The landscape of the intrusion alarm market remains robust, with insights from industry leaders reflecting a sentiment of optimism amidst evolving consumer demands and technological advancements. According to SDM’s 2024 Industry Forecast, a significant majority of respondents view the market favorably compared to previous years, citing consistent growth driven largely by innovations in smart home technology and enhanced security solutions.
Parks Associates’ latest research underscores this trajectory, revealing that nearly half of internet households now integrate security solutions, including networked cameras and video doorbells. This shift toward device-centric security reflects a broader consumer appetite for comprehensive, yet user-friendly, home protection systems.
Leaders in the field, such as Bryan Cipoletti of Guardian Protection and Sara Harshbarger of Brinks Home, emphasize the increasing convergence of security with smart home functionalities. They highlight not only the rising consumer interest but also the challenges and opportunities in navigating a competitive market shaped by technological advancements and changing consumer expectations.
As the industry continues to evolve, stakeholders are focusing on enhancing value propositions and educating consumers on the benefits of professional security solutions versus DIY alternatives. This strategic approach aims to capitalize on the expanding market while addressing barriers such as cost, cybersecurity concerns, and the complexity of systems integration.
In this report, we delve into the key trends driving the security and smart home market forward, examining how industry players are adapting to meet the growing demand for integrated, secure and technologically advanced home protection solutions.
Security Professionals’ Perception of the Intrusion Alarm Market
SDM asked, “How would you rate the current state of the market and the potential for sales in the intrusion (burglar) alarm market?”
When asked about the current state of the intrusion alarm market in November of 2023, 46 percent thought it was very good or excellent, down just 1 percentage point from the previous year.
// SOURCE: SDM 2023 AND 2024 INDUSTRY FORECAST STUDIES
Steady Growth, Rising Demand
When asked about the current state of the intrusion alarm market, a large majority (81 percent) of respondents to SDM’s 2024 Industry Forecast expressed they viewed it in the range of good to excellent — essentially the same sentiment compared to last year.
According to the latest research by Parks Associates, the security market indeed has experienced slow and steady growth overall. Now 43 percent of internet households have a security solution — either a system or a device that is a networked camera or video doorbell, explains the Dallas-based research firm’s president and chief marketing officer, Elizabeth Parks.
“Growth in the market is coming from the device, not the system side,” Parks says. “Security systems can provide and need to leverage the many ‘peace of mind’ and ‘comfort and convenience’ devices into the security platform and service offerings. There is demand for various monitored security services that extend beyond the access control points in the home. For example, cyber services or air quality monitoring or energy monitoring services all provide great value and context for the consumer.”
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Cipoletti, president of Warrendale, Pa.-based Guardian Protection, expresses the intrusion alarm market is as dynamic and exciting as ever, with new products, more competition, the perception of increased crime and consumer interest.
“The potential for new customer growth across the industry continues to increase as more consumers explore and understand how security fits with both their security concerns and smart home needs,” says Cipoletti, who is featured on this month’s cover. “Professional security integrators, like Guardian Protection, are well positioned to take advantage of this consumer interest by offering a professional solution to an increasingly complex ecosystem of intrusion and smart home devices.”
While the potential for sales continues to increase, Cipoletti explains Guardian Protection has also seen the costs to generate new customers increase, and that is something on which the company has been laser focused. Gone are the days when the typical new customer had only a motion detector and a few door/window contacts, he says.
“However, expansion of customer demand for advanced, interactive products, for which we’ve experienced increases in costs, makes it challenging to find the right balance of competitive price to the customer and attractive economics for us,” he adds. “Yet, this demand for more comprehensive intrusion systems with smart home devices increases the value proposition for the customer and reinforces our belief that consumer desire for professional installation is here to stay. We remain committed to educating the consumer on the advantages of professional security over DIY.”
Harshbarger serves as senior vice president and general manager of direct to consumer for Brinks Home, Dallas. She reports during the COVID-19 pandemic, the company saw an increase in consumer interest in home security. “Consumers were spending more time at home and wanted to feel safe, causing them to turn to companies like Brinks Home that promise enhanced home security from a technological standpoint through our systems and a human element, including 24/7 professional monitoring,” she says.
In addition to wanting to feel safer at home, consumers began to look at ways to enhance their comfort and convenience, Harshbarger continues. “Industry-wide, we’re seeing that smart home technology is being integrated into an increasing number of households, and we see an appetite for this in our customer base as well.”
Judy Jones-Shand, vice president of marketing, NAPCO Security Technologies, Amityville, N.Y., cites research that shows almost half of security system owners today have a newer system, many of which are only a couple years old. Add to that most people today require their system to have remote connectivity via a smartphone.
“Given that even more people equate a video camera or video doorbell alone with an entire security system, we see a very new dynamic in security systems and their consumers,” Jones-Shand says. “Before there were digital native consumers, born and raised with the internet, a security system always consisted of a metal panel box, digital keypad and a sensor network. But technology has grown faster and faster, and there are no preconceptions that last anymore — except that technology serves the consumer, not the other way around. Gen Z consumers don’t expect to have to be trained to use a system or fear false alarms either.”
Instead, Jones-Shand explains, Generation Z — born after 1995 and said to be the biggest customer demographic in this next decade — expects technology to blend with their lifestyles intuitively, as well as adapt to their lifestyle, not the other way around.
“And whatever technology it is, it has to work faster and smarter than yesterday,” she adds. “Voice assistant support, smart phone control, and video visibility are the foundation for many residential devices — from a vacuum, to security, even cars.”
According to Parks Associates latest research, 31 percent of households in the United States contract for professional monitoring services. Twenty-two percent of households with a security system have professionally-monitored services and 9 percent have a paid service attached to a video device, with no security system.
As smart home technology continues to advance, the role of central monitoring stations is expected to evolve significantly. Caroline Brown, president of Security Central, Statesville, N.C., points out that monitoring centers now have access to more data than ever before. Thus, she believes central stations will remain critical for residential customers who value professional monitoring services.
“However, the central station partner must focus on how to effectively utilize the data presented and manage the customer’s expectation of the service as well,” she says. “Which can be challenging when, traditionally, the central station has assumed the role of an intermediary between the end users and emergency dispatch centers.”
Brown goes on to explain operators are making determinations based on the data presented with the account, which may not always follow the traditional patterns monitoring centers are used to seeing. The goal is to adapt to new technology by finding solutions that make central stations more efficient, ultimately improving the end-user experience.
Moreover, she continues, the central station’s role has shifted from being a silent partner to an active participant in the customer experience. Brown notes that valuable interactions between customers and monitoring centers, such as notifications via SMS or other applications, create a stronger relationship and improve customer satisfaction.
“The customer is aware of the central station and if there are valuable interactions between the two parties, it creates a stickiness,” she explains.
Jim McMullen, president, COPS Monitoring, Williamstown, N.J., echoes the importance of professional monitoring in the smart home ecosystem. He emphasizes that while smart devices can detect unusual activities and trigger alerts, professional monitoring adds an essential layer of security that technology alone cannot provide.
“This human element is crucial in assessing the severity of a situation, coordinating with emergency services, and providing the lifeline homeowners are looking for when choosing a professionally monitored system,” he says.
Moreover, McMullen adds, professional monitoring offers 24/7 surveillance, ensuring continuous protection and peace of mind, particularly in emergencies when immediate human intervention, intuition and decision-making is critical.
Rising Demand for Video Integration
Both Brown and McMullen have observed a growing demand for video integration in smart home systems. Brown points out that video is essential for smart home integrators, whether for lifestyle purposes like viewing pets or packages or for video verification to assist law enforcement.
“Video is a must for smart home integrators,” she says. This trend is particularly valuable in metropolitan areas where law enforcement resources are stretched thin. The continued development of video analytics is expected to further enhance this capability.
“Many other smart home integrations may not impact the central station environment; however, video is only going to continue to be enhanced with the continued development of analytics,” Brown adds.
McMullen concurs, noting that monitored video can significantly enhance security by providing real-time surveillance and recorded evidence of incidents. “We’re seeing a larger demand for monitored video from consumers in their smart homes,” he notes. “Homeowners gain personal peace of mind from being able to check in on, and visually verify, activities in and around their homes, whether checking on children, pets or property.”
McMullen also suggests monitored video is going to play an important role in the adoption of the TMA-AVS-01 standard, which sets guidelines for the use of audio and video in alarm verification.
“This standard helps reduce false alarms by enabling monitoring stations to better assess situations through video verification, leading to faster, more accurate responses and increased overall safety and reliability of home security systems,” he explains.
Adapting to Future Trends
Brown also mentions that the smart home model will continue to evolve with new trends, such as presence detection of devices. It is critical for dealers and integrators to stay aware of new technologies and have a monitoring partner capable of helping them stay advanced, educated and relevant in the industry.
“It is critical for integrators to be aware of new technologies and have a monitoring partner able to help them progress by staying advanced, educated and relevant in the industry,” Brown emphasizes.
McMullen adds that the combination of advanced smart home technology and professional monitoring provides a comprehensive security solution that neither can provide individually. Security providers who embrace technology and think forward will thrive, while those relying on legacy security solutions may struggle to survive in the future.
“We believe the combination of advanced smart home technology and professional monitoring delivers a more comprehensive security solution that neither can achieve alone,” he says.
Security Professionals’ Perception of the Monitoring Market
SDM asked, “How would you rate the current state of the market and the potential for sales in the monitoring market?”
When asked about the state of the monitoring market, 47 percent of security professionals surveyed for the Industry Forecast consider conditions to be very good or excellent, a 3-point decrease compared to the previous year.
// SOURCE: SDM 2023 AND 2024 INDUSTRY FORECAST STUDIES
Surge in Video-Integrated Solutions
As homeowners increasingly seek seamless and comprehensive solutions for their security and lifestyle needs, security dealers are confronted with the challenge of incorporating advanced IoT devices, AI-driven analytics and intuitive mobile platforms into their offerings. This shift not only demands a deeper technical expertise but also necessitates a more holistic approach to customer service, fundamentally altering traditional business models and operational strategies within the industry.
To remain competitive, traditional security system providers need to prove the value of their systems and attached services, Parks explains.
“Providers are pivoting toward aggressive marketing, competitive pricing strategies, and the creation of new value propositions in lifestyle services to regain market share,” she says.
Parks Associates has ascertained that consumers who are new to the smart home market are far closer to the mainstream consumer than to the early smart home adopter, who is often a product champion. For example, 30 percent of “newbies” (those who own 1-2 smart home devices) have a security system — the exact same adoption level for all internet households in the United States. By comparison, 71 percent of “super power users” own a security system.
Security Professionals’ Perception of the Smart Home Market
SDM asked, “How would you rate the current state of the market and the potential for sales in the smart home/home entertainment system market?”
When asked about the state of the smart home/home entertainment market, 66 percent of security professionals surveyed for the Industry Forecast consider conditions to be good to excellent.
// SOURCE: SDM 2024 INDUSTRY FORECAST STUDY
“The industry needs to focus on the benefits and messaging that will inspire these middle-market buyers to acquire their next 3-5 smart home devices,” Parks explains. “They are underserved in security services, which is a universally appealing value proposition, but messages must be more inclusive, focusing on the practical benefits and ease of integration into everyday life to appeal to this wider audience.”
Other important trends that Parks highlights: Costs, lack of clear benefits, unclear value proposition, and lack of trust are perennial top issues keeping more households from buying smart home tech.
“Emphasizing user-friendly interfaces, affordability and the tangible improvements and convenience these technologies bring can help consumers understand and appreciate the value provided,” Parks adds.
Clint Choate, senior director of security markets, Snap One, Charlotte, N.C., describes the current state of the smart home market as experiencing moderate growth, fueled by artificial intelligence (AI), product innovation and consumer demand. Snap One, recently acquired by Resideo, is particularly excited about a few key trends driving the smart home market, Choate says. He describes the following:
- AI INTEGRATION: Smart home devices are becoming increasingly intelligent thanks to AI. This allows for features like facial recognition in security cameras, self-learning thermostats that adjust to user preferences, and voice control that understands a variety of users. These advancements make smart homes not just convenient, but truly intuitive.
- FOCUS ON INTERCONNECTIVITY: Gone are the days of siloed smart home devices. The industry is moving toward a more integrated approach, with devices from different manufacturers working seamlessly together. This interconnectivity creates a streamlined user experience and unlocks the true potential of a smart home, allowing for automation and customization across different devices under one smart home hub. By example, Snap One designed its Clare and Control4 products with this in mind, using multiple communication methods such as Zigbee and Z-Wave to integrate with hundreds of devices.
- CYBERSECURITY AWARENESS: As smart homes become more integrated, cybersecurity is a growing concern for homeowners. Choate says Snap One prioritizes robust security features in its products and educate integrator partners on best practices. The industry recognizes the importance of building trust with consumers by ensuring their smart homes are safe from cyberattacks.
When Jon Adams, vice president of sales, DMP, Springfield, Mo., surveys the smart home market he notes several trends that are influencing the company’s approach in the sector moving forward.
“We’re looking more and more at energy efficiency— thermostats and anything that can help control the costs. When we look at inflation in our markets, everybody wants to control costs,” he explains. “So, energy efficiency is a driving factor. Also continuing to look at safety, I think smart home locks are going to continue to play a big role.”
As the security landscape evolves, the need for intrusion panels — the hub of security for customers — to interact seamlessly with various products becomes paramount, Adams says. DMP has consistently excelled in this area, ensuring their products integrate smoothly and effectively with systems that enhance energy efficiency and safety, he says. Most importantly, these panels must be user-friendly, allowing customers to quickly and easily achieve a sense of safety and environmental comfort.
“Customers are also thinking about their costs,” Adams continues. “Even better than putting it at their fingertips is making it automated: learning their habits, learning their behaviors, setting up their system so it behaves the way their lifestyle demands. And I think that’s super important. Smart home products need to work and behave in ways our customers’ lifestyles demand, and it’s going to significantly continue to grow.”
Customers are especially interested in AI-enabled capabilities for object and motion detection, Harshbarger says. They are using sensors in a variety of ways and in different places throughout the home, as well as installing smart thermostats to help save on electric bills.
“Our customers appreciate the ease of being able to connect and control their devices from a single app,” she adds. “For example, they can connect our smart doorbell camera and see who’s at the door with just a few taps on their smartphone.”
Austin Keller, a security consultant for Custom Alarm, Rochester, Minn., shares that over the past few years the company has seen a rise in smart home system sales. He credits the continuous growth of new housing and developments in Custom Alarm’s service area for significantly driving potential sales of alarm systems, along with customer interest in video surveillance that works with their smart home systems.
As tech giants like Google and Amazon increasingly encroach into the smart home market with their expansive resources and consumer reach, traditional security dealers are facing heightened competition. These dealers are navigating a landscape where educating customers about the unique value propositions of their smart home solutions and services has become paramount.
Amid the allure of well-known brands, sources say they are focusing on personalized customer education strategies to highlight the benefits of their offerings. From emphasizing local expertise and tailored support to showcasing reliability and specialized security features, these measures are crucial in distinguishing themselves from tech behemoths and other new disruptive entrants.
“What separates us from those companies is the customer service we back ourselves on,” says Austin Keller of Custom Alarm. “To those companies you are just another number and customer; however, at Custom Alarm we pride ourselves on going above and beyond for each and every customer.”
Bryan Cipoletti of Guardian Protections says he appreciates that consumer awareness of security and automation products continues to increase in part through the efforts of tech giants and so-called market disruptors. The company is able to leverage that awareness by delivering fully integrated, easy-to-use and professionally installed systems.
“Professional installation gives us an in-home opportunity, and differentiator, to deliver products and educate our customers in person,” he explains. “We then leverage digital, phone, chat and in-person channels to further educate and troubleshoot when necessary.”
Cipoletti further explains the company has developed a much more sophisticated and comprehensive customer journey, including customized promotional campaigns to upgrade equipment, call center interactions to enhance customer knowledge, and other tactics to keep the customer engaged with the valuable features of their system.
Sara Harshbarger of Brinks Home expresses the importance of continuing to provide value to customers at multiple stages. It starts, she explains, at the point of installation, with knowledgeable technicians walking customers through how to use their system.
“We’re proud to see 5-star reviews on how patient and helpful the installation technicians are with making sure customers are comfortable using their panel and controlling the system,” Harshbarger says.
Brinks Home also ensures their customers know they are available around the clock through their alarm response center, Harshbarger adds, offering multiple channels for assistance including calling, texting, live chat and accessing their online help center.
“Our team is continually thinking of ways to further educate customers on how to make the most of their system and device features, communicating across touchpoints like email and social media,” she says.
“This is something almost every single one of our customers has at their home,” he says. “Video gives our customers a great sense of security and comfort knowing they can view what is happening around their home no matter where they are.”
Cipoletti echoes the rising video trend in the smart home as customers express interest in integrating video surveillance into their smart home security systems.
“Doorbell cameras are becoming a new standard in the home, with features like package detection, wide field of view, video analytics, remote access and video clip storage,” he says. “Outdoor cameras are also a customer favorite with ever expanding and improving analytics.”
Customers increasingly value Guardian Protection’s mobile app, which integrates cameras and other device features, and engages the customer with alerts and notifications, Cipoletti adds.
Overcoming Adoption Barriers
Despite the rapid advancements and growing popularity of smart home technology, several challenges and barriers continue to hinder widespread adoption, according to sources. Consumers often face issues related to high costs, unclear value propositions and concerns over cybersecurity. Additionally, the complexity of integrating various devices and the lack of standardization across products can be daunting for many potential users.
These obstacles, coupled with a need for greater consumer education on the practical benefits and ease of use, highlight the critical areas that industry stakeholders must address to drive broader acceptance and utilization of smart home systems.
Choate of Snap One acknowledges several challenges hindering the widespread adoption of smart home technology. While these barriers are gradually diminishing as the market grows and manufacturers expand their offerings, some key issues persist. One major hurdle is the cost; the upfront expense of purchasing and installing smart home devices can deter consumers, even though the long-term benefits, such as energy savings, can offset the initial investment. Additionally, Choate says, the complexity of setting up and managing a smart home system can be daunting for non-tech savvy users, highlighting the need for simplified installation processes and user-friendly interfaces.
Privacy and security concerns also play a significant role in consumer hesitation, Choate says. Ensuring robust cybersecurity measures and transparent data practices is essential to build trust with users. Interoperability issues present another challenge, as the lack of seamless interaction between devices from different manufacturers can frustrate homeowners. Although industry standards like Matter, Z-Wave and Zigbee aim to address this issue, it remains a work in progress.
Current vs. Future Product/Service Offerings
SDM asked security dealers what products and services they offered now and plan to offer in the future. For smart home/home entertainment systems:
More than 3 in 4 (76 percent) of SDM 2023 Industry Forecast respondents either currently offer/sell/install smart home/home entertainment systems or plan to within the next two years.
// SOURCE: SDM 2024 INDUSTRY FORECAST STUDY
Top Residential Niches
SDM asked, “In which one residential market segment do you expect to see the highest rate of revenue growth in 2024?”
Existing middle-market homes top the list of residential segments 2024 SDM Industry Forecast respondents expect to see the highest revenue from this year.
// SOURCE: SDM 2024 INDUSTRY FORECAST STUDY
Furthermore, Choate explains that labor shortages in some regions lead to a limited availability of qualified smart home installers, resulting in installation delays, higher costs, and customer frustration. In other areas, the demand for technicians exceeds supply.
“Here at Snap One, we believe that professional integrators play a vital role in overcoming these challenges,” he says. “Our network of integrators can provide expert advice, simplify installation and setup, and ensure robust security measures are in place. By working with professional integrators and prioritizing user-friendly solutions, we can make smart home technology more accessible and appealing to a broader range of consumers.”
Affordability and value continue to be the main barrier for consumers to purchase smart home technology, with Parks Associates research showing that 41 percent of households consider smart home devices as neither affordable nor valuable. A third see these devices as both affordable and valuable.
“Demonstrating real-life scenarios where smart home technology solves common problems or enhances comfort can convey the tangible benefits, persuading consumers of the value in these innovative solutions,” Parks says.
Still, Parks points to a continued sharp decline in buyers acquiring their security systems from local home security companies, which should be a concern for major hardware providers going through the local dealer channel. Whether they own a DIY or pro system, she says, security buyers are most likely to go straight to the source for their systems and make the purchase online.
Acquisition & Funding Services (AFS) is one of the longest-standing, independently operated funding providers in the security alarm industry. Before establishing AFS in 1996, Rory Russell owned and operated Empire Security, which was then the largest regional security company in the Northeast, managing $5 million annually in sales and installations. SDM reached out to Russell to get an overview of the M&A market and current industry trends.
SDM: How would you describe the current overall landscape of M&A activity in the security market?
Russell: It is absolutely booming. The industry is seeing a wave of consolidation as bigger companies continue to expand through strategic mergers and tuck-in acquisitions. There’s a flood of private equity money targeting security businesses of all sizes, and because of the limited number of companies available, the competition is fierce.
SDM: How do you assess the impact of M&A activity on smaller or regional alarm companies currently? Are they facing challenges in the market due to higher interest rates or other factors?
Russell: Now is a great time to sell for regional and small business owners. There’s a surplus of buyers, not enough sellers, so you can get a great offer. Even though interest rates are a little higher, it hasn’t really affected the market. While interest rates are integral to M&A deals as many buyers finance all or part of the acquisition, there’s still a strong market for quality deals.
SDM: What are some key trends you are observing in the industry and how are security companies being impacted?
Russell: Some significant industry trends gaining momentum are primarily related to technology. Because new tech supports fully integrated security platforms, more companies are combining their security and business sectors into a single, efficient system.
43% of U.S. Internet Households Have a Security Solution
Currently 45% of U.S. households have a smart home device.
The security market in the U.S. has experienced gradual growth, with 43% of internet-connected households now having a security solution — either a system or a device that is a networked camera or video doorbell.
// Source: Park Associates
“The insurance channel is also starting to support the distribution of systems, with 6 percent of recent buyers reporting acquiring a system through their home insurer,” Park says. “There has been a significant drop in recent buyers acquiring their system from someone knocking on the door, as leading providers modernize their ecommerce experience to meet consumers’ desire for convenient shopping.”
As the smart home market continues to evolve, Adams of DMP is projecting significant, continued growth in major metropolitan areas for multifamily condos, duplexes, townhomes and apartments. This trend is forcing manufacturers to recognize the need to adapt their products to applications where tenants may not stay for more than a few years, ensuring that the solutions work effectively for both tenants and landlords. The goal is to make sure products address these needs comprehensively, Adams explains.
“This is something we talk about at DMP. How do we make it so that products, which are normally installed to be there for a long time, can be in a home for one to two years, and then either stay there or go with the tenant to their next home? But we also want to meet the needs of the landlords of the property development companies and such,” he says. “It’s not that big of a challenge, but it’s something every company in our industry needs to look at.”
NAPCO expects trends to continue with dealers offering more diverse products to attract a broader range of consumers, driving growth in the smart home security market, Jones-Shand says. While Gen Z will be content with simpler security systems with less coverage for their starter homes, more complex and custom systems will be needed for mature, multilayered residences.
“Both ends of the spectrum can coexist, benefiting the savvy security professional who caters to both,” she adds. “This approach can lead to increased revenue and higher account valuation from more connected, service-oriented system accounts and SaaS/VaaS offerings.”
