Recently, SDM Magazine had the chance to speak with Keith Jentoft, president of Videofied, White Bear Lake, Minn., regarding the burglar alarm market for the SDM February cover story: “State of the Market: Alarm Systems.” Jentoft touched on many aspects of the alarm market, including what he describes as its “crown jewel” — alarm response. Here’s what he had to say:
SDM: What trends have you observed occurring in the burglar alarm market?
JENTOFT: The major trend I see is the bifurcation of the recurring monthly revenue (RMR) intrusion alarm market into two distinct solution sets that are very different from each other in philosophy — almost two opposing views:
1. The security panel is really a services delivery platform for all kinds of new services within the home.
This is the message of Alex Dunn at Vivint™ (formerly APX Alarm). The company created a panel that delivers security and energy management, lighting management, advertising, etc. Increased RMR is found in non-security services.
2. Greater security in a “pure play” security sale through improved alarm response.
This is the priority response concept message of Videofied. Police respond faster to a verified crime-in-progress provided by video intrusion alarms. Improved response means greater value. Increased RMR is found in improved alarm response.
A second major trend is record-setting copper prices continue to drive outdoor crimes and this means increased importance for outdoor security. The front cover of the December 5, 2010 issue of BusinessWeek was dedicated to an article on copper theft and how America is being sold for scrap metal. Outdoor security is booming because outdoor theft is skyrocketing as noted in the article.
SDM: Overall, in the industry, during 2011, what factors willhave the greatest impacton the increase or decrease of revenue in the burglar alarm field?
JENTOFT: Response has the greatest impact in the RMR security business. No response equals no RMR. This is why the industry has spent millions of dollars battling non-response laws and the reason that it created the Security Industry Alarm Coalition (SIAC). Response is the by-product of a partnership between law enforcement and the security industry. Community budgets will increase pressures on law enforcement to become more effective/efficient. This creates an opportunity for the security industry to build stronger partnerships with police/sheriffs; in essence our technology and central stations can become the “first responder to the first responder”and help law enforcement outsource part of its work to the central stations — for free. The easiest way to do this is to use technology to remotely identify actual “crimes in progress” so that the reduced law enforcement resources make more arrests and maximize life/safety for the community. The stronger we can make this partnership, the greater value we provide — and the greater monetary valuation we have as an industry.
SDM: What are the biggest challenges facing the alarm industry in 2011?
JENTOFT: Declining municipal budgets and declining response resources. These have already contributed in a group of suburbs of Chicago to attempt to enter the fire monitoring business themselves — for the money. This challenge is also the opportunity. It opens new doors of partnership where municipalities can outsource certain aspects of community safety to the industry and reduce their costs. Ultimately it means that the industry can adapt and grow or remain static and end up battling change in the courts and city council meetings.
Another challenge is the continued demise of POTS communication. The erosion of the traditional telephone system is the greatest threat to the installed base, from an attrition perspective. This is already beginning to be addressed by alarms being transmitted over the cell network.
SDM: During 2011, what external factors will influence the burglar alarm industry?
JENTOFT: Technology evolutions in communications create opportunities to deliver greater levels and varieties of services such as Internet panels and alarm management over the cell phone.
The industry can embrace and foster technology evolutions to improve the partnership with law enforcement that provides response to the RMR business model. Embracing video or other forms of verification to help identify actual crimes-in-progress is one positive influence. Working with the new communications to improve the relationships between the central stations and the 911 dispatch centers as the CSAA did this year is another way that this evolution is positive.
Refusing to accept and embrace this change will only result in expensive lawsuits, lobbying battles, and static markets that minimize growth. It is much better and more profitable to quickly embrace cell communication than to fight against the inevitable disappearance of the telephone landline. It is more profitable to embrace IP communications and profit by the incremental service offerings that it creates than fight the move to IP.
SDM: Are you seeing any trends in how dealers are approaching the market in 2011?
JENTOFT: As evolution speeds up and becomes more complex, dealers are looking to their central stations to lead the way through the evolving marketplace. I see that the dealer/central station relationship is becoming more important because the central stations have the expertise and trust of their dealer base to make decisions that are too time consuming or complex for the average installing dealer to deal with.
SDM: How is the action in municipalities and law enforcement different from 12 months ago and what effect does that have? Are there any differences in relationships overall in the industry?
JENTOFT: Alarm response is the crown jewel of the RMR security industry. No response means no industry. It truly is our greatest asset. Response is the result of the partnership between law enforcement and the security industry, regardless whether this partnership is weak or injured. Up until now the security industry’s view of building this partnership consisted of extending its hand to police and saying, “I want to be your friend and I will harm you as little as possible,” (through false alarm reduction). This needs to evolve into something like, “I want to be your friend and while I will harm you as little as possible, we have all this to offer,” (remote verification of a crime-in-progress, etc.). We need to strengthen this partnership through offering law enforcement something positive, not by simply reducing a negative.