Arriving with the Stabilized Market: New Customers, New Offerings, New Competitors
Announcements from leading national security providers as well as new entrants from the telco and cable industries have garnered heavy ink in both security and general business press the past six months.
The security provider elephant in the room, ADT, offers its Pulse System with options for IP monitoring, lighting control and energy management. In its latest earning report, its management states that ~35% of its new customers are adopting Pulse as a complement to their professionally monitored security. Vivint, formerly APX Alarm, offers packages with innovative monitoring and automation features through its relationship with 2GIG and Alarm.com. From a startup in the early 2000s, it has risen to be ranked as one of the five largest national security providers. While not all its growth is a function of expansion beyond monitored security, certainly Vivint’s assertive approach to current package offerings reflects its view of where opportunity for growth lies.
Add to this the arrival of the telcos and cablecos, each offering some spin on security to their IP services and you have a market ready for a renaissance. With Comcast, Charter, Cox Communications and Time Warner all entering with professionally monitored security from the cable side and AT&T announcing professionally monitored security as part of its Digital Life platform, the industry buzzes with questions and hypotheses. Will these players expand the markets, cannibalize existing markets, or both? Equally interesting is Verizon’s entry with self-monitoring via IP cameras and sensors — at a much lower price point per month and aimed at that 75% of broadband households in Figure 3 not yet in the security marketplace, but believed to be prime for targeting.
All these players arrive with IP-based system solutions that are causing traditional security providers to adopt to the migration to IP more quickly than what would have occurred without their entry. This trend has legs because IP-based security monitoring provides a lower cost solution than other monitoring approaches — even without consideration of other features.
However, the cablecos and telcos are not entering the market just for cannibalization via a lower cost solution, although they will happily take customers from existing players if possible. Instead, they enter for reasons pertinent to their own industry status and with the precept that there is a new target set of households to acquire with bundled benefits that were previously unavailable. Security is the starting point due to its familiarity to most householders.
High on the list of new benefits are monitoring via IP cameras, control of core home management functions from mobile technology devices such as smartphones and tablets, and anywhere, anytime status. The key to communications providers’ approach is the platform, an overriding software solution that can be appended quickly with new features as they arrive on the market. Examples of these additions include connected door locks and connected garage doors. The telcos and cablecos understand that security providers are and will continue the migration to IP if only as a low cost solution. They plan on enhanced and powerful feature bundles to make their marks.
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