Gadgets to Go

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IF SUMMERHILL HOMES, BASED in the tech Mecca of Palo Alto, Calif., is putting structured wiring behind the walls of every home it builds, can the rest of the country be far behind? Probably not, since low-voltage wiring provides the foundation for a host of other home technologies vying for consumers’ attention—and their checkbooks. Although sales of home electronics ticked up a modest 2 percent last year, growth has been steady. The Consumer Electronics Association of Arlington, Va., said it expects a 5 percent boost in product sales for 2004, topping $100 billion for the first time.

For many builders, offering structured wiring—and the gadgetry that goes with it—is simply a way to get an edge on the competition. But other builders are responding directly to customer demand. Three years ago, SummerHill began installing bundled wiring, universal outlets, and a distribution panel in each home. “Buyers expect structured wiring in the most usable rooms of the house so that they can add voice, video, data, and whatever the current technology is,” says Roger Menard, president and CEO of SummerHill Homes, which delivers about 400 houses a year ranging in price from $600,000 (starter homes and first-time move-up buyers) to $3 million. “It’s a big plus for a starter home to have that capability.” A recent study by the CEA and the NAHB indicates that three out of four builders now offer structured wiring, with the proportion of those offering it as a standard feature having grown from 34 percent in 2003 to 47 percent this year (see chart).

WIRED UP: Builders are not only offering the latest home technologies more frequently than they did in 2003, but they are including them as standard features. For his early adopter customers, the “most usable rooms” are everything but the bath, says Menard. Buyers can spend an extra $300 to install additional universal outlets—and they do, especially in the office, den, and bonus room. SummerHill offers a slim menu of other electronics choices, ranging from pre-wiring for a pair of speakers ($310) to a $2,190 surround sound package with a subwoofer. But buyers who want to build their own entertainment, data, lighting, or security systems are often passed to the builder’s electrical subcontractor to purchase components after closing.

“Those items are not like carpet and granite countertops. The technology is so specialized and changes so rapidly that it’s difficult to keep up with,” Menard says. “Because our buyers have got to have the latest and greatest, it would require a huge amount of manpower to keep up. So we leave it up to individual contractors.”

Testing The Market No doubt because it’s all so complicated, home technology has not boosted the bottom line as much as builders might expect. Only 19 percent of those polled in the 2004 CEA/NAHB study said that the installation of home technologies had increased their company’s revenue over the past two years. Nearly two-thirds of the builders also cited lackluster demand as the reason for not putting structured wiring in more new homes. And yet, an equal percentage considered it important to include the latest home technologies in their marketing.

U.S. Home’s Denver division is luring buyers by including a plasma TV with every home purchase, which averages $275,000. That’s in addition to the structured wiring that comes standard in all living spaces except the formal living and dining rooms. The homes are designed with a recessed niche so the plasma TV sits flush with the wall, and the screen’s size varies with the size of the home.

TECH TACTICS: U.S. Home’s Denver division is luring buyers by including a plasma TV with every home purchase. That’s in addition to the structured wiring that comes standard in most living spaces. Pardee Homes of Los Angeles installs a hub for structured wiring in virtually every home, but buyers pay to run data lines where they need them. Donna Sanders, vice president of options, says the home office package, which is $350 per room or $1,000 for the whole house, is a consistent seller. “That’s where the market is,” says Sanders. “A lot of buyers are concerned about networking multiple computers.” Still, the builder recently began testing how far its buyers will go with a nifty Nuvo system that gives them the option of controlling music selections and volume in designated rooms via a control panel. “It’s the most hip thing we have,” says Sanders. “We haven’t offered it too much yet because buyers are a little leery of getting technology through the builder; they think developers mark up their options incredibly.”

Experts On Board To eliminate that perception, and to help buyers navigate the labyrinth of ever-changing technologies, both Pardee Homes in Las Vegas and U.S. Home in Denver have recently started partnering with electronics specialists to sell products. In November, U.S. Home retained sales-people from Denver-based Ultimate Electronics to meet with buyers in each of its four design centers. Design studio manager Nick Riney says it has taken the load off the interior designers who specialize in how things look and feel. “I hesitated to add more technology products because they were too complicated,” Riney says. “Now I’m offering more in that category than in the past, and we’ve seen some very big increases in sales.” Riney estimates that 50 percent of buyers spring for a technology upgrade such as a $2,500 home theater.

Chris Mauzy, director of operations for builder services at Ultimate Electronics, which partners with 19 regional builders, says the company’s most popular product is a central vacuum system, followed by whole-house audio. And there is “huge interest” not just in sharing information between PCs, but also in being able to pull family photos stored on a PC to the TV for a slide show, or piping music stored on files throughout the house—what Mauzy calls Internet Protocol (IP).

“The consumer electronics industry is trending to IP,” he says. “It’s about streaming audio and video and being able to network any device that’s IP based. People want to have mass amounts of music stored on a music server and distribute it throughout the home.”

Structured wiring, which connects such devices together, has come down in price 30 percent to 40 percent over the past four years, Mauzy says. As time makes technology more affordable and builders get savvier about selling it, no doubt the profits will follow.