Winston Churchill once said Russia was a “riddle wrapped in a mystery inside an enigma.” I feel much the same about the role of the electrical contractor in the voice/data market. I have read the industry forecasts that trumpet double-digit voice/data growth until the next millennium until my eyes glazed over. I have been PowerPointed to death by countless speakers at industry conferences urging electrical contractors, distributors and any other company in the electrical construction industry that will listen to jump on the voice/data bandwagon.
But for all of its double-digit growth, bread-and-butter power wiring still dwarfs the voice/data market in total sales, and will for years to come. Check out CEE News' second annual listing of largest electrical contractors on page 14. For these companies, with their years of history in the market and hundreds of employees on the job, voice/data business accounts for no more than 15% of total sales. Also, in a recent CEE News reader survey, voice/data sales accounted for about 10% of work.
One of the riddles that electrical contractors must decipher with datacom is to figure out how much of their resources they should devote to the fastest-growing market around — but one that will probably only account for a proportionally smaller piece of their total business.
Voice/data sales will grow big-time in the years to come for big and small contractors alike. I don't need to read the latest research study to believe that. Check out the following trends:
Datamation. Industrials are installing fiber-optic networks to link factory floor machinery to the management suite so the bean counters can track production runs real-time.
Networking hits home. Over the past year to 18 months, builders have started dangling prewired high-speed Web access and other low-voltage niceties such as home theater, security and intercom systems in front of homebuyers, and they are biting. Electrical contractors marketing themselves directly to homebuilders as a solution to demand for these services are taking the early lead.
Economic resilience. Despite the dismal economic picture and headline news stories about how manufacturers of networking components such as Lucent, Nortel and Cisco have been left with warehouses full of unneeded and now obsolete inventory because of the dearth of demand from the legions of now bankrupt dot-coms, demand for voice/data work from core customers such as schools, universities, offices, industrials and government agencies is holding up reasonably well.
A new round of cabling upgrades. Customer demand for high-speed downloads of movies, videoconferences and other tasks with a big appetites for bandwidth has sparked a whole new round of cabling upgrades. You can see examples of this in today's specifications for Cat. 5e cable, which replaces Cat. 5 cabling. These upgrades will be a healthy business in the future.
I don't want to oversell voice/data to readers who have not yet gotten into the market, because it can require a sizeable investment in personnel, training and new tools. There is also well-entrenched competition already in the market, from large established electrical contractors already fielding trained installers to cabling specialists from the telecom and security businesses.
The dilemma of whether or not to embrace this business reminds me of another famous quote from Churchill, when the famed British statesman was asked to compare democracy with other forms of government. “It's the worst form of government… Except for all those others that have been tried from time to time.”
That's not unlike the situation you face with the voice/data business. Despite its challenges, compared to other potential avenues for new business, the voice/data market is the most intriguing new business opportunity of our time. If Sir Winston was an electrical contractor today, I think he might agree.