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 security industry is also counting on its expertise and position as a trusted source as an advantage in the competition with cable/telco/wireless companies.

“What mass market companies like Verizon and Comcast offer is a start — a taste of home control — but it doesn’t compare to an integrated home, an entire smart home that can be controlled from a smart device. As more people start to have the technology in their home from mass market, it increases the demand for the electronic lifestyle. Traditional companies need to use the mass marketing to up-sell themselves as the channel for additional integration,” advises Erica Shonkwiler, market research manager, Custom Electronic Design & Installation Association (CEDIA), Indianapolis.

Mastering the argument for additional services or integration will help dealers find business in 2012 in existing homes. That’s business they are hard pressed to find in new construction. New construction remains flat in most areas around the country.

“New construction is almost non-existent in greater Atlanta market at present. Once one of the hottest building markets in the country, we no longer enjoy the benefits of installing systems for the builders at time of construction, and then signing on customers for monitoring when the home was sold,” Raia says. “We have compensated by expanding our residential and commercial programs, and continued focus on recurring revenue products and services.”

That’s the good news: today’s new technologies and service offerings offer a golden opportunity to connect with current customers and sell upgraded systems to existing homes.

In SDM’s 2012 Industry Forecast Study when SDM asked dealers and integrators, “In which one residential market segment do you expect to see the highest rate of revenue growth for your company in 2012?” the answers, while spread between high-end, middle market, and low-end homes, attributed a resounding 76 percent of revenue growth to existing homes.

This same trend is reflected in a study conducted by CEDIA, which SDM supported through collaboration on the survey base. The study, “Size and Scope of the U.S. Residential Electronic Systems Installation Market 2011,” showed security dealers participating in CEDIA’s study reported 72 percent of installs would be retrofit this year.

Wireless

Retrofits benefit from ever-growing wireless technologies that are making it easier to upgrade or install new systems in existing homes.

Wireless is another area predicted to grow in 2012.

“To put a wired alarm system in a house is expensive and in older homes it can also be complicated. Wireless is what we’re finding to be the up-and-coming player. We carry 2GIG, and you have ease of installation, and, more importantly than that, the complexity of what it is able to do. People are really responding and loving the features,” says Dennis Holzer, executive director, Powerhouse Alliance. The PowerHouse Alliance is a national consortium of 11 regional distributors providing technology products, including alarm products, to dealers nationwide. Powerhouse Alliance expects its intrusion/wireless offerings to grow substantially in 2012.

“We’ve seen significant increases every month, and we think we will continue to see that in 2012,” Holzer says.

“We believe the intrusion market in 2012 will be different than 2011 due to clients more rapidly adapting Web-based interfaces for their systems, both PC and mobile,” says Steven Paley, president, Rapid Security Solutions, LLC, Sarasota, Fla. “We see 2012 as an expansion year for these technologies and we are proactively reaching out to our clients to show them what additional features they can add to their platforms, including video surveillance and home and lighting control.