SSI serves security installing contractors providing systems and services; surveillance, access control, biometrics, fire alarm and home control/automation. Coverage in commercial and residential product applications, designs, techniques, operations.
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Figure 1: Forecast for IP Security Bundles 2011-2016 acquisition have on competitors? • What, if any, impact does Tyco's spinoff of ADT Security promise? At the dealer level: • With nearly all large providers adding connected home features, must independents do the same? • Should today's independent dealer off er connected home features without professional monitoring? While history is easier to recount than the future is to forecast, security dealers have decisions about their futures to make now or during the next 18 months. And, as ever, decisions for new directions are risky, even while they off er signifi cant opportunity. But so are no decisions. CONNECTED SERVICES OFFER HOPE At the consumer level, connected home features present new reasons to consider monitored security by those previously disinterested. Most consumers understand what a monitored security system off ers. T rough the years, providers have presented all sorts of deals to spur acquisition. T ese include loss leader pitches on equipment, deals on installation, inclusion at small cost in new starts and, in some cases, even no-money- down systems — all on the premise of eventual profi t for providers based on monthly revenues. Today monitoring fees average nearly $40 per month. However, some monitoring providers outside of the major players have reduced monthly fee off ers to as low as ~$15 per month. Manufacturers have greatly improved system reliability so false alarms, while still an issue, are infrequently the fault of system errors. Nevertheless, despite all the system technology advances, reliability improvement, aff ordability by most measures, and consumers' genuine concern for the security of their homes, monitored security is present in fewer than 20% of U.S. households. In short, market growth stalled. T e recession and the slow economic recovery By 2016, 16% of all installed security systems will have some IP feature enhancements. The rate of growth for IP bundles will continue its increase from now through and beyond the forecast period. Overall, nearly 27% of U.S. households will have a security system with professional or fee-based self monitoring. Why is today's penetration of monitored home security so low? Most consumers have not valued the benefi ts of traditional monitored security enough to adopt it at the going rates. Connected home features increase the number of benefi ts to be assessed by the consumer. Not only do IP-based features enhance the capabilities of the security system itself, new categories of benefi ts including energy and home management are available that add cost savings (energy), convenience (access and status through smartphones, tablets and computers) and control. exacerbates a problem already apparent but somewhat camoufl aged by earlier high volumes of new starts. T e problem: only a low percentage of householders without monitored security seriously consider its adoption. Providers believe IP features and benefi ts will reinvigorate the market. In addition to off setting or reversing traditional market growth slowdown, IP services are expansive. Once in the home, providers can change, adapt and increase off erings over time. For the security ecosystem, IP services off er a platform for continuing expansion that will be vibrant for a few decades. Figure 1 provides a forecast of IP service bundles, with or without monitored security.* WHAT THE PEOPLE SEEM TO WANT According to Parks Associates, dealers should add connected home features to their portfolios, albeit carefully. Exactly which features will resonate fi rst is not guaranteed, but the following rank high in appeal: • IP cameras allowing status and alerts • Smartphones and computers as user interfaces • Capability to control/access the security system Other IP services receive lower appeal rankings overall, but still have a good sized set of consumers providing high rankings (see Figures 2 and 3). T ese new services present more challenges to dealers than traditional security because they are new to consumers. New concepts often equal misunderstood concepts, and even to some consumers, scary concepts. T ey ask themselves, "Will I know how to use it? Who will I call for help?" In this economy, many consumers will also ask, "Can I aff ord it? Is the benefi t worth another bill?" But fi rst, consumers must be familiar enough with the services to engage in assessment. T e seven attributes of relevancy, with the exception of cultural sets that are less important when viewing only the U.S. marketplace, are shown in Figure 4. Familiarity is the fi rst and foremost factor necessary before a product or service is acquired. No other relevancy factors are addressed by consumers until familiarity NOVEMBER 2012 / SECURITYSALES.COM / 33