Today, everyone thinks of the residential security market as well-established and facing a period of maturation with a questionable amount of growth. The future ahead looks to some to be one of little innovation ever since ADT, Brink’s, and Protection One introduced their low-down/no-down mass-market programs.

The future, however, is not as bleak as some would think. Emerging technologies will provide a boost for the residential market, just as they have in the past.

The power of the mass marketers challenged the sales skills of the independent dealer, and this created mergers and buyouts for lots of dealers who decided that size was important to their growth. So what lies ahead for the residential market? Is it getting tired and thinking of retirement as it expands? Analysis indicates the answer to that question is “no.”

Broadband Broadening Horizons
Personal computers are now in more than half of all U.S. homes. Of those households, 25 million of them have broadband connections. Low-interest financing has created a construction boom in which structured wiring is a major selling point for builders, while home theaters and distributed audio are increasingly popular.

As a result of the increasing popularity of broadband, more executives are commuting from their kitchen to the home office, instead of running to the station and jumping on the train or starting the car and getting on the highway. I know a Sony vice president who works out of his house in Vermont but has his office in San Diego. A big telephone company has discontinued a big office lease and sent more than 10,000 people to work out of their homes.

All of this is changing the way we live and creating new opportunities for a residential electronics business that doesn’t limit itself to security. A case can easily be made that today’s security business model is morphing into a new model with more recurring revenue opportunities.

New Players in Integrated Industry
Home automation companies like HAI are in the security business now. Video manufacturers are seeing growth in camera systems installed in the home — even networked IP systems that can transmit anywhere remotely. These systems are especially handy for those that bought condos in the south and west when they cashed out some of the equity in their homes.

Video monitoring is slowly taking a larger toehold after a little disappointment. People are buying wireless laptops and PDAs with which they can get all the home information they want wherever they are. On top of that, homeowners are subscribing to movie DVD services on a monthly fee basis, and camera cell phones are popping up everywhere. All the while, IT companies are watching and ready to get into the act themselves.

With the professionally installed home security market now penetrating one in every four U.S. homes, who will come up with the next dynamic recurring revenue program that rides, at least in part, on the back of the existing residential security industry? Consumers are ready to look at new, interesting, and exciting ideas that create more safety and convenience. Monthly payments are not a problem if the value is there.

 

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