In the company’s latest Research Note, Blake Kozak (senior analyst for security and building technologies at IHS) discusses the impact of the ‘smart home’ on residential security.
The residential security market will never be the same. In 2012, several MSOs (multiple-system operators) in the USA began offering home automation in conjunction with security which has altered the perception and demand from end users. Prior to this paradigm shift, the use of a residential burglar alarm system was often a purchase to protect a property and, in many cases, an ‘after the fact’ purchase as a result of a break in.
While many reasons exist as to why a homeowner may purchase security equipment, the reason is no longer solely security, with many end users looking to add additional features which are both life safety and convenience-driven.
IHS estimates the world market for security devices in traditionally monitored homes [for example – ADT] to be worth about $2.9 billion in 2014 compared with $670 million for smart homes [for example – ADT Pulse].
By 2018, the revenue of smart homes is forecast to top $2.4 billion. That’s according to a recent report from IHS.
These rapid changes to the residential security market have been mostly positive. However, the influx of competitors has dramatically changed the make-up of this industry.
Ten years ago, professionally installed, centrally monitored systems were the main offer available to end users. However, this situation has changed. Today, products are offered by monitoring companies, MSOs, electric companies, retailers and DIY equipment manufacturers.
End users can find innovative products from new market entrants such as Google and Apple which, until recently, did not have an offering for the residential security or home automation space.
So what does this mean for the ‘smart’ residential security market moving forward? For manufacturers, it means that despite the increase in competition, the market offers ample opportunity for all due to the current low penetration rate of smart products.
For end users, it means more product/solution and pricing options are available than ever before.
Finally, as far as the dealers, installers and monitoring companies are concerned, the release of new and innovative products/solutions creates better sales opportunities by dint of being able to better meet customers’ needs and budgets.