State of the Market Series

State of the Market: Alarm Systems 2012

This year the alarm industry is increasingly unshackled from landlines and high costs, buoyed by end user demand for remote/interactive services, and up against more competition.

By Heather Klotz-Young

House graphic — 2011: 2 Out of 3 Ain't Bad

SDM asked dealers and integrators in 2011, "How would you rate the current state of the market in Burglar Alarms?"

*percentage of respondents to SDM's 2012 Industry Forecast Study, conducted October 2011 among SDM's subscribers.
Source: SDM Industry Forecast Study

Almost two-thirds of dealers rated the 2011 market for burglar alarm sales "good" to "very good/excellent."

Security industry pie chart on alarm sales — 2012 Holds Potential for Most Dealers

SDM asked dealers and integrators in 2011, âConsidering the economic health of your business, how would you rate the potential for sales in 2012 in the Burglar Alarm market?â

*percentage of respondents to SDMâs 2012 Industry Forecast Study, conducted October 2011 among SDMâs subscribers.
Source: SDM Industry Forecast Study

The overall outlook for alarm system sales in 2012 is good to excellent, note 6 of every 10 security professionals.

Security equipment spending chart — Equipment Spending Expected to Rise

SDM asked dealers and integrators to indicate how they expect their level of spending on burglar alarm equipment in 2012 will compare with prior years.
*percentage of respondents to SDMâs 2012 Industry Forecast Study, conducted October 2011 among SDMâs subscribers. Prior-year figures are based on results of prior Industry Forecast Studies from each respective year shown.

Source: SDM Industry Forecast Study

More than 4 in 10 security dealers indicate their spending will increase this year.

The commercial alarm market is looking for remote access. NAPCO's iRemote option allows for commercial system control via smartphone or iPad.
PHOTO COURTESY OF NAPCO

The Fastest Trend in Residential Security

Mobile access is a fast-growing trend in residential security today. Based on the analysis of hundreds of thousands of Alarm.com authorized dealers’ interactive service customers, tracked behavioral changes in usage clearly show this trend. Today, more than 75 percent of remote access events for Alarm.com interactive service accounts are through a mobile app. This is a progression that began in earnest in 2010 and continues to grow with the ubiquity of mobile devices and proliferation of consumer expectations for interactive capability.

Accessing security systems via smartphone is the fastest growing trend, and for dealers and integrators to succeed in the increasingly competitive environment, it’s important to capitalize on this trend. Alarm.com has been providing interactive services to security customers for more than seven years. When the very first Alarm.com app was released in the spring of 2009, the vast majority of logins to an Alarm.com interactive account were through the Alarm.com website. It was a year later that logins averaged 50 percent collectively through mobile apps and 50 percent through the dedicated website. In August 2011, Alarm.com noted the first time mobile app logins reached more than 75 percent, and this has continued to grow.

Mobile access keeps customers “sticky.” In 2011, Alarm.com confirmed the correlation between a consumer’s consistent interaction with their interactive security system and reduced attrition. Through an independent third-party analysis, it was proven that customers with interactive accounts stay on longer than traditional security customers and those who are actively logging into their accounts via the Alarm.com website or mobile app attrite even less. Click here for more from Alarm.com on taking a mobile-first approach.. — Contributed by Alarm.com

Photo Courtesy of Alarm.com

Eric Landress fills customer orders at EMC Security's office warehouse, Suwanee, Ga. In 2012 EMC Security is focused on adding new services that include interactive home control, medical alert services, video surveillance, remote access, and others, all in addition to security systems.
PHOTO COURTESY OF EMC SECURITY

Mike Morton, sales manager, meets with a customer in EMC Security's design center (which has been remodeled since this photo). EMC Security continues to focus on educating consumers on new technologies.

PHOTO COURTESY OF EMC SECURITY

Spending in home automation — Moderate Growth in Home Products

SDM asked dealers and integrators to indicate how they expect their level of spending on home automation and network equipment in 2012 will compare with prior years.

*percentage of respondents to SDM’s 2012 Industry Forecast Study, conducted October 2011 among SDM’s subscribers. Prior-year figures are based on results of prior Industry Forecast Studies from each respective year shown.

Source: SDM Industry Forecast Study

Spending will most likely stay the same this year in home products according to 5 in 10 dealers.

Enhanced Sensors Open New Markets

“Outdoor detection and asset monitoring offer a great system add-on for dealers. These products continue to mature and improve in reliability with each product life cycle and we are seeing a keen interest in these technologies,” says ADI’s Andy Morra.

New sensor developments keep expanding the outdoor services and asset monitoring dealers can provide. For example, Honeywell’s new 5816OD is ideal for gates, sheds, fences, barns, detached garages or any other outdoor areas in residential or commercial environments.

“There is a need for robust wireless outdoor sensors, especially as end users want to expand their area of influence and awareness. Now dealers can take a look outside and see a long driveway, shed or a gate and can now ask if end users want it monitored,” says Honeywell’s Gordon Hope.

In addition to outdoor sensors, new sensors like Honeywell’s 5870API Wireless Asset Protection Sensor enhance the way dealers can guard against theft in both residential and commercial applications by affixing to virtually any valuable requiring protection within a home or business. This sensor is ideal for environments where the use of a constantly armed panel is not practical — such as colleges, hotels and any areas requiring free-flowing human traffic.

Honeywell’s 5816OD Outdoor Wireless Magnetic Contact

PHOTO COURTESY OF HONEYWELL

Don't Sweat the Small Stuff

SDM asked dealers and integrators: "Approximately how many subscriber accounts did you acquire from the security-installing/systems integrations companies purchased in the past 12 months?

*average number of accounts acquired per acquisition among respondents participating in SDM's 2012 Industry Forecast Study, conducted October 2011 among SDM's subscribers.

Source: SDM Industry Forecast Study

One in 10 companies were part of an acquisition in 2011. Companies eyed bigger account numbers per acquisition, staying at more than 300 accounts per acquisition almost 70 percent of the time.

Paley shares that his company has a strong backlog and is in a growth and hiring mode.

“In our markets, we see more and more of our commercial clients having larger security budgets. On the residential side, we see home sales and new and remodel construction increasing and existing homeowners getting more serious about security as the economy has put serious pressure on everyone. These factors give us confidence that we will have 2012 growth of 20 to 25 percent over 2011,” Paley says.

Declining prices and increased reliability are helping wireless growth in 2012, as well.

“Prices for wireless system components are on the decline as the market matures further, making them more attractive to dealers. The added value of improved reliability and reduced labor expense for the dealer continues to drive growth in this category,” says ADI’s Morra.

Mechler predicts the same trend, saying, “Panels that make IP communication easy for dealers and integrators have the greatest potential for sales. Security dealers are looking for products that help to streamline their installations at customer sites,” he says.

A Head’s up on 2G

Communication technologies will continue to influence the alarm market in 2012. Everyone is aware of POTS, but the newest “dying” communication technology, 2G, is starting to get attention. 2012 will see a push from manufacturers and distributors attempting to educate the market on the extinction of POTS. Unlike the sunset of analog, 2G seems poised for a gradual fade out, but manufacturers are emphasizing the switch now will avoid replacing thousands of accounts when the service fades out. (For a more detailed look at the extinction of 2G, read “The Importance of Switching from 2G” on page 49.)

“It’s not clear as to when 2G will no longer be supported by the major carriers, but we know it will happen at some point so we are ready to help our dealers embrace the new technology. At ADI, we are positioning our assortment with products that offer communications over 3G/4G for new installs and offer the hottest features that end users want,” Morra relates.

Dealers recognizing the shift can be ready and unaffected to a large degree when the technology does go dark. The key this year is that they understand the trend. With 2G and other changes in mind, Mechler says the market needs more education on the use and idiosyncrasies of alternative communications technologies in the upcoming year.

EMC’s Secure Path™ is its branded answer to the multiple communications paths it uses to create a strong system. Secure Path™ technology provides protection via any of three different paths of communication: phone, wireless and Internet connection. EMC Security explains to customers how Secure Path™ connects their home to its central monitoring station in Suwanee, Ga., and its redundant central monitoring center in Gainesville, Fla. In the process, EMC Security increases the perceived value of the systems it installs.

Elevated Education

In addition to educating end users, there still is a lot of work to be done educating the alarm market, and manufacturers and associations are making a huge education push in 2012, putting together kits and training for dealers.

Heather is the Senior Editor of SDM Magazine. She can be reached at (630) 962-0096 or klotz-youngh@bnpmedia.com.

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