State of the Market Series

State of the Market: Alarm Systems 2012

This year the alarm industry is increasingly unshackled from landlines and high costs, buoyed by end user demand for remote/interactive services, and up against more competition.

By Heather Klotz-Young

House graphic — 2011: 2 Out of 3 Ain't Bad

SDM asked dealers and integrators in 2011, "How would you rate the current state of the market in Burglar Alarms?"

*percentage of respondents to SDM's 2012 Industry Forecast Study, conducted October 2011 among SDM's subscribers.
Source: SDM Industry Forecast Study

Almost two-thirds of dealers rated the 2011 market for burglar alarm sales "good" to "very good/excellent."

Security industry pie chart on alarm sales — 2012 Holds Potential for Most Dealers

SDM asked dealers and integrators in 2011, âConsidering the economic health of your business, how would you rate the potential for sales in 2012 in the Burglar Alarm market?â

*percentage of respondents to SDMâs 2012 Industry Forecast Study, conducted October 2011 among SDMâs subscribers.
Source: SDM Industry Forecast Study

The overall outlook for alarm system sales in 2012 is good to excellent, note 6 of every 10 security professionals.

Security equipment spending chart — Equipment Spending Expected to Rise

SDM asked dealers and integrators to indicate how they expect their level of spending on burglar alarm equipment in 2012 will compare with prior years.
*percentage of respondents to SDMâs 2012 Industry Forecast Study, conducted October 2011 among SDMâs subscribers. Prior-year figures are based on results of prior Industry Forecast Studies from each respective year shown.

Source: SDM Industry Forecast Study

More than 4 in 10 security dealers indicate their spending will increase this year.

The commercial alarm market is looking for remote access. NAPCO's iRemote option allows for commercial system control via smartphone or iPad.
PHOTO COURTESY OF NAPCO

The Fastest Trend in Residential Security

Mobile access is a fast-growing trend in residential security today. Based on the analysis of hundreds of thousands of Alarm.com authorized dealers’ interactive service customers, tracked behavioral changes in usage clearly show this trend. Today, more than 75 percent of remote access events for Alarm.com interactive service accounts are through a mobile app. This is a progression that began in earnest in 2010 and continues to grow with the ubiquity of mobile devices and proliferation of consumer expectations for interactive capability.

Accessing security systems via smartphone is the fastest growing trend, and for dealers and integrators to succeed in the increasingly competitive environment, it’s important to capitalize on this trend. Alarm.com has been providing interactive services to security customers for more than seven years. When the very first Alarm.com app was released in the spring of 2009, the vast majority of logins to an Alarm.com interactive account were through the Alarm.com website. It was a year later that logins averaged 50 percent collectively through mobile apps and 50 percent through the dedicated website. In August 2011, Alarm.com noted the first time mobile app logins reached more than 75 percent, and this has continued to grow.

Mobile access keeps customers “sticky.” In 2011, Alarm.com confirmed the correlation between a consumer’s consistent interaction with their interactive security system and reduced attrition. Through an independent third-party analysis, it was proven that customers with interactive accounts stay on longer than traditional security customers and those who are actively logging into their accounts via the Alarm.com website or mobile app attrite even less. Click here for more from Alarm.com on taking a mobile-first approach.. — Contributed by Alarm.com

Photo Courtesy of Alarm.com

Eric Landress fills customer orders at EMC Security's office warehouse, Suwanee, Ga. In 2012 EMC Security is focused on adding new services that include interactive home control, medical alert services, video surveillance, remote access, and others, all in addition to security systems.
PHOTO COURTESY OF EMC SECURITY

Mike Morton, sales manager, meets with a customer in EMC Security's design center (which has been remodeled since this photo). EMC Security continues to focus on educating consumers on new technologies.

PHOTO COURTESY OF EMC SECURITY

Spending in home automation — Moderate Growth in Home Products

SDM asked dealers and integrators to indicate how they expect their level of spending on home automation and network equipment in 2012 will compare with prior years.

*percentage of respondents to SDM’s 2012 Industry Forecast Study, conducted October 2011 among SDM’s subscribers. Prior-year figures are based on results of prior Industry Forecast Studies from each respective year shown.

Source: SDM Industry Forecast Study

Spending will most likely stay the same this year in home products according to 5 in 10 dealers.

Enhanced Sensors Open New Markets

“Outdoor detection and asset monitoring offer a great system add-on for dealers. These products continue to mature and improve in reliability with each product life cycle and we are seeing a keen interest in these technologies,” says ADI’s Andy Morra.

New sensor developments keep expanding the outdoor services and asset monitoring dealers can provide. For example, Honeywell’s new 5816OD is ideal for gates, sheds, fences, barns, detached garages or any other outdoor areas in residential or commercial environments.

“There is a need for robust wireless outdoor sensors, especially as end users want to expand their area of influence and awareness. Now dealers can take a look outside and see a long driveway, shed or a gate and can now ask if end users want it monitored,” says Honeywell’s Gordon Hope.

In addition to outdoor sensors, new sensors like Honeywell’s 5870API Wireless Asset Protection Sensor enhance the way dealers can guard against theft in both residential and commercial applications by affixing to virtually any valuable requiring protection within a home or business. This sensor is ideal for environments where the use of a constantly armed panel is not practical — such as colleges, hotels and any areas requiring free-flowing human traffic.

Honeywell’s 5816OD Outdoor Wireless Magnetic Contact

PHOTO COURTESY OF HONEYWELL

Don't Sweat the Small Stuff

SDM asked dealers and integrators: "Approximately how many subscriber accounts did you acquire from the security-installing/systems integrations companies purchased in the past 12 months?

*average number of accounts acquired per acquisition among respondents participating in SDM's 2012 Industry Forecast Study, conducted October 2011 among SDM's subscribers.

Source: SDM Industry Forecast Study

One in 10 companies were part of an acquisition in 2011. Companies eyed bigger account numbers per acquisition, staying at more than 300 accounts per acquisition almost 70 percent of the time.

The latest research from Alarm.com also shows the growing power of apps, reporting that today more than 75 percent of remote access events for Alarm.com interactive service accounts are through a mobile app. See “The Fastest Trend in Residential Security” on page 51 for more results of the Alarm.com research.

This shift is supported by the continued growth of smartphones. A key stat from Morgan Stanley Research estimates sales of smartphones will exceed those of PCs in 2012.

“End users want to be able to control their burglar alarm systems using the latest technology. They want to be able to operate the system from an iPhone, iPad or iPod Touch using an app for these devices,” says Tom Mechler, product marketing manager for Bosch Security Systems Inc., Fairport, N.Y.

National players are driving interest with their connected home products, which will benefit local players, says Vince Raia, president, EMC Security, Suwanee, Ga. “Smartphones and their apps are everywhere. Customers love the mobile monitoring solutions, and this will continue to expand. Everyone wants control and connectivity. We will continue to develop and offer solutions that link people with their home or business,” he promises.

The products are there to offer home automation — in addition to security — and pick up additional recurring monthly revenue (RMR). Craig Foster, senior analyst, Home Automation Systems, ABI Research, Irthlingborough, England, says, “Providers such as Alarm.com, iControl and Honeywell have developed fully extensible software platforms that not only offer traditional home security, but also, affordable home automation, giving security companies the opportunity to benefit from increased recurring monthly revenue (RMR) in the upcoming year. For example, a company offering home automation on top of home security might benefit from a $10 to 15 increase in RMR per subscriber.”

In addition to adding RMR, the services are also proven to generate “stickier” customers, and more research is proving this and dealers are experiencing it.

“The connected service has been the best thing for creating stickier customers. It is a real tangible product that the customers can see and use daily, reminding them of the value of the service they are paying for each month,” says Mike Morton, sales manager at EMC Security.

It is important to note the demand for interactivity and remote access isn’t just a residential trend. Companies see it growing commercially in 2012, as well.

One reason is that it carries over from the home.

“We are starting to see some pick up on the commercial side in the intrusion and interactive service. That is because knowledge of the service carries over from the chief security officer or chief information officer saying, ‘We use it at home, why can’t we have it here,’” says Kevin Corl, director of sales and marketing, EC&M Integrated Solutions, Mechanicsville, Va. While Corl expects mostly flat growth overall in the alarm side of the business, he does anticipate new growth through the company’s new UL 2050 certification.

Judith Jones, vice president of Marketing, NAPCO Security Technologies Inc., Amityville, N.Y., says the company is seeing commercial growth thanks to a new product line, a new niche and interactive services available for business.