This issue features the 28th annual SDM 100, a ranking based on recurring monthly revenue of the largest security installation and monitoring providers based in the U.S. The responses of these companies to a survey produced by SDM generate a large amount of data and anecdotal information which can be used to identify and confirm industry trends.
Based on responses from the SDM 100 group of security dealers, 2017 was both a successful year and a challenging year. SDM asked: “What issues and trends do you think will have the greatest impact on your business in 2018?” They identified more than 10 issues (those cited most often are listed here), and described the impact on their businesses.
- Internet of Things and smart home;
- Do-it-yourself (DIY) security (particularly DIY products from traditional security manufacturers) and monitor-it-yourself (MIY);
- Cyber security;
- Active shooters;
- Emerging technologies, particularly the effect of having to continually train personnel to stay in front of new technology;
- Communication paths;
- App-based self-monitoring of video;
- Integrated security solutions model;
- Mid-term elections causing a wait-and-see attitude in spending; and
- Interest rates as tied to new construction.
“IoT is reshaping the industry. Security is old fashioned — to survive, companies must embrace all “connected” devices and services. For example, the massive increase in Amazon home deliveries sparked a similar increase in the number of thefts of packages from homes, which fueled the increase in doorbell cameras (which sold out several times last year).” — Central Security Group Inc.
“We are confident that growing interest and awareness in the connected home and IoT will lead to further residential market penetration.” — AMP Smart LLC
“The IoT will continue to impact how various building devices communicate with each other and the monitoring companies. Customers are very concerned about cyber security and whether their systems are protected. The topics of terrorism and active shooters are blanketing social media and the news. It is a fact of life and we are well-positioned to address customers’ concerns for increased security.” — Red Hawk Fire & Security
“IoT and mobile are definitely impacting the security industry as a whole, and we are seeing an increased movement to cloud-based security offerings. The trends that are already taking hold in residential security are making their way into the commercial world. DIY providers are faced with challenges as security is getting increasingly more complex and there is a shortage of educated and sophisticated installers — compounded by low unemployment. Cyber security is an increasing concern as IoT devices expose vulnerabilities. We are also seeing an increased focus on active shooter preparedness and prevention as well as EMC offerings for buildings. Kastle is launching KastleEMC in the coming weeks, which is part of our mobile credential platform, KastlePresence. Due to demand, we also plan to offer the EMC tool as a standalone software package for non-KastlePresence (and/or non-Kastle) customers.” — Kastle Systems International LLC
“Security providers continue to succeed, but need to add smart home products and services to remain competitive and take advantage of the biggest opportunities; see Strategy Analytics report, “Smart Home: Disrupting the Security Industry”. Last year, Vivint Smart Home introduced first true smart home assistant powered by artificial intelligence. Vivint will automatically manage the connected devices in a smart home, including locks, lights, thermostat and security system. Vivint takes full advantage of the greater number of sensors and devices that are part of every Vivint smart home system, an average of 15 per home. Machine-learning algorithms use data from these sensors, as well as from mobile devices and system usage, to provide intelligent recommendations and take action to streamline the home experience. Despite its rapid acceleration, smart home is still an emerging industry with many barriers to adoption, including pricing and installation. Most Americans have never installed a smart door lock, a doorbell camera, or a thermostat, much less figured out how to get them to all work together. Vivint is breaking down the barriers to mass-market smart home adoption, making it easy and affordable to create a smart home with innovative purchasing options, including a partnership with Citizens Bank to offer zero-percent financing, and a first-of-its-kind interactive retail offering in Best Buy.” — Vivint Inc.
“DIY market for residential providers and IoT devices will certainly have an impact on the way we do business in the future. I believe one of our biggest challenges is continued education for our personnel to stay in front of technology.” — Sonitrol SW Ohio
“Our industry is experiencing a significant evolution as many ‘early disruptors’ to the category become more mature, such as the Internet of Things, DIY, and new industry competitors. Rather than one particular item transforming the industry or our business, Guardian sees the collective influence of all these elements coming together to both increase the market awareness of our products and services, as well as, increase our challenge of how to break through in a crowded marketplace.” — Guardian Protection Services
“We would speculate that there will be continued growth in our space, most likely driven by awareness from the new market entrants that are supporting both security and automation. This is to say that we will continue to see a growing impact from DIY providers, but some of this may result in demand for professionally installed security systems. In the residential space, macro-trends such as terrorism (and general crime awareness) as well as the increased consumer comfort with technology (driven by the general growth and pervasiveness of technology for communication and simple automation (IoT)) will position heightened awareness around solutions that combine security and automation. This increased comfort will drive demand, with some of the demand resulting in sustaining professionally installed security and automation solutions. It is also speculated that it will result in some price compression and growth in features from the professional integration segment, as consumers compare available technologies. At a high level, we feel that these trends will continue to inspire commercial growth as technology evolves and consumers demand smarter, safer buildings, certainly with video, intrusion (door control and panic buttons) and access control as key solutions. Fire alarm work will also continue to grow, driven by positive construction trends in the markets that we serve throughout the Southeastern U.S.” — ADS Security L.P.
“The two issues that seem to be impacting our business the most are cybersecurity and DIY. Cybersecurity tends to impact us the most as our commercial customers, which require security, need to know that the security provided, whether it be cameras, access, or intrusion is safe from hackers. DIY/MIY is like a water fountain that can’t be shut off; it might be just dripping, causing you to lose a little at a time and not very noticeable until you see the water bill and wonder who is using all the water. Similar to attrition, when they cancel a little at a time over the course of time it adds up. This is at least something we can measure; we have no idea the customers we are losing who decided to do it themselves versus a traditional alarm company install. This, coupled with MIY, has been growing over the last couple of years and seems to be more and more of a challenge to the traditional security companies that are also offering smart home solutions. Another issue or trend is the consolidation of major IoT companies that are crossing over into the security industry such as what is happening with Google, Nest, Ring and Amazon. As independent security companies around the country we continue to look for ways to grow, differentiate, and compete with these types of services and offerings now being provided by the likes of Google and Amazon.” — Custom Alarm
“It appears as though the pace of technology change and new entrants is accelerating. 2018 will be an interesting year for traditional dealers to navigate the various trends and dynamics (DIY, ADT Public, Amazon-Ring, etc.)” — Alert Protective Services
“I believe the DIY market is the biggest threat to residential security in the short term. Once the security and home automation manufacturers find a way to have all these different devices and platforms integrate and play well across platforms it will be a force to be reckoned with. There is so much innovation in the space right now from many different and new players that it keeps the market from taking a large leap forward since none of these devices work well together and this keeps normal homeowners from being able to install these devices since they are not technically savvy to this high level.” — Fleenor Security Services
“I think our biggest threat to our industry are Amazon and Apple launching a self-monitored system that is a better product than what the industry currently offers.” — Mountain Alarm
“Cybersecurity is a common topic for the deployment of integrated systems. Customers are continuing to ask for documented cybersecurity policies in order to participate on enterprise-size projects. The trend in 2018 will move from internal cybersecurity policies to policies related to the product selection, configuration, and ongoing maintenance of hardware being deployed on customer networks. The requirement for systems integrators to demonstrate their ability to follow cyber security best practices will be paramount. As customers strengthen their internal cybersecurity, and manufacturers offer more cloud-based and mobile solutions, integrators will be challenged with implementing and maintaining cyber security best practices.” — RFI Communications & Security Systems
“We recently picked up multiple school district accounts here at Allstate Security Industries Inc. While this was a major accomplishment for our company, it also forced us to look at the security we offered from a different standpoint. With all of the recent events we unfortunately hear about more and more often in the media, we now as a company have to offer solutions to situations like active shooters or terrorist activities. We realize the magnitude of this take on: not only providing security services, but ultimately saving lives. We have worked with school district representatives to introduce new and innovative solutions that we feel will not only be beneficial in an unfortunate event, be rather help prevent one from ever occurring.” — Allstate Security Industries Inc.
“While the impact may be indirect, active shooters and terrorist activities continue to have an impact on our business. A recent customer, in fact, sought us out to add “the best” security after an active shooter attacked his premises. Truck attacks like the one in New York have caused those that protect large trucks to consider whether they have enough security.” — Electric Guard Dog
“Legalization of marijuana in Massachusetts is providing opportunities for integrated security solutions at dispensaries. Active shooter threats are leading to state government wanting city-wide integrated security with cities and towns.” — American Alarm & Communications
“Our goal has always been to provide our customers with the products and service they can rely on to keep their loved ones safe and secure. Due to the many troubling events in the news, many local businesses and institutions are revisiting their current security plans. We have seen an increased interest in security and fire systems from municipalities, educational facilities, churches, homeowners and other local establishments.” — Ener-Tel Services I, LLC
“Customers’ desire for an integrated security solutions model where technology integrates into other asset protection related services. Physical and operational security situational awareness and harnessing the intelligence for predictive analysis is becoming a key expectation, as we have the ability to influence more of our clients’ portfolio.” — Allied Universal Security Systems