Do-it-yourself (DIY) is nothing new. Italian archaeologists unearthed the ruins of a 6th Century BC Greek structure in southern Italy that came with detailed assembly instructions, a kind of “ancient IKEA building.”
Today, it’s no surprise that some homeowners want the peace of mind of security and the convenience of a smart home without paying for professionally installed products and the monthly cost of monitoring. No doubt, technology has fast-tracked DIY from those Athens boys to millennials with smartphones, the Internet and IP video cameras.
For example, surfing the Web, you can hit on SuretyCAM’s DIY Division, “created so that do-it-yourselfers can have the same premium quality security alarm monitoring and 2GIG Alarm.com interactive services that full service customers rely on every day without paying for the installation and maintenance services they don’t want.” And numerous firms sell products and systems that allow consumers to remotely view their property, record their heart rate and receive alarm alerts.
While it seems DIY is the boogeyman of the traditional security industry, the trend can impact numerous product and service providers, as well as jazz up security and smart home dealers’ bottom lines.
Of course, the big guys are sniffing around the DIY turf. Financial analysts covering ADT recently suggested that ADT’s management team mentioned that they are exploring the possibility of leveraging a recent Best Buy partnership to potentially offer their own DIY products to expand their total available market and address the 80 percent or so of homes that don’t have monitored security. Vivint’s Support site kind of talks DIY. Protection 1 sees some customers who are DIY comfortable. Verizon is back in home systems with its new FiOS Quantum Gateway, which contains a number of radios to handle pluggable home security and smart home products.
A natural link is to encourage DIY products that lead to more traditional monitored alarm service. SAFE Security, San Ramon, Calif., has a division, SAFE@home. It enables consumers to self-install wireless security systems and includes professional UL certified monitoring. The home security system can be controlled remotely by a smartphone or tablet via Honeywell’s Total Connect.
Another example: “Of all the products we offer, we are most excited about the wireless Interlogix System,” says Wheeling, Ill.-based Sentry Security’s President David Balestrery. “This all-in-one DIY security system is really the best of both worlds. The consumer saves with the ‘do-it-yourself’ installation and still receives the benefits of partnering with a security company: 24/7 monitoring and customer service. Plus it is just plain cool to be connected. You have the power to lock and unlock your doors on the go, if you need to.”
More broadly, DIY is big business. If you search for home automation on the Web:
- Best Buy has 1,586 hits including PEQ powered by iControl Networks’ OpenHome and ADT Pulse special marketing and offers.
- Lowe’s has 80 including the firm’s own Iris.
- Staples has 20 including Connect powered by D-Link.
- Amazon boasts 360 including Piper from iControl Networks, Samsung’s SmartThings and a sponsored link to AT&T Digital Life.
- eBay is the leader at 31,147.
- Home Depot has 406 with an ad that proclaims, Nest now works with Wink.
- Menards has 141 including Insteon.
But security and home automation firms still can be venturous as well as cautious when it comes to DIY.
“DIY provides a product that fits a niche market of security buyers. We don’t believe it will ‘take over the industry’ but we do feel there is an consumer segment out there that is comfortable with technology and enjoys doing things themselves,” says Jamie Haenggi, chief marketing & customer experience officer, Protection 1, Chicago.
Haenggi adds, “Our marketing efforts have been national in scope and, therefore, we generate lead flow that we cannot serve through our branches. Previously we left those potential customers no option. In an effort to fully monetize our lead flow, we developed the DIY channel and today now offer those prospects an alternative and have been quite successful with it.”
Ryan Petty, ADT’s vice president of product and innovation, points out that “ADT is present in select Best Buy stores for another means to reach our customers as a service provider, not as a DIY provider.”
He adds, “At ADT, our 140-year history adds up to expertise in developing and providing total solutions that drive peace of mind for our customers, and we believe that a smart home is not necessarily a safe home. A lot of DIY devices are marketed as ‘security’ products, but the majority of them provide more of a fun or convenience factor. Simply ‘seeing or notifying’ is not monitored security. With that in mind, it is certainly an exciting time for our industry and we believe that ADT is in the right place at the right time with the right capabilities to capitalize on new opportunities. DIY certainly represents opportunities for ADT in terms of both products and partners. As we evaluate ongoing growth opportunities for this market, new products and services provided to our customers will be developed through the lens of a security-first approach.”
Still, is DIY in ADT’s future? Petty says, “ADT has a policy of not commenting on future products and services, but we are pursuing innovations that bring more value to our current ADT Pulse home automation customers and continue to expand the market. For example, we’ve partnered with Intel Security to bring digital devices and data protection to ADT Pulse customers and we announced a partnership with Life360 to develop a mobile, out-of-home security solution. At this point in time, we view the market landscape in two distinct areas: the first being the integrated monitored security, life safety and automation solutions (approximately 20 percent of U.S. homes); and the second being ‘stand-alone’ home automation solutions (currently a nascent but growing market). ADT’s focus has traditionally been on the monitored security and home automation arena, where we have 25 percent of the market today, with efforts underway to grow the market and ADT’s market share. Most of the focus on DIY is on the other portion of the market. We recognize the need for tailored products for this segment and the potential value that ADT can provide by making monitored security and interactive smart home solutions an important component to this segment.”
Says Protection1’s Haenggi, “DIY and home automation are two separate things. Today’s consumer who cares about security is looking for and enjoying the benefits of home automation. We continue to see in our take rates and in our consumer research that the No. 1 feature of home automation is in the remote arming/disarming, and then No. 2 being text notifications. With regards to DIY, yes, I think those customers are more comfortable with home improvement projects and technology.”
But does professional security monitoring as part of a DIY approach outweigh self-monitoring?
“I would say that it’s not so much the technology that drives this sector, it’s the consumer’s appetite to self-install — their comfort level with home improvement projects, and their comfort level with technology,” Haenggi says. “Protection 1 only offers professionally monitored systems. With that said, we are not seeing a high demand for self-monitored systems. I believe the self-monitored customer is and will remain a small niche of customers. Security is still a considered purchase and most buyers of security want the peace of mind provided from professional monitoring.”
Adds ADT’s Petty, “A smart home is not necessarily a safe home, and many DIY options lack the peace of mind that comes with professional security and monitoring. A professionally installed, monitored security and automation system offers an easy, headache-free set-up experience with the added value of knowing that in the case of a break-in or a fire, a trained security professional will respond on your behalf, even if you’re unavailable.”
He comments, “Because ‘smart home’ is such a growing market with rapidly changing technologies and products, we believe that customers want the additional peace of mind that comes from knowing that someone will stand behind their home automation products and solutions. Many current DIY products and smart home solutions in the market today lack that assurance.”
Still, while a small segment of consumers have long been interested in home automation, only recently has a confluence of new technologies set the stage for broader interest in a new, more expansive smart home. The fastest growing part of this new smart home market is the do-it-yourself segment, fueled by a wave of new products that consumers buy, install and manage by themselves, according to Michael Wolf of NextMarket, who forecasts the DIY smart home to reach $7.8 billion in the U.S. by 2019.
“Early generations of smart home products were expensive and often required a professional installer,” says Wolf, chief analyst at NextMarket Insights. “But over the past few years, new technologies have made the smart home more affordable and approachable for the average consumer.”
While much of the industry interest in smart home has been centered on managed offerings from service providers, many consumers are first exposed to the smart home through self-installable point products such as smart thermostats, smart locks and smart lighting. Others are experimenting with self-installable smart home systems that connect multiple products.
“The DIY smart home is becoming a ‘hits-driven’ business,” says Wolf. “Products like the Nest thermostat, Kevo smart lock, and Dropcam are raising awareness and offer entry points to the smart home for the consumer. We believe new initiatives such as Apple’s HomeKit and the new
‘Works With Nest’ initiative from Google/Nest will create additional momentum for the consumer-managed smart home over time.”
Another firm, ABI Research, agrees. A new generation of smart-looking as well as connected smart home products is drawing a growing swathe of consumers into smart home device spending. Shipments of these devices will grow at a close to 30 percent compound annual growth rate (CAGR) between 2013 and 2019. However, their impact will extend far beyond individual device sales, according to ABI Research.
DIY is one of the stalwart segments of the smart home automation market. There have long been home automation enthusiasts with the technical ability and enthusiasm to build out home systems themselves; increasingly, devices like Nest’s Smart thermostats and Dropcam’s streaming video cameras are bringing simple-to-install, smart-home-DIY to a far wider audience.
The popularity of these devices, which can be accessed and controlled by smartphone apps as well as the Web, helps spawn wider evolution in the home automation market. “Single application, connected smart home devices will not only drive connectivity into a wealth of everyday home appliances from air conditioning units to coffee machines, they will also provide a new battleground for new and existing smart home automation players,” says Jonathan Collins, principal analyst at ABI Research. “Existing players and start-ups alike are preparing their strategies to leverage the popularity of these devices into their own holistic smart home automation plays.”
There are myriad services, as well. “Home energy monitoring is growing in popularity with our customers. Protection 1 now has the ability to offer its customers solar energy with the introduction of Brite Energy earlier this year. We offer a mobile app that can help our customers monitor the energy they are saving through the conversion to solar as well,” says Protection 1’s Haenggi.
With so much going on, it is natural that traditional security and smart home players may see dangers ahead. “Will Apple and Google take away business?,” Duane Paulson, senior vice president of product and market development at Linear and 2GIG, Carlsbad, Calif., recently asked during a NextMarket webinar. “Instead, they will create opportunities. We need the mass market to generate more business.” He sees DIY as a starter drug to more managed home services. “There is a cottage industry around DIY” but one that emphasizes the advantages of home security and smart home more generally.
At the same webinar, Greg Roberts, vice president of marketing at iControl Networks, Redwood City, Calif., pointed out that “it all depends on whether Google and Apple will pursue an open or closed system. DIY does not mean free. There can be recurring revenue” for dealers. “DIY is the foot in the door for an expanded relationship,” a future of the connected home outside of the home, inside of connected cars and with predictive analytics.
According to Strategy Analytics’ Smart Home Strategies forecast, it’s obvious that Apple, Google and Samsung are among the big consumer brands posturing for position in the market as ADT, Vivint, Comcast and AT&T drive growth in the interactive security market.
Bill Ablondi, director, Smart Home Strategies, says, “Interactive security will take the revenue lead from professionally installed home control and entertainment systems in the overall U.S. smart home market, and Nest’s acquisition of Dropcam signals Google’s desire to become a disruptive force in this market.” He adds, “There are many options available. I think DIY will be a small part of the security market, not really changing in terms of professional monitored. There is an opportunity for dealers to offer more home automation. Can they make money? Business models can be developed. There is value in someone who knows how things come together. What is coming is a new type of technician, more down-market potential.”
Ablondi views some of the DIY activity as “an awareness builder.” And home monitored security as an essential. Strategy Analytics sees monitored security at about 24 percent penetration with growth to 30 percent in a handful of years.