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Studies Point To Return Of Residential-Install Growth

3/11/2010 11:35:00 AM Eastern

Dallas -
Three-fourths of surveyed systems integrators expect their residential-install
revenues to grow this year, up from only a third who said their businesses grew
in 2009, according to a fourth-quarter survey by Parks Associates and the
Custom Electronic Design & Installation Association (CEDIA).

The survey polled
installation companies that install home controls, entertainment systems and
energy-management solutions, including multi-room audio, home theater,
low-voltage wiring, and security and control systems. The installers' forecasts
exclude commercial-venue installations.

In a separate
study, Parks forecasts integrators' residential-install revenues will rise 6.6
percent in 2010 to $8.9 billion, reversing two consecutive years of declines.
In 2009, revenues fell 4.6 percent, preceded by a 6.5 percent drop in 2008. The
two-year drop followed 2007's single-digit percentage gain of 8.8, which
followed years of double-digit gains. The industrywide estimates reflect
installer-level revenues, including hardware sales and labor charges.

The upturn in
installer sentiment and forecast channel revenues tracks a January 2010
forecast by the National Association of Home Builders (NAHB), which projected
that single-family housing starts would increase 35 percent in 2010 following
four years of double-digit percentage declines. The housing-start declines
peaked in 2008 with a whopping 40.5 percent drop, Census Bureau statistics
show.

In releasing
details of the installer survey, Parks said 54 percent of surveyed integrators
reported 2009 revenue declines, with reported declines averaging 4.1 percent.
Another 13 percent said their revenues remained the same in 2009, and 33
percent reported revenues increased in 2009.

Among the third of
polled installers whose sales grew in 2009, many had diversified to focus more
on retrofit and upgrade opportunities, the survey found. In fact, retrofit
projects accounted for an average 63 percent of installers' 2009 revenues.
Other installers who grew in 2009 hired more sales staff and enhanced their customer
support.

Installers also
plan to diversify their product offerings. Although integrators continue to
generate two-thirds of their revenue from A/V systems, the survey found, many
plan to diversify in 2010 by offering lighting controls and solar panels for
the first time. About 40 percent of integrators plan to begin installing
photovoltaic solar panels, and another 38 percent are investigating the market to
determine if they should do so, the survey found.

U.S. Single-Family Housing Starts, Forecast
(in thousands of units)

                                 Starts
1945                           325.0
1959                       1,234.0
2005                       1,715.8 (+6.7%)
2006                       1,465.4 (-14.6%)
2007                       1,046.0 (-28.6%)
2008                           622.0 (-40.5%)
2009                           443.5 (-28.7%)
2010*                         600.0 (+34.9%)

Sources: Census Bureau statistics 1959-2009 (http://www.census.gov/const/newresconst.pdf)
U.S. Dept. of Labor housing-start statistics 1945-1959.
*National Association of Home Builders (NAHB) 2010 forecast,
as of Jan.8, 2010.(