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Hardware sales can be just the start of VAR's home sale

Hardware sales still form the basis for most home IT setups, but they're just the beginning.

Dell Inc. may be the leading hardware provider to telecommuters and consumers, but it's far from the only company profiting from what is becoming a far more sophisticated residential IT infrastructure.
Home networks encompass far more than desktops, laptops and traditionally shared peripherals, such as printers. In fact, today's home network can cover the gamut — from controllers that oversee lighting, audio and video, as well as televisions and digital video recorders, according to Mark Hurwitz, owner of HED, a Manhattan-based solutions provider specializing in home automation systems for the high-end residential space., whose company is seeing gains of between 20% and 30% each year.

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Home networking is next major frontier for VARs

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Since it can be difficult, if not impossible, for one solution provider to put together, install and support some of these diverse products, there are ample opportunities to partner. "There seem to be a lot of teaming projects," Hurwitz said, adding that HDS often completes the hard-wiring, and then works with a more traditional computer reseller to provide some of the IT-based services. "I think it's very hard for people to have the depth of experience they need across all these different platforms."

Adoption of the many flavors of media servers in home networks is on the uptick, analysts say.

"From multimedia PCs capable of storing and streaming content to set-top boxes that distribute video from room to room and component-based systems that complement home theater and multi-room audio systems; sales of these systems will reach approximately 20 million units by the end of 2010," according to Kurt Scherf, vice president and principal analyst at Parks Associates, a Dallas-based research firm..

Initiatives by computer-industry leaders such as Microsoft, Intel and Apple, will propel the PC media server market alone to $44.8 billion by 2011 from $3.7 billion in 2006, as mainstream PCs become fully functional media servers, according to ABI Research. Other growing sectors will be PC aftermarket software and embedded middleware for media servers.

Vendors such as Snapstream and Orb Networks are delivering software allowing consumers to create their own media servers, and DLNA middleware vendors such as Mediabolic and DigiOn are creating media server software for OEMs across all media server categories, said Wolf. The embedded media server software market alone will see over 112 million software units shipped in 2011, the research firm estimated.

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Not surprisingly, vendors are leveraging this built-in and expanding demand. In September, Klegg Electronics Inc., for one, began selling the Enterastream media server, an entertainment server designed specifically for the storage conscious consumer, who desires to access all of their digital media easily.

The Las Vegas-based developer and distributor is selling the system through its stable of custom integration dealers. In October, Inteset LLC, a maker of advanced home entertainment systems, partnered with Exceptional Innovation, producers of Life|ware home control software, in order to better manage the media server. Once installed on a high-end Inteset media server system, Life|ware software runs on the MCE interface, providing dealers with numerous whole house control options, said David Hirsh, vice president of business development at Hanover, Mass.-based Inteset.

Indeed, more than 30% of home theater and audio system installations in 2005 included a media server, according to a Parks Associates' study. "The average price to the consumer for media servers is approximately $11,000 for video servers and $4,500 for audio servers," said Scherf.

By differentiating themselves, VARs can benefit from entering this market, according to Chano Gomez, vice president of technology and strategic partnerships, as well as director of the U.S. office of DS2, a developer of broadband over PowerLine (BPL) and high-speed PLC applications, with headquarters in Valencia, Spain.

"We believe adding advanced networking capabilities will increase the margins for [VARs'] products," Gomez said. "We think that the digital home, a home where electronic devices communicate and interact, is emerging as the key driver for new services in the telecommunications sector.

The ability to provide services with real benefits will help exploit the wide array of opportunities that home networking technology offers. VARs need to look not only to the end consumer, but also to the service providers to help them drive the digital home concept."

Whether they partner with a complementary solution provider or go it alone, there are plenty of opportunities for VARs to cook up success by addressing the varied and ongoing needs of the home-network consumer.

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 Desktop management, sales and installation

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