The home security market has had a long and storied history. Its inception can be traced back to the conclusion of the First World War when crime spiked, causing American homeowners to seek ways to protect themselves and their property. The demand led to the development and innovation of alarm systems and home security products that fared well for many decades. As this market entered the 21st Century, however, legacy systems began to show their age.
In the U.S., consumer demand for home security has capped at between 20 to 25 percent of the homeowner market. Confined to a higher-income market segment, traditional home security became a mature, non-expanding cash cow business, subject to contraction during economic downturns. Hard-wired sensors, industrial-design keypads and telephone return paths once characterized the in-home security networks. Installation relied upon installers with specialized electrical and wiring skills.
Traditional home security relied on long-term contracts, which were set up in large part to recoup the expense of installations. This business model pushed aside many consumer segments, including middle-income earners, younger and relatively mobile homeowners, and renters.
In recent years, the home security market has undergone a significant evolution. Many converging technologies have expanded and disrupted the home security business model, creating a new opportunity in its place. Expansion has come through adding new home monitoring and control services to the offerings of traditional, professional home security companies, transitioning security into “Smart Security.”
Market disruption has arisen when entrants forgo professional installation and monitoring to offer do-it-yourself (DIY) home security with Smart Home capabilities – creating “DIY Smart Security.”
DIY Smart Security systems are capturing consumers underserved by traditional home security dealers, as well as existing home security customers who see the traditional model as simply more than they require or want to pay. Emerging DIY Smart Security solutions are being offered with mobile applications controlling various types of devices. Three primary offerings are single point products, simple kits and All-in-One devices, with the latter tapping a wide potential market.
The DIY Security Model
DIY security has two primary considerations: installation and monitoring. The traditional security industry will continue to roll trucks and use certified technicians to initiate service. Some consumers may even opt for “white-glove service” despite being presented with systems that are designed and marketed for simplified set-ups.
The move toward DIY monitoring has similar drivers. While some of the lowest-cost products eschew monitoring altogether, providing only an alarm in the event of a break-in, professional monitoring remains a key element to most security offerings and one that will ensure a profitable RMR stream for traditional dealers. The good news for security dealers is that self-monitoring DIY offerings are viewed as risky for many consumers who do not want the added responsibility of acting on alerts on a smartphone, especially when they are not home.
Leveraging DIY as a Dealer
Both DIY Smart Security customers and those subscribed to DIY monitoring services are growing at a quick clip. “Total DIY security users will grow at an annual rate of 71.5 percent from 2014 to 2020,” market research firm NextMarket reports. “Monitored DIY subscribers will grow 53.4 percent in the same period.”
The DIY Smart Security market is growing at a considerable rate through direct and consumer retail channels, and this growth will continue with or without traditional security participation. If security dealers and installers decide not to enter this fledgling market, they could risk future disintermediation – i.e. eliminating the middle man – as consumers will turn to other offerings to meet their needs.
However, there is promise for security dealers and installers to expand their reach in this segment by leveraging the demand of DIY equipment and systems to offer much-needed services such as installation and initial configuration, as some DIY setups are too complex for average consumers. There is also significant opportunity for security dealers to address the needs of the unmonitored consumer segment who buy DIY devices, kits and all-one-one systems to protect their homes, but are unable to efficiently self-monitor.
DIY Smart Security Solutions
Taking total consumer demand into account, Business Insider forecasts a massive growth in the number of Smart Home security device shipments. That amount, worldwide, could hit 709 million in 2019. These shipments are likely to consist of three kinds of offerings that traditional security dealers and installers should look at adding to their portfolios:
Point solutions. This is a single device, controlled by a dedicated app, aimed at a single task. Dropcam, a Wi-Fi video streaming camera acquired by Nest, in turn purchased by Google and renamed Nest Cam, is one example. Another example is Arcsoft Simplicam, an early Dropcam competitor, which is pushing the envelope on facial recognition technology.
Bundled or kit solutions. Bundled sets of hardware, controlled and monitored through a single universal application by a company such as SimpliSafe, include a base station, keypad, motion detectors, smoke detector, etc. The design-savvy Scout system is an example of a kit with optional professional monitoring that could appeal to new segments, such as apartment dwellers or new homeowners.
All-in-One solutions. This approach integrates advanced video surveillance with an alarm and a host of wireless protocols that enable a wide range of peripheral devices through a single application interface, providing security that is expandable to home automation. They are typically sold with service packages such as video storage and retrieval and professional monitoring. These solutions are ideal for dealers as they offer more options for the consumer and better opportunity for RMR.
Opportunities Ahead
Home security is a mature, but evolving industry. While the technology has become smarter and more conducive to DIY Smart Security installation and self-monitoring, there will still be demand and opportunity for traditional security dealers and installers.
As the technology grows in complexity, more and more consumers will require professional expertise to install and configure their DIY Smart Security systems. Professional monitoring services will also continue sought by consumers who prefer around-the-clock protection and support.
Looking toward to the future, traditional security companies have a clear opportunity to increase RMR, add new customers, enhance existing relationships and reduce churn by employing a DIY Smart Security strategy.
Kevin Garton is Chief Marketing Officer at Zonoff, which offers a proven, enterprise-scale Consumer IoT Platform with the interoperability, flexibility and reliability needed to successfully support mass-market Smart Home offerings. Find out more at http://zonoff.com.
