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Home networks are the next (profitable) frontier for VARs

Consumers are building home networks with more technology than many businesses, and creating new business for solutions providers in the process.

The home network market is starting to sizzle — and VARs that can handle the size of the customer base and range of customer demands could find their prospects heating up as well.

Home networking doesn't just mean sharing printers and making sure the DSL connection's live. Home networks can be as complex as those in small businesses, with a far wider range of technology and, often, better margins.

Home-based telecommuters and the companies that employ them pay extra for reliable access to corporate email and databases. Gamers — both adults and adolescents — pay extra to connect multiple PCs; audio- and videophiles may launch a complex home-improvement project to create a home theatre and stream media throughout the house.

"There is an immense opportunity in the home. IT resellers are in a very good position."
Bill Boothat
 Director, Strategic RelationsNASBA, the Association of Channel Resellers

A lot of these are still do-it-yourself projects, but an increasing number of high-tech homeowners are hiring solution providers to design, implement and support those systems as well as automation that allows them to control lights, access burglar alarms and perform other tasks remotely.

"There is an immense opportunity in the home," said Bill Booth, director, strategic relations at NASBA, the Association of Channel Resellers, with headquarters in Atlanta. "IT resellers are in a very good position. They make up a huge army, perfectly capable of transitioning to the home."

In fact, more than 20 million U.S. households have a data network today, compared with 2.5 million at the end of 1998, said Kurt Scherf, vice president and principal analyst at Parks Associates, a Dallas-based research firm. That number will double by the end of 2010, he estimated.

"The vast majority of [users] today claim they were able to install and configure home networks on their own," Scherf said. "Right now they mostly turn to the trusted friend, family or neighbor. In growing numbers, though, they're starting to recognize some of the large retailers are offering good support."

But traditional VARs and solution providers — those with backgrounds in networking or the audio-visual arena — are building up awareness in the market that professionals can configure houses to take much greater advantage of the technology than homeowners are able to on their own, he said.

"The home is the final frontier," said Chaim Lowenstein, CTO and COO of Webcom247, a Brooklyn, N.Y.-based VAR and system builder. "The typical VAR will have to get into more specialized [solutions]. They have to find out where Best Buys, the Geek Squads, the Circuit Cities end. I think there will be a place for traditional VARs."

Installing home networks is too complex for many individuals, according to Research and Markets. "Despite the advances in broadband to the home, networking within the home is still a little behind," according to the Dublin-based research firm. "Deploying the routers and network adapters to connect PCs and home electronics in a seamless network still has not been easily achieved for the average consumer."

More people today want to pull into the driveway and automatically have lights go on in specified rooms, said David Wexler, co-owner of The Little Guys, a Glenwood, Ill.-based home cinema, audio-video and network provider.

The Little Guys retail store features a house — including a kitchen, bedroom and bathroom — to demonstrate how home electronics and networks can work in a home. "More and more and more people want the little extras," Wexler said. "It's not necessarily real pricey: It's a matter of how automated it is and the types of controllers you use."

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Last year, the "installing dealer channel for home theater and audio installations" totaled almost $4 billion, according to Parks Associates. Often, people buy home networks in steps, said Wexler. Typically, they initially have the home wired for a network, and then add capabilities such as a home theater, media server or remote alarm system, he said.

"I think we're right on the cusp of the next generation of controllers and integration," Wexler said.

As mainstream computer-market developers design products for the home, the role of VARs should evolve, said Scherf. "Some of the new systems that Intel and Microsoft are developing are positioned for distribution through VARs," he said. "They could be positioned through the VAR channel at the high-end or a boutique type of reseller."

VARs also should consider partnering with a company that specializes in related areas, such as audio or home theater solutions. Although it hard-wires networks in homes, The Little Guys tend to team up with IT specialists for other computer-related assignments, said Wexler.

NASBA is organizing a networking event for members of the IT, audio/visual and wiring engineering communities, said Booth. The confab will be held in Costa Mesa, Calif., on May 20, 2007, he said. "The partnering opportunities are immense," said Booth. "The problem is, no one's connected the dots yet."

The VAR Home Networking Market:

  • Home networking is next major frontier for VARs
  • Selling home storage that has nothing to do with closets
  • Home network market worth billions
  • Security rises in consumer budgets
  • Hardware sales and traditional home tech sales still work
  • Dig Deeper on Emerging Technology Markets

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