State of the Industry Special Report - CE Pro Download
The custom electronics industry saw a healthy 8 percent growth rate in 2018, down slightly from the blazing 11 percent growth in 2017 but still admiringly strong. Our 2019 State of the Industry indicates that readers expect to see even more growth in 2019. Get your copy today.
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 firstname.lastname@example.org
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