I thought you presented some very valid views with your original post even though it undoubtedly made just about every custom installer who read it bristle at your view of the future. It was only a few of your comments mixed in that managed to irritate me, hence the somewhat strident tone of my first post.
|Originally posted by trdr_vix
I don't see the comparison with Dell since they sell and have sold to John Q public since day one.
My point was simply that companies always impose restrictions on how they sell their products with one goal in mind â€“ optimizing their profits. Dell is every bit as restrictive about how their product can be sold as Control4 will be, just in a different way. The only real difference is that the demand for PCâ€™s is huge, whereas the demand for HA is still relatively small. It is misleading to say â€œDell has sold their product to John Q Public since day oneâ€, because it suggests that Control4 is not selling their product to John Q Public. They are also selling their products to John Q Public through dealers, just like HP, IBM etc.
Before you say that the demand for PCâ€™s is huge because distribution is wide and prices are low, yes they are. But before a product reaches that point it must usually first go through a product cycle of the type you described. First the product will be priced higher to pay for production costs and R&D. Then, IF demand is strong and IF manufacturing efficiencies are in place to allow prices to drop and IF there are a sufficient number of competitors (sometimes it only takes ONE) manufacturing prices will start to drop and distribution will increase.
This happened with plasma televisions. First they were marketed very heavily through custom installers because they were the only ones that were selling them when they were 25K. Prices continued to drop, consumer awareness of the technology continued to rise along with demand, and surprise of surprises you now find plasma TVâ€™s in Best Buy, Circuit City, Sears etc. This cycle is as inevitable as the sun coming up in the morning and going down in the evening.
However, that cycle does not always happen within 5 years and will only happen in the case of HA when certain factors have been sufficient met â€“ such as consumer demand, manufacturing efficiencies, ease of installation etc.
|Do you intend on marking up this lower price solution more to match the higher price HA solutions and make more material margin?
I suspect your question is somewhat of a test, if not I think it reflects a lack of awareness of the amount of competition that already exists within the custom installation market. No, I donâ€™t think anyone will be charging more margin to match the higher priced solutions. If only such a world existed we custom installers would be laughing to the bank. Pricing will be much lower based on the lower cost of the product.
|Are you going to go out and be able to sell more of the lower price solution systems because of the lower price and spread your labor overhead accordingly? Will you have to hire more installers if you get this greater volume, and the associated higher employee overhead costs? Were you looking to reduce installer hours for each system and resultant less billable hours for each job? Were you looking for a lower price solutionâ€¦
Just trying to see what this easier, lower cost solution is all about, if it's not about getting it out to more John Q masses, what is the differentiation if it does not open up greater market penetration thru a complimentary sales/marketing program.
Yes, I think the things you describe are what everyone hopes for. Custom installers would like to have a product that allows for lower material costs as well as installation/ programming costs. The problem until now is that such a product has not existed. Hopefully Control4 is one of the first steps on the way to that vision.
|BTW regarding your comment on "I hate it when I want something and can't have it" I am the one with the money...I thought that's what a business wants...my money? Is there some satisfaction that someone gets in depriving me of a product? Seems like that kind of business is the one that commits business suicide.
What I meant by that statement is that people frequently talk out of both sides of their mouth. They praise the free market when it gives them what they want ($500 PCâ€™s) but claim that companies are imposing â€œartificial restrictionsâ€ on products when it doesnâ€™t give them what they want. Those â€œartificial restrictionsâ€ as you call them are not artificial, they are based on supply and demand.
This relates back to my fist statements in this post. Using PCâ€™s as an example, they were first sold primarily through â€œboutiqueâ€ type independent stores. Nothing â€œartificialâ€ about it. Those initial independents played a vital part in the development of the PC market. Now that cycle is repeating itself in the HA market. As pricing, demand etc. adjusted the product achieve wider and wider distribution.
|I also thought the whole idea of control4 was not "high end" it was a lower end product, much easier to install, with full capability as the high end system...why is home Depot business suicide?
Because of how the market works. See below.
|Seems to work well for the other x0,000 or so suppliers that sell thru them.
Flawed logic. It also doesnâ€™t work well for x0,000 or so suppliers who donâ€™t sell their product though Home Depot. The statement above is probably the most flawed in your post, insofar as it represents a common and incorrect assumption which is that â€œit worked for product A so it will work for product Bâ€. Or to put it another way, that the HA market is the same as the PC market or the lumber market etc. Each of those markets is distinctly different, which is why for example the cost for HA equipment is still much more expensive than the cost for PC equipment.
But to answer your question it would be suicide because:
1. Products like this are still at the absolute highest rung of electronics for the home because:
A. Pricing is still high. It is a breakthrough compared to what currently exists but it is still high. That limits demand.
B. There are very few people that understand how to install and configure them. This product would be so far beyond the scope of your average Home Depot salesperson itâ€™s not even funny.
C. They MUST work with the existing sales channel if they want to sell the product. But the existing sales channel would laugh their ass off and not touch the product if it was in Home Depot stores. And Home Depot stores couldnâ€™t sell it. So thatâ€™s why it would be suicide. Thatâ€™s all opinion of course but I think itâ€™s sound and anyone that has a clue about how this market works will confirm it for you. Believe me when I tell you this has already been tried before (and will keep being tried until someone gets it right). A few years back AMX decided they were going to market a lower priced turnkey system through cable companies and telcos. The project failed MISERABLY.
Having said all that I think your vision is what will happen in some form at some point in the future and is spot on.