Recently the home improvement retailer Lowe’s came to market with a self-monitored/self-installed alarm and home automation system. It has caused quite a stir in the industry. Some see it as a gloomy harbinger of things to come; a sort of dark lining on the collective cloud of traditional residential alarm companies.
As I ponder the situation, I am much more optimistic. I see this as just another permutation of the industry where a certain segment of the market will finally have its demands met. The segment that I’m referring to is all those folks who want some level of security but who don’t want to deal with an alarm company and 24/7 central station monitoring. They darn sure don’t want to write a $34.95 check every month. This is a huge segment of the market and offers great opportunities for those who jump onboard the self-installed/self-monitored model. The good news for alarm dealers is that they were never going to sell an alarm system to these folks anyway. For that reason, I don’t feel like these types of offerings will hurt them.
I am a firm believer that bringing the need for security into the public consciousness is good for the entire industry. When I watch one of those supercool ADT commercials with the zeros and ones buzzing around the house, I think to myself, “Well done, ADT. You just put forth a great advertisement that will sell lots of alarm systems for your company and for your competitors.”
Remember those Broadview/Brinks’ commercials with the intruder breaking through the door? Those were powerful images and it made people think, “Wow, maybe I do need a security system.” Some of those people called Brinks’, while others were motivated to conduct an Internet search and who knows what alarm company they chose? So, in kind, as this new home improvement chain begins to advertise security, I believe it will help the security industry in general.
Adapting to a New Normal
Here is another important piece to consider: As these self-monitored customers travel on airplanes or are otherwise “out of touch,” they may begin to realize that self-monitoring is not all it’s cracked up to be. It’s hard to respond to your home alarm from 40,000 feet in the air! Some may just end up forgoing the service for this reason, but some may seek out traditional alarm monitoring as an alternative. This is yet another potential opportunity presented to the traditional alarm dealer from the self-installed/self-monitored model.
It’s also important to consider that self-monitoring is not necessarily “free” monitoring. I believe that $9.95 per month is a reasonable fee for a self-monitored system that sends subscribers key notifications as well as providing remote arming and disarming capabilities. Add home automation functionality and the price just increases. In this case, the consumer is paying for software as a service (SaaS). This could be offered by alarm dealers as a stop-gap measure to service customers who don’t want traditional alarm monitoring.
The world is changing. Adapting to those changes will be a key to survival five years and 10 years down the road. The successful companies in our industry will see themselves not as “alarm companies” but as “solution providers.” It’s all about changing the mindset of who we are and what we offer. I say the sky is the limit. As new technology opens doors, we need to equip ourselves to walk through those doors. This is cause for optimism and excitement!
So, in conclusion, I don’t think for one minute that the market for full-service alarm monitoring will be diluted in the least by the new self-installed/self-monitoring offerings. The reality is that market studies show the entire United States residential market is only roughly 20% penetrated with monitored alarm systems. That reflects a lot of room for growth. There are always going to be consumers who demand a professionally installed and monitored alarm system. It just may not look and function like your grandfather’s alarm system!
Mark Matlock is Senior Vice President at United Central Control Inc. (UCC), a wholesale monitoring station based in San Antonio.