How Digital Transformation Forces HVAC OEMs to Reconcile Two Competing Truths
The HVAC industry is entering a moment where two conflicting truths are becoming clear and unavoidable. Homeowners today are digital-first and they expect clarity, transparency, and real-time visibility into the systems that run their homes. Uber trained all of us to expect certainty: where the car is, how long it will take, which route it will follow, and even the choice to select a different ride. Drivers have the same visibility and control over whom they want to serve.
Meanwhile, HVAC OEMs still depend on long-standing distributor and contractor networks for sales, service, and homeowner interaction. That channel-centric model has shaped industry economics for decades, and many decisions still orbit around it.
Over the past few weeks, I’ve been wrestling intensely with the tension between these two realities. One question kept resurfacing:
Why does HVAC industry still behave as if the homeowner should be the least informed person about the equipment they invested the most in?
Most connected solutions still prioritize the contractor experience. Homeowners get filtered information – alerts, codes, or reports that explain very little. And the more I investigate this, the clearer it became: the underlying issue isn’t technology.
It’s fear!!! Fear of disrupting the channel, fear of upsetting relationships, and fear of cannibalizing the existing business.
1. The Legacy Model
The current HVAC model rests on a decades-old assumption:
“Only the contractor understands the system; the homeowner doesn’t need to.”
This belief created a power structure where:
- Contractors hold knowledge
- Distributors hold influence
- OEMs stay distant
- Homeowners remain dependent
Even the digital tools built in recent years reinforce this model. They help contractors, not homeowners. They surface technical codes, not understandable insights. They digitize the old process instead of rethinking it.
It’s old wine in a new bottle. The tools look modern, but the assumptions are still old.
2. The Truth Nobody Wants to Admit
The real friction slowing digital transformation isn’t technology. It’s channel conflict. Inside OEMs, the concerns sound like this:
- “If we give homeowners too much visibility, contractors will think we’re bypassing them.”
- “If we talk directly to homeowners, distributors may stop pushing our products.”
- “If we build a direct-to-homeowner model, the channel will retaliate.”
And honestly, some of this fear is justified. During the 2 to 4 transition year period when digital business models are still maturing, OEMs rely heavily on traditional channels to sustain revenue. These partners can influence what gets installed, promoted, or deprioritized. The fear is real:
“If we move too fast, we cannibalize ourselves.”
But then a deeper truth emerges:
By protecting the channel, we unintentionally hurt the homeowner.
The person who lives with the equipment, pays for it, and depends on it daily remains the least informed participant. Once I saw this contradiction clearly, I couldn’t unsee it.
3. Why This Model No Longer Works
Homeowners today are not passive participants—they’re digital-native, comparison-driven, and expect transparency. Recent industry studies show that nearly 40% of smart home technology buyers, including smart HVAC and water heaters, are between 18 and 34 years old. They expect:
- Clear explanations
- Data they can understand
- Insights they can act on
- The ability to choose based on information
Yet OEMs still design digital solutions based on the feedback of the traditional channel, who naturally shape tools around their workflow, not the homeowner’s needs.
Contractors want efficiency.
Homeowners want understanding.
Caught in between, OEMs try to satisfy both and end up satisfying neither.
4. Why New Entrants Always Win
Across industries, a familiar pattern repeats itself: new entrants drive real change, while incumbents adapt only when they’re forced to. It’s not a lack of intelligence or resources — it’s simply that incumbents have more to protect. New players, on the other hand, build with no baggage, no channel conflicts, and no sunk cost mindset. That freedom shows up clearly when you look at other industries that have already gone through similar shifts.
Analogy #1 — Zillow: Breaking the Information Monopoly
Before Zillow, realtors controlled almost everything. Buyers had limited visibility, had to rely entirely on agents, and had no easy way to understand true pricing. Zillow changed all of that by giving buyers the same data the experts had. Suddenly, the information monopoly disappeared.
The HVAC parallel is obvious. Homeowners should be able to see plain-English explanations like “Your compressor is overheating because airflow has been dropping for two weeks,” along with trend patterns, likely causes, and estimated repair ranges. Not cryptic error codes. Not alert fatigue. Just simple, understandable transparency — because transparency is the foundation of trust.
Analogy #2 — Tesla: Removing the Middle Layer
Tesla challenged decades of dealership dominance by removing the middle layer entirely. They decided they would talk directly to the customer — no dealerships, no intermediaries. That one philosophical decision changed the entire automotive experience.
The same thinking applies to HVAC. A direct digital relationship between the OEM and the homeowner is the natural evolution. Contractors will still play a major role, but as execution partners, not the gatekeepers of information. This simple shift rearranges the entire system: the homeowner becomes the core of the flower, and everyone else — OEMs, contractors, distributors — becomes a supporting petal.
Analogy #3 — Marketplace Model: Flipping the Power
In today’s HVAC model, the flow is straightforward but limiting: the contractor visits, diagnoses the issue, gives a quote, and the homeowner typically has only one option. But in a marketplace-driven model, the power flips. The homeowner already has insights, shares OEM-verified data, receives multiple bids, and contractors compete for the job.
This shift removes unnecessary diagnosis fees, brings transparency into pricing, and gives homeowners real choice. It also rewards contractors who provide better service, not just those who happen to be called first. And importantly, this is not a dashboard upgrade or a UI change, it is a fundamentally different economic model for service
5. The Core Premise: The Homeowner Must Move to the Center
Here is the fundamental shift:
Traditional HVAC: Contractor is the core.
Digital HVAC: Homeowner is the core.
Contractors remain critical even—but as trusted execution partners, not information gatekeepers. The OEM’s digital-first role becomes:
- Enabling transparency
- Simplifying insights
- Providing contextual clarity
- Facilitating fair service competition
- Supporting data mobility between homeowner ↔ contractor
This isn’t cannibalization. It is value creation:
- Homeowners get empowerment
- Contractors get high-intent leads
- OEMs get stronger brand loyalty
This is not evolution. This is re-centralization.
6. Why Incumbents Struggle (Even When They See the Future Clearly)
Even when leadership recognizes the coming shift, there is natural hesitation and it is not without reason. Behind most strategic conversations sits this question:
Is this hypothesis solid enough to justify the risk?
If the timing is wrong, or if the channel misreads the intention, the company could face:
- Reduced push from distributors
- Slower contractor adoption
- ROI delays
- Opening for competitors
- Significant opportunity cost
This caution is understandable. HVAC OEMs operate in a complex, slow-cycle, relationship-driven market. And these deeper structural constraints make rapid transformation even harder:
- Revenue Hostage Syndrome: Legacy revenue streams fund the entire business; disrupting them feels risky.
- Channel Dependency: Distributors and contractors have shaped market behavior for decades.
- Organizational Antibodies: Sales, operations, and IT are optimized for the old world.
- Sunk Cost Fortress: OEMs have invested heavily in contractor-centric tools and programs.
Meanwhile, new entrants carry none of these burdens:
- No legacy revenue
- No channel to protect
- No internal resistance
- Full freedom to design for the homeowner
They build what the market wants while incumbents protect what the market was. Protecting the past feels safer until the future arrives.
7. Final Conclusion: There Is No Single Playbook
No industry transformation follows a single universal playbook. The right path depends on a company’s capabilities, market position, channel structure, and leadership conviction. HVAC is no exception.
That’s why this essay doesn’t prescribe a singular solution — because there isn’t one. Instead, it lays out the strategic options, the analogies, and the underlying forces that shape the dilemma.
In the end, every OEM must choose the path that aligns with its courage, its constraints, and its long-term view of the homeowner relationship. Some will move gradually. Some will take bolder bets. Some will wait for the market to shift around them.
The future won’t be determined by a perfect blueprint, but by a willingness to question assumptions that have gone unchallenged for decades.
The HVAC and water-heater industry now stands at a similar inflection point that many other sectors have already crossed.
The question is not “Will this shift happen?”, It is:
“Which company will have the courage to go first?”
The direction is clear: the homeowner must move to the center. How each company gets there and how quickly will define the next decade of the HVAC industry.