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Executive Roundtable: Residential Ductless Technology

Originally published: 03.01.19 by Pete Grasso

Executive Roundtable: Residential Ductless Technology

Ductless technology has come a long way since it was first introduced to the US market, as it continues to become a mainstream offering for contractors.


Perhaps the biggest growth segment in this industry over the past several years has been in the residential ductless market. While this technology has been around for a long time, even in the U.S., it has only relatively recently started to become more mainstream.

And, while more and more contractors are offering some kind of ductless product as part of their portfolio, there remains a huge growth potential or savvy contractors looking to increase business.

I recently met with a handful of top executives at many of the top ductless manufacturers to get their thoughts on the acceptance of ductless technology in the U.S., how contractors should market these solutions to customers and where they see the market headed.

This Executive Roundtable panel included Woo Young Choi, product manager for ductless at Bosch; Jerad Adams, director commercial product management for Friedrich Air Conditioning Co; Nick Shin, vice president and general manager of VRF & ductless systems for Johnson Controls; Kevin McNamara, senior vice president and general manager at LG Electronics; Steven Scarbrough, senior director of residential business at Mitsubishi Electric Trane HVAC US; Allan Dziwoki, vice president and general manager at Panasonic; Randy Roberts, vice president of sales for Rheem; and Russell Tavolacci, senior vice president & COO at Samsung HVAC.

Our panel includes:

Woo Young Choi
Product Manager for Ductless
Bosch Thermotechnology
Jerad Adams
Director, Commercial Product Management
Friedrich Air Conditioning Co.
Nick Shin
Vice President & General Manager of VRF and Ductless Systems
Johnson Controls
Kevin McNamara
Senior Vice President & General Manager
LG Electronics
Allan Dziwoki
Vice President & General Manager
Steven Scarbrough
Senior Director of Residential Business
Mitsubishi Electric Trane HVAC US
Randy Roberts
Vice Presidentof Sales
Russell Tavolacci
Senior Vice President & COO
Samsung HVAC

How has ductless technology evolved in the U.S. market in the past decade?

Tavolacci: We’ve seen more VRF technology, which is a commercial product, but it has a residential capability now as well. It’s that addition to what was the conventional ductless product that has widened the bandwidth. What you can do from it started out to just a single one-to-one like a conventional central system, you now have, of course, multi-split systems, you have multi choices of ductless and ducted.

Roberts: The flexibility of the products, and certainly the contractor awareness of how they can use those features and benefits to sell to a greater population of problems than they did before. Generally, ductless was isolated to some very niche parts of their business and so with time and good education and training and additional features and benefits; it’s now helping them solve more problems. The products have improved a lot too. If you look at it over the last 10 years, their efficiency levels are even much higher today.

Dziwoki: The contracting community is who really influences the sale of residential air conditioning, no question. So the more contractors got comfortable with ductless technology and really understood the applications of the product, the more they embraced it. Business-minded contractors who really understand the opportunity of ductless to solve myriad problems have embraced it.

Scarbrough: We have progressed all the way into hybrid solutions, where we can integrate both traditional ducted products together with ductless to provide the customer with countless opportunities to solve any of their needs. Contractors can now provide customers with significant zone comfort solutions with the benefit of only paying for what they need.

McNamara: The development of the multi-zone systems, we’re able to have one outdoor unit that could service multiple rooms with its own individual local source for heating or cooling has been a really big step forward.

As the applications were developed to do heating and cooling more efficiently, and as the products became better in a short amount of time, this technology became much more attractive to homeowners.

Shin: The next big evolution is the advancement of the compressor technology to be able to run the heating mode in very cold climates. When I say cold climates, we’re talking down to -22F. You could still produce 70 to 80 percent capacity in heating. That’s very critical because more than half the population lives in the northern part of the world. Now, the variable speed ductless product can run four seasons instead of two or three. This has helped gain acceptance in a larger portion of the U.S.

Adams: Ductless is the fastest growing segment of HVACR. The growth has been staggering. With the mechanical contractor interest and now consumer demand, we are evolving at an even faster rate. Technologically, ductless has come a long way. Compressor technology switched from ‘standard’ to variable-frequency drive (VFD) ‘inverter’ compressors, increasing performance.

Evaporator unit fan motors evolved from direct-drive to DC- or ECM-type to minimizing sound levels and power consumption. Heat exchanger technology has evolved to include intricate high-performance coil designs, which are minimal in surface area but maximize heat transfer to ensure system capacity.

How can contractors use ductless technology to offer additional solutions to customers?

Tavolacci: The quintessential solution with ductless that contractors have offered was the ability to do an add-on room, but now that has now grown to being able to do a full house, a complete home with ductless systems.

Roberts: Contractors are now able to use ductless to promote whole home solutions that meet the wants and needs of the homeowner, and they can often do that more effectively and cost efficiently. Ductless offers more flexibility. It allows the customers to customize the units to their spaces.

Scarbrough: One of the things that we talk about with our contractors is the fact that we can solve a tremendous amount of issues in customer’s homes. We can do it with a product that is generally much easier to install. The contractor now has a very large arsenal to go to the customer, based on just about any need that they could possibly have, and come up with a solution.

McNamara: As people are building smarter homes, they’re building more efficient homes, there’s no question the right technology is here as far as the inverter technology is concerned for a home.

Shin: In the beginning, we had these single zone systems. Contractors used it for some odd type of applications like room additions, bonus rooms, and those types of things. But now, as the capabilities have increased, and with the multi zone offerings contractor’s can use this technology to design whole home solutions.

Adams: Ductless offers homeowners a highly efficient, customizable, all-season HVACR solution. When it was first introduced, it was a niche product for sunrooms or spot heating/cooling. Ductless has evolved into a whole home solution. The technological changes have continued to push performance and capabilities.

Choi: We’re moving toward ductless as a primary source for heating and cooling — not only with the single zone, but with the multi zone as well to the customers. It’s easier for contractor’s to work on in terms of the installation and serviceability compared to traditional systems. So that’s how they’re pushing it to the market.

What are some of the main benefits contractors should highlight when it comes to ductless systems?

Tavolacci: The efficiency in ductless systems is in the 20s and 30s in terms of SEER. Their ability for super quiet, low sound where you don’t have to worry about hearing the air blowing into the space. And, of course, there’s efficiency as well as the maintenance. The reliability of these systems has been proven for generations overseas, and coming into the U.S. market in relatively recent past. The quality is there, and therefore there’s a lot less maintenance to be associated with the homeowner.

Dziwoki: Comfort control is the big one, where you can individually heat and cool rooms at their own temperature is a big selling point. Because in every house, there is always a room somewhere that’s too hot in the summertime and too cold in the wintertime. Subsequently, not only do you have individual temperatures in those rooms to satisfy the occupants of those rooms, but also you can turn rooms on and off and save energy.

Scarbrough: Health, comfort and efficiency. Those are really our three keys when we look at the residential market.

McNamara: The contractors win because if they’re able to present to the homeowner as part of their value proposition that the homeowner is going to get a rebate, for example from the utility, to help incentivize them for this change, that’s a big win.

Shin: The biggest benefit is efficiency. When you get rid of the ductwork — all the metal ducting you’ve got to push air through takes up about 30 percent of wasted energy. Plus, with variable speed, you’re talking about energy savings of 50 to 60 percent compared to the traditional systems.

Adams: The increasing availability of ductless system options — providing room-by-room comfort, customizable to the specific needs of a space — is what’s driving demand on the residential and commercial side. This type of design flexibility, matched with high efficiency performance, makes ductless the best system option in many instances. It used to be that ductless was an option mainly for areas of a home or business that didn’t have existing ductwork, but now with how efficient and effective they are, customers are realizing that ductless systems are a great option instead of central air.

Choi: First is ease of use for the system. Most of the time it comes with the wireless thermostat, the customer can track it quite easily with the controlling feature as well. It’s got the display on the unit so they can see the actual unit and see how it’s running. Also it’s easy to clean compared to traditional systems. They can take the filter out once in a while, clean it, dry it, put it back on and it runs like a fresh new unit.

What are some challenges still facing ductless technology?

Tavolacci: Educating the customer versus what they’re used to in the conventional central system or the conventional heating system. I think the customer still has to get more educated that these are a completely great alternative solution to what they’re used to, the awareness of what their flexibility is, the awareness of what their range of choice is … if you’re talking about the customer, they need to know what their choices are like any consumer product.

It’s not simply that it’s going to save them money and it’s going to be more comfortable — they expect that — but what are their choices? If you give them more choices, then you pull that consumer in, and that’s better for the contractor because they have a lot of options.

Roberts: So many of the homes in the US that have been built over the years, have really been designed around ducted solutions. You’re seeing some new construction with ductless, especially some of the high rise, some of the lofts, some of the things where ductwork is such a challenge to be put back into those retrofits. But you still have a lot of history of homes that are being built with duct work and with the new zoning systems and things along those lines, the ducted solutions have even more options as well, just like ductless does.

Dziwoki: It’s going to be the price point because compared to traditional heating and air options; residential end users are going to be more price-conscious. That has been a challenge from the beginning, so it’s not new. But that’s going to continue to be an obstacle, as it becomes a larger portion of a contractor’s business. It may slow down the rate at which it will grow as a part of the contractor’s portfolio. So that has to be mitigated through consumer financing and energy driven rebates.

Scarbrough: The biggest hurdle we have is the cost. Sometimes it takes both the customer and the contractor back a little. Not only do we have to work with the customer to overcome that obstacle, we have to work with our contractors. Many times, a contractor doesn’t believe their customer is going to go for that purchase option, even though it’s the best option for what they want.

McNamara: The challenges in the residential world is kind of twofold. The initial first cost is probably still a little bit higher than a standard unitary system. And, you have this entrenched design approach to homes that’s very difficult to change. I think that’s the challenge. As time passes, however, these systems become more accepted.

Adams: One of the biggest challenges is greater adoption by the trade and making it easier for contractors and installers to sell and provide ongoing service for ductless systems. As a relatively recent growth category in the U.S., not all trades are yet familiar with or have incorporated ductless as part of their business plans, and a big reason for that is because servicing individual ductless units vs. a single central air system can seem daunting at first.

Choi: In different parts of the country, electricity cost is a little bit higher than others and there’s a little bit pushback. But with the better efficiency of the product we are trying to get through those obstacles.

How will this market change over the next few years?

Tavolacci: It’s going to assimilate more to what conventional systems do or can do, but with a technology that comes with ductless. I think you’ll see more efficiency and more flexibility in the ductless systems themselves. The market acceptance will continue to be greater as well. I say that because of the technology surrounding us. The consumer is much smarter today because of the information that’s out there, and they’re identifying this type of technology that they want for their home.

Roberts: Growth of ductless is outpacing growth of ducted. It has for a number of years. It will continue for the foreseeable future. And it’s going to represent a double-digit percentage of the market; it’s going to get to 15 percent of a contractor’s business pretty quickly. And if a contractor doesn’t get involved and get engaged, they need to look at that as lost sales opportunity.

Dziwoki: People are starting to see this as a whole home solution. We’re not anywhere near there yet, but it’s happening. Higher end residential homeowners will consider this as a solution. Some niche builders will consider this as a solution in their new residential building construction. I think the price will continue to go down in the next several years because market pressure will force that to happen. There are too many competitors in the market to feed the current demand and they’re all trying to create demand and work within a limited channel. All of that pressure is going to bring the price down.

Scarbrough: As we look to make this more of a mainstream option for consumers, we realized that we needed to be more flexible. Not simply integrating ducted units with ductless units, but also creating different styles of ductless units. Ones that we can integrate up into the ceiling, or something that we can put in a floor space. All of that has helped us become far more recognized as a real-world solution than just the traditional wall unit.

McNamara: The residential segment is growing 20 to 25 percent a year. And you have multiple layers of players as well as far as products go. Everybody wants to be in it. Right? Because it’s growing. I think you’ll continue to see it move in that direction.

Adams: Ductless continues to gain acceptance and most industry pundits now forecast ductless will capture approximately 15 percent of the total market. If this happens, it certainly changes the current industry dynamic, from manufacturing and branding to advertising. Specifically, key consumer messaging for all types of HVAC will likely need to evolve to stay relevant in the consumers’ mind.

How should contractors go about adding ductless solutions to their portfolio?

Tavolacci: Education and training is the key thing. What manufacturers offer not only education and training on their product portfolio, but also how is it offered? A contractor’s time is extremely limited. They have to focus most of their time, obviously, in the field hopefully installing more and more systems.

Roberts: Take advantage of all the training that is out there. At Rheem, we invest a significant amount of dollars into training in order to help the contractors not only understand the technical side but also the business side and the advantage of ductless and how it can help support their business.

Dziwoki: If they’re not selling it today or they’re doing it on an as asked for basis, I’d tell them to take it more seriously. Not just because I work for a ductless air conditioning company, but also because ductless is a true problem solver. It’s got a tremendous amount of benefits and contractors can make a lot more money if they focus a portion or a significant portion of their business on that.

McNamara: It’s hard to imagine a contractor that’s not engaged in it today quite frankly. Contractors who haven’t ventured into this area should be aware that probably their competitors are. If they want to have a differentiated offering, or something different in their competitive environment, then they should certainly be looking at the things that are out there. I think that’s where inverters fit in nicely in ducted and ductless technology.

Shin: It’s easy, but you still have to know how to install the products properly. Once you do that, really the market’s wide open. It’s growing at double digits for many years and, right now, the penetration’s been only about 10 percent of the market, so there’s still 90 percent of the market that can be converted to ductless products.

Adams: Getting into ductless makes sense for a contractor because it’s a growth opportunity and they need to understand it in order to be able to compete. We have seen contractors now devote their entire business growth to ductless solutions, so being engaged is important. We highly recommend partnering with a brand that offers an extensive ductless training curriculum, like our Friedrich Ductless Academy courses.

Choi: Ductless is one more avenue for contractors to generate business as well as offer more solutions to their customer. So, maybe traditionally if they had only one or two ways of getting the home cooled or heated now they have one more feature, one more solution to add on to it. Get educated right away and start offering these solutions to your customers.


About Pete Grasso

Pete is the former editor of HVACR Business magazine. He has spent his career working in and with trade media, both as a public relations practitioner and as an editor. He gained a great deal of expertise in the B2B arena, within large and medium sized advertising agencies. Be sure to follow Pete on Twitter and connect with him on LinkedIn!


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