Google Will Not Rest, Now That They Own NEST!
So Google purchases NEST for 3.2 billion dollars and immediately the blogs and social media posts are saturated with how this is Google’s way into your home and how their ability to monitor your thermostat settings and power usage will lead to an invasion of privacy for homeowners across the globe.
Nobody really knows what the master plan is for Google yet, but it is pretty safe to say they didn’t spend 3.2 billion dollars looking to make their return by selling thermostats. Currently about 40,000 NEST thermostats are sold each month, which is amazing considering they have only been in the thermostat business for two short years! At 3.2 billion and assuming NEST is making a 60% margin on their product (retails for $249.00), the ROI on this is about 44 YEARS at current production levels! Even with reduced manufacturing costs and increased sales, which Google is sure to achieve, this purchase was never about getting rich off thermostats.
The reality is the large big box retailers and now the Google’s of the world have identified a trend and market that nobody is really filling. Most HVAC contractors resist change so much that they are allowing, actually inviting these companies into our industry. The HVAC industry is changing and changing rapidly, yet most HVAC contractors would rather fight the change and circumvent regulations, than evolve to fill the growing demand.
Look at California for example. This state recognizes that energy consumption, comfort levels, indoor air quality and life expectancy of HVAC equipment is all determined on the quality of the installing contractor. They also know that “quality” is a word most HVAC contractors use to describe their services, yet by-pass and resist every program to actually measure or quantify it.
Look no further than permitting. Today, verified duct testing is required on all HVAC change outs in CA and what happens, most contractors simply stopped pulling permits. Why? Doesn’t the quality of the duct system determine the efficiency and effectiveness of a new HVAC system? Isn’t it in the customer’s best interest when investing in a new HVAC system to ensure the ductwork is properly sized and sealed? Every contractor knows this is true, but they would rather look at the changes as “regulation” rather than the opportunity it truly is.
When you test in and test out all duct systems as part of a new system installation it leads to more sales, more revenue and more profits!! But let’s by-pass this program and NOT pull a permit any more. We’ll tell the homeowner that this testing is just going to end up costing you more money and is a waste of everyone’s time. Really!!
Why is Home Depot, Lowes, Best Buy and soon Google offering energy auditing? None of these companies are actually HVAC contractors or energy management providers? They’re offering the testing to get into YOUR customer’s homes! They are giving your customers what they want and educating homeowners on all the ways they can improve the comfort, safety, indoor air quality and energy efficiency of their homes.
Then they are selling improvement packages at top dollar so that they can sub contract the work out to local HVAC and GC companies, all while depositing double digit NET profits into their bank account day in and day out. It’s a great business plan and so far it seems to be working very well for them.
Wake up! Stop complaining about low margin work, the seasonality of your marketplace and how the local utility or municipality is killing your business and start educating yourself so you can give your customers the real quality they deserve and are willing to pay for. Oh yeah I forgot, nobody in your market has any money and would never invest in these type of home improvements.
Tell that to Google, Home Depot and the other huge retailers when they call you and ask you to be their subcontractor to install this new high efficiency air conditioner they just sold. You think you’re making crappy money/profits now, wait until you see your margins when you no longer own your customer!
The Google purchase was never about thermostats, it’s going to be much bigger than that. Look at the indoor air quality market. It has gone from a 4 billion dollar industry to a 12+ billion dollar industry in the last few years and the HVAC industry accounts for less than 10% of this market. Today’s homeowners are more educated than ever before. They are looking for real solutions to their challenges and not band aid fixes.
I have dedicated my professional career to helping HVAC contractors become the experts in all these areas for their clients. I believe it is more important today than ever before for contractors to educate their clients on all aspects of their home to ensure their customer database is bullet proof to the big box retailers.
No longer can HVAC contractors bury their head and the sand and continue doing business like their daddy or granddaddy did. It’s no longer about equipment and accessories, it’s about increased health/safety, comfort, reduced dust levels and energy efficiency. None of these areas of concern for your homeowners can be solved with variable speed, air cleaners or 2-stage equipment alone.
Now is the time to embrace home performance contracting and building science. It would be my pleasure to help you explore what this could look like for you and your business.
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