I was at Microsoft's Preview Day today in New York, which for me was largely about mobile devices (see my bio). One thing that came across clearly, however, was the centrality of Windows XP Media Center (XP MCE) to Microsoft's overall consumer plans. This reminded me of an interesting case study in Digital Connect about a custom installer, Silicon East, which has a somewhat unique specialty putting systems into new construction. That's nothing new - when the walls are open, it's the best time to put in home networking gear, and the walls are never more open than during new construction. But rather than get Mr. New Homeowner to buy a typical custom installation A/V system, Silicon East is pushing PC's with XP MCE.
This should be a pretty tough sell, as the notion of using a PC as a media hub still hasn't hit mass adoption yet - at best, builders are content to wire up a house for broadband and create a media nook where a plasma TV can be hung on the wall. Silicon East gets around this by selling the builder first. They actually go out to builders and hook their offices up with MCE boxes. The latest version of XP MCE is nearly as slick as a TiVo (and far more versatile - I'm typing this column on one); once the builders are hooked, they demonstrate it to potential customers in the model homes.
Silicon East gives up some margin figures (7% on hardware, 30% on service), and notes that they turn down business that's likely to be unprofitable (any time the customer uses the term, "Dell"). The initial foray is almost a loss leader - once the customer is hooked, there are follow on opportunities for display sales, system extensions, and all kinds of home automation.