Research: Tracking Home Automation and Security Growth

The 2014 Home Systems Study delivers perspective from those on the frontlines looking to market, sell, install and service new offerings like smart locks, IP cameras and connected smoke detectors.

Beginning with Google’s high-profile acquisition of smart thermostat and smoke detector maker Nest to kick off 2014, this year may well turn out to be looked back upon as The Year of the Smart Home. Consumers are being bombarded with advertisements for connected home-type systems and services, and it seems there are now weekly if not daily announcements of new offerings directed at this enormous market opportunity. This should give installing residential security systems dealers and monitoring services providers cause to rejoice as they are ideally positioned to capitalize on this exciting trend.

That fervor must be tempered, however, because this marketplace is increasingly competitive (with many participants outside of security), the technology is advancing very quickly and workable business models are still being sussed out. That’s where Security Sales & Integration‘s annual Home Systems Study, produced in partnership with Dallas-based residential research specialist Parks Associates, comes in. Analysis of recent and new data reveals how providers are addressing the changing landscape and the impact of connected peripherals to basic security systems, as well as bring the tremendous opportunities into sharper focus.

Broadband, Security, Services on Rise

When viewed from a topline perspective, 2014 reports on the adoption of security systems in the home seem little changed from the previous two years. In Q1 2012, 25% of U.S. broadband households reported having any security system in use; in 2013 and 2014, that percentage increased to 26%. Note that, given the margin of error, the presence of any active security system in U.S. broadband households remains roughly the same over those years. However, one point to consider: each year, a higher percentage of U.S. households has adopted broadband and there exists a slightly higher number of households overall, so there is a bit of a double count increase. For example, as we entered the year 2012, 75% of U.S. households (total U.S. HHs, 118.9 million) had adopted broadband, while in 2014, 78% of 120.6 million U.S. households have adopted broadband. The net result of these small but important additions is that even at the same percentage reported, growth exists. In 2012, there were approximately 29.7 million U.S. households with any active security system; in 2014, that number has increased by ~1.6 million to 31.3 million total households with an active security system. Figure 1 provides Parks Associates’ findings of services in security households from surveys completed in Q1 2012, 2013 and 2014. Even with limited increases, there is a trend line for increased adoption of professional monitoring by households with security systems, as well as a corollary decline, at least by percentage of households, for fee-based self-monitored security systems. Those fee-based self-monitored systems are created by adding security system-level sensors (motion, window, door, etc.) to home controllers or, in a few cases, a continuing presence in a home of a security system sold with the intent of self-monitoring. Local alarm-only systems are in households that either never contracted for professional monitoring services or cancelled service when their contract ended, but continue to use the system for its local alarm and chime value.

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