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| EMagazine Volume 5 Issue 2 April / May 2000 |
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Toys Article - April 2000 - [HTI Home Page] |
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Navin Sabharwal is a
Senior Analyst with Allied Business Intelligence, covering residential
technologies. He is the author of the report titled: |
One advantage that is unique to the MDU developer/landlord is that because landlords own the inside premises wiring, they can sell the wire or access to it back to the newly deregulated service provider. Thus there is now an incentive to provide services to the tenants that include security monitoring, energy management and, of course, fast Internet access. Not surprisingly, in the cases where structured wiring is installed in MDUs, it is part of a broad parcel of services such as security monitoring. |
Residential structured wiring (also known as structured cabling) is rapidly emerging as the way most new homes in the future will be wired. The installation of a structured wiring system provides the bandwidth and in-home distribution for such services as broadband access, computer networking and home automation. By using high bandwidth cables such as Category 5 copper wire and RG-6 coaxial cable, and a configurable central distribution hub, the home can be properly "future-proofed."
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MDUs are very different in size and layout from SDUs. While SDUs typically are significantly larger than 2,000 square feet in size, MDUs rarely exceed 1,500 square feet. This implies that less cable is needed and fewer rooms need to have wall outlets installed. In some cases, if the MDU is small enough, there is little need for a structured wiring system, since computer networking, typically the main benefit, is of little value.
Also, MDUs are usually a number of units stacked on top of each other. There is thus little room left unused that would help in installing the cabling since there is often no pathway at all between units. Therefore, though the equipment cost might be less, the labor cost is not. The degree of complexity can be significantly more, particularly in retrofit situations.
Generally speaking, the identity of an MDU structure is unique. While it is used for residential purposes in the case of an apartment building they are often considered commercial buildings for purposes of safety codes. Hence wiring for support systems such as energy and fire alarms are regulated.
In the SDU segment, the homeowner either already owns the home or is committed to buy it from the developer at some point. In the latter case the developer/builder will recuperate the full additional cost of the structured wiring system, plus a tidy profit margin, upon the sale of the house. The ownership structure in the SDU segment therefore reduces any financial risk of installing the system. This is typically not the case in the MDU segment, because the occupant of the dwelling unit is rarely the owner.
This puts the burden on the developer to ensure that the installation of a structured wiring system will bring positive financial returns over the longer run. These revenue stream implications often make the installation decision a very marginal one. The developer/landlord has to consider what rental premium can be charged to tenants as well the impact on occupancy rates. A "wired" apartment is likely to have a longer tenant retention rate as well a higher overall occupancy rate. Rental premium and tenancy durations thus represent delicate assumptions that need to be validated by past experience.
Of course the story is not all negative for the MDU segment in comparison to the SDU space. One advantage that is unique to the MDU developer/landlord is that because landlords own the inside premises wiring, they can sell the wire or access to it back to the newly deregulated service provider. Thus there is now an incentive to provide services to the tenants that include security monitoring, energy management and, of course, fast Internet access. Not surprisingly, in the cases where structured wiring is installed in MDUs, it is part of a broad parcel of services such as security monitoring.
Currently, the large structured wiring players, including Home Director and OnQ Technologies, are particularly focused on locking up large, single-unit production builders through their system integrators. Thus the MDU market is comparatively underserved.
Allied Business Intelligence (ABI) believes that as the structured wiring market continues to find its feet that most of significant structured wiring players will begin aggressively targeting the MDU space, in some cases with customized product offerings. By 2004 the MDU segment is projected to account for 23.9% of the total residential structured wiring market in terms of number of installations. This is up from an estimated 13.7% in 1999.
Allied Business Intelligence, Inc. is an Oyster Bay, NY-based technology research think tank specializing in communications and emerging technology markets. ABI publishes strategic research on the broadband, wireless, electronics, networking, energy and transportation industries. Details of these studies can be found at www.alliedworld.com . Or call 516-624-3113 for more info.
