Is the smart home market maturing and stabilizing, showing a clear path forward for security dealers wanting to capitalize on the new desires of homeowners to interact with many areas of their home life, including security? Not exactly. But there are definitely signs that it has moved to another level of adoption and interest, making the time ripe for action for those who want to adjust their business model to capture opportunities in this fast-growing space.

As SDM columnist and smart home expert, Helen Heneveld, president of Bedrock Learning, Holland, Mich., puts it, “The smart home is here and burgeoning and growing. We are beyond smart home products. Now we are looking at what the opportunities are within the smart home.”

Product adoption has stabilized, to a point, says Parks Associates’ Brad Russell, research director, connected home, for the Dallas-based research firm. “From 2017 to 2018 we didn’t see a large increase in new buyers to the market that didn’t previously own a smart home device. The overall growth of smart home households was flat.” 

Russell puts the penetration rate of smart home devices at about 25 percent currently — a familiar number to many in the security space. However, that 25 percent may not be the same people as the traditional professionally installed and monitored security system penetration rate, leaving room for expansion overall. 

Russell breaks down the smart home market by the number of devices they own. Those with one or two are “newbies;” three to five are “players;” and 10 or more are “super power users.” While overall growth may be flat, the movement is within the categories, he explains. “The average number of devices owned by homes that already own at least one smart home product has been increasing. In the fourth quarter of 2018 the average number was six, versus 5.1 in the first quarter, an 18 percent increase … Smart home owners are buying more devices, which is why sales are up in a lot of product categories, even when adoption level isn’t growing.”

In SDM’s 2019 Industry Forecast Study, nearly three-fourths (74 percent) of respondents described the home control/home entertainment market as good to excellent. While this was down 6 percentage points overall from the previous year, the number of respondents characterizing the market as “very good/excellent” was up 8 percentage points, to nearly 40 percent. What’s more, 45 percent expect the revenue from this market to increase this year, in 2019.

Mitchell Klein, executive director, Z-Wave Alliance, says the smart home market just “keeps performing,” but it is not necessarily growing rapidly. “It is a linear growth,” Klein says. “It is growing but not by hockey sticking, as people have been hoping.”

That doesn’t mean that those in the business, both manufacturers and dealers, didn’t have solid performances in 2018. Many point to a very good — if restructuring — year. For example, Dallas-based Brinks Security spent 2018 launching and marketing the Brinks Home Security Brand, says CEO Jeff Gardner. With the marketing theme, “Be sure with Brinks Home Security,” the company sought to emphasize the difference between DIY/self-monitored systems and a professionally installed and monitored solution.

“We emphasize that we provide real security,” Gardner says. “We made a lot of progress and 2018 was much better than 2017, for sure.”

Another company that spent 2018 restructuring was Resideo, which spun off its residential unit from Honeywell. “That drove much of our year, not only organizing and internal efforts but in the marketplace we had a pretty good year,” says Scott Harkins, vice president and general manager, connected home, Resideo, Austin, Texas. “Connected or smart home solutions [are] growing significantly higher than non-connected business and are an important component of our future with the spinoff. Thirty-seven percent of our entire product portfolio is connected in some way and that number was up last year. We also increased the numbers of connected consumers 24 percent year over year. We wrapped up 2018 as the year when consumers who were given a choice began to overwhelmingly choose connected. Everything indicates the smart home piece is a pretty critical component of the consumer decision process.” 

Alula, St. Paul, Minn., merged two businesses together to form its solution, and 2018 was the first full year after that transition, says Brian McLaughlin, CEO. “We did quite well in 2018; we grew top line at about 25 percent,” he says. “We were able to thrive and grow, in addition to being able to integrate all the pieces and parts [of the two companies] and have two major product launches … We filled out our platform in 2018 and grew in the marketplace, overall.”

Reinvention may be the key to success for security dealers as well. Todd Langdon, vice president, Audio Security and Automation Providers Inc., Saranac, Mich. (featured on this month’s cover), says his company has gone through several shifts since the 2008 housing collapse. It was originally a residential security provider, but later focused more on commercial security and lighting control. Now, 30 percent of the business is back to residential and that is growing quickly — largely due to the company’s focus on smart home.


New Opportunities

Some of the new market opportunities in smart home come from outside the traditional residential security space. Bedrock Learning’s Helen Heneveld identifies three main opportunities: aging-in-place, insurance incentives and multi-dwelling units (MDUs).

  1. Aging-in-place - As the Baby Boomer generation continues to age, the issue of elder care is at a peak right now. Increasingly adult children don’t want to put their parents in a facility if they can be effectively monitored at home. The benefit for security dealers with this trend is that it fits naturally with what they are already selling, says Alula’s Brian McLaughlin. “Dealers are starting to get into adjacent verticals. Aging-at-home or aging-in-place technology uses the same security core platform to see if someone got out of bed, or if they have eaten. These can be integrated with PERS (personal emergency response systems) and now you have a healthcare model.”’s Anne Ferguson sees this trend growing. “We expect that interest in systems which support aging-in-place will continue to grow as more consumers look for alternatives to in-home care or assisted living, and as advanced analytics continue to make these systems more intelligent, adaptive and easy to use.”
  2. Insurance Incentives - Insurance companies have begun to try offering incentives to homeowners by giving them a break on their premiums if they have certain technology such as a smart thermostat or a water leakage detector. While some of these devices are sold directly to consumers as a self-installation model, the same DIWM principle applies, giving dealers an opportunity. “Insurance companies will start to wrap up their pilot projects in 2019, so 2019 and 2020 will be important years for smart home platforms in this space,” says Blake Kozak of IHS Markit. Water detection is a natural offering for dealers to add to their portfolios, says Z-Wave Alliance’s Mitchell Klein. “It’s a means to get in the house and add something else. Insurance is nascent, and going to become big.”
  3. MDUs - More and more Americans — particularly millennials — are eschewing the single-family home in favor of more urban environments and multi-dwelling units, such as apartments and condominiums.

“The smart apartment market expanded by more than 120 percent in the U.S. in 2018,” Kozak says. “For MDUs this market remains very small with about 15 players offering solutions … but the market opportunity improves in 2019 and 2020.”

Kozak says traditional security dealers should capitalize on all of these trends. “Dealers should look to mix in services that monitor appliances, HVAC and other high-cost goods in the home for repair and maintenance. By combining additional services, dealers could look to diversify away from relying solely on monitored security, which is typically a grudge purchase.”

Resideo’s Scott Harkins agrees. “Stop thinking about security and alarm signaling only and start thinking about all the components in the home that bring peace of mind. Customers worry about their hot water heaters or air conditioning and we can help them monitor that. We are early into that journey but it is an interesting path to start exploring.”


“2018 was much better than 2017,” he says. “There was a lot more automation in homes, and a lot more security tied in with audio … The economy seems to be in a much stronger position right now and there is a lot more building and remodeling. Our phone is ringing a lot more from homeowners calling to say, ‘We have tried to do home automation ourselves but would really love to have someone come in and put it all together into one package.’

Langdon says his company is also getting customers it wouldn’t have had before, thanks both to the publicity and growing awareness around the smart home, as well as his company’s response to it. 

Xfinity Home is another company that feels the overall market pie is growing. “2018 was great,” says Dennis Mathew, vice president and general manager of Xfinity Home, Comcast, Philadelphia. “Right now we are on a journey. If we talk about smart home, our specific focus is Xfinity Home security, which has grown to over 1.3 million customers. We are seeing strong interest and growth in that space. We are focused on driving penetration and adoption of home security among internet customers.”

Mathew says about half of these customers are new to the home security category, a factor he attributes to the company’s strategy of offering it as part of a package with a home internet or entertainment play.

The question is, is this experience unique to Xfinity, or is the overall pie truly growing? 

Parks estimates 28 percent of broadband households now have some type of security system, a number that is growing at a slow rate of one percent at best, Russell says. “The big number is the conversion of legacy customers to interactive services. Two-thirds have interactive, or 66 percent. That is the underlying foundation for layering other kinds of smart home devices.”

IHS Markit, a research firm based in London, estimates that global revenue for smart home hardware increased by 64 percent in 2018 (relative to 2017), to reach $28 billion. However, without more homeowners starting to buy these products (as opposed to adding on to initial purchases), 2019 could be the peak for growth before it begins to slow annually in 2020 or 2021, says Blake Kozak, senior principal analyst, smart home and security technology. “As smart speakers, thermostats and cameras begin to fill consumers’ homes, the market will shift to finding ways to get consumers to expand their existing ecosystems,” he says. 

When it comes to the professional security market relative to smart homes the level of growth may depend on finding new markets or ways of selling. “Although the peak could occur in 2019, the market growth could pick up again depending on senior care, insurance companies and the MDU space. Although companies like ADT continue to push automation, IHS Markit expects the transition of professionally monitored alarms from ‘connected security’ to ‘home automation’ will be slow … There are many elements that could propel stronger growth in 2019 and 2020 relative to 2020, but this depends on the new/adjacent markets.”

McLaughlin feels security dealers are up to the task ahead. 

“I talk to hundreds of dealers and I would say 70 percent are embracing the change and excited … Whereas a year ago there was a lot of fear and panic around Amazon and Google, they are now seeing we can offer the same things but in a better manner, with better service and support. I have seen the security industry start to get that confidence back that they can compete with these guys.”

This is true for Control4 and its dealers as well, says Brad Hintze, senior director of product marketing, Control4, Salt Lake City. “We saw a growth of about 10 to 12 percent in that space in 2018. Some of the biggest factors were rising consumer demand and awareness of the smart home. A lot of that is being driven by mega corporations spending millions to drive the market, such as Apple, Google and Amazon. That is benefitting us [and our dealers] as they go to try and fulfill some of that interest.”

What has changed about the smart home market in the last year? Perhaps the biggest shift has been the level of consumer awareness due to the publicity created by the large companies in the security and MSO, as well as the DIY, space. At the same time, products have gotten better, more interactive and more able to work together, says Judith Jones-Shand, vice president, marketing, Napco Security Technologies, Amityville, N.Y.

“Large ad spends by very large and often new market entrants is increasing awareness,” she says. “There is more universality with IoT devices and technologies integrating and supporting multiple brands, and there are fewer, better, more powerful ecosystems. Today’s consumer sees new convenience, utility, ease-of-use and improved reliability for the IoT things to actually, consistently work. That all translates to market growth.”

For those in the professionally installed security space, this can also translate to more value to the consumer, Jones-Shand adds. “All these interconnected devices and our ongoing love affair with blue screens make the value proposition of connected home services much more attractive and more coveted than just geeks with the cool factor of old. Another upside on connected accounts in general, beyond a higher RMR rate, is that the consumers find their security provider services more useful and more relevant.”


Tech Drivers

Perhaps one of the biggest technology trends in 2018, continuing from 2017 and showing no signs of slowing, was video. “Video camera and video analytics are continuing to get better each year and eventually we will see the price come down for cloud storage and high resolution such as 4K,” says Blake Kozak of IHS Markit. “Despite the advances in video cameras, video analytics will be the differentiator in 2019 and 2020 because true 4K cameras will remain expensive.”

What’s more, video and video analytics will lead to another big trend that is just starting to be talked about in the security industry at large: artificial intelligence.

“Video and analytics are two opportunities that add significant value to what our service providers offer and how they operate their business,” says’s Anne Ferguson. “Video analytics identifies moving objects and uses cutting-edge AI to help determine whether to alert the property owner. This helps reduce unnecessary alerts and excess video clips, creating a better experience.”

Video doorbells also continued their popularity, says Brian McLaughlin of Alula. “Adoption rates are through the roof right now,” he says. “The video doorbell has moved from side dish to center plate as people want to be able to look at the doorbell with the rest of their cameras.”

Audio is another continuing trend, with the Alexas and other voice assistants forming a de facto hub in the home. There were more than 45 smart speaker models released globally in 2018, Kozak relates. “During 2018, the market also saw premium audio brands enter the smart speaker/smart home market such as Bose and Bang & Olufsen.”

Parks Associates estimates smart speaker ownership at 36 percent of U.S. broadband households in the first quarter of 2019, up from 28 percent in the second quarter of 2018, says Brad Russell. “The average number of speakers is at 1.58. People who bought one, bought more. It is so affordable now they are putting it in other rooms in their home.”

Going along with this is the voice trend in general, he adds. “That has doubled in the last year. Thirty-seven percent are now using a smart speaker for control of their devices … That is important because it makes the whole experience much easier for the consumer. They don’t have to learn how to use apps or open their phone. Voice will help drive smart home device and service adoption.”

While video and audio get a lot of the attention, there was another technology that really started to take off last year, says Todd Langdon, Audio Security and Automation Providers Inc. “Lighting control seems to be the big push right now,” he says. “Everyone wants to control smart lights and switch to LED lights.”

Control4’s Brad Hintze calls lighting the “sleeper” technology. “Lighting is one of those things you have to experience to fully appreciate — and more and more people are getting those experiences. It is easy to dismiss lighting and say, ‘I am not so lazy I can’t walk across the room and turn off a switch. But as they experience it they don’t want to live without it. Lighting is one of the biggest and most under-represented opportunities, and that is going to change quite dramatically in the next several years.”


That RMR is a critical piece for security dealers. Many have speculated that monthly fees will ultimately have to come down to meet the new entrants’ lower fees, but so far that doesn’t seem to be happening. In fact, SDM Industry Forecast respondents indicated the median monthly monitoring price of a residential system was $33 in 2018, up from $29 the previous year. Over half (54 percent) of respondents said their average monthly monitoring price was between $21 and $40, up from 44 percent last year, while the number indicating it was greater than $41 stayed the same both years. 

At the same time, cost of systems for mass market versus a traditional system is inching closer, enabling traditional dealers to better compete with DIY and mass market systems. In the SDM Forecast, the average price of a traditional system was $1,100 in 2018, versus $1,400, while the average mass market price rose from $495 to $678.

“Technology is better, faster and cheaper,” McLaughlin says. “Price points have come way down and dealers can become more competitive with the perceived low cost of DIY.”

There is more good news for the professionally installed security space. “The biggest opportunity for dealers will remain with the professional channels and this is only getting better,” Kozak says. “DIY will remain a threat, but likely won’t impact the bottom line in 2019 or 2020.” However, he does caution that the “Ring-style” products that offer inexpensive monitoring could become a threat.

“Security remains the primary driver for many smart home purchases,” says Anne Ferguson, vice president of marketing for, Tysons, Va. “There’s an exploding consumer demand for smart home security systems. Solutions that integrate the expanding diversity of connected devices are showing up nearly everywhere, and the assurances that come with professionally installed and monitored systems are driving demand and adoption. Dealers that effectively market and sell the value of fully supported smart security systems are growing in the market.”

While the DIY space is no doubt growing, it may also be adding to the confusion on the part of the consumer, leaving a wide opportunity for those that can effectively position themselves to help homeowners make these products all work together. “The market is moving to trying it themselves but calling professionals if they need help,” Heneveld says. “DIY is growing, but very confusing.”

She predicts 2019 will be a big year for DIY, but also DIWM (do it with me), as a result of those who over-estimate their skills.

“I think DIY is one of the best things that can happen to the pro installer market,” Klein says. “Things were static and consumers weren’t adopting new devices to their home … DIY is increasing adoption, awareness and attachment rates. We call it ‘DIY’ but people don’t really want to do it themselves. Traditional security companies need to look at this as an enormous opportunity.”

Even if they successfully install it themselves, there comes a point where self-monitoring is not as attractive as it seemed, Langdon says of consumers. “I have seen this influx of DIY companies jumping on board with no monthly monitoring … It has taken business, but it has also enlightened people that security in homes is more important than just having locked doors. We are finding the people doing this DIY stuff later on decide to talk to a professional and … get professional monitoring.”

This trend is echoed by Parks Associates research. “As you look at the segments [by number of devices they own], as they go up, pro-monitoring goes up,” Russell says. “With 10 or more products more than 80 percent have monitored security. Newbies are at 50 percent. There is a correlation. Security has always been the foundation to smart home market growth.”

Doug Vanden Berg, president, Vanden Berg Stereo Inc., Holland, Mich., is a smart home dealer that works with both and Control4 products. His company has been offering security for about five years and he is seeing more homeowners wanting to combine their smart home with their security systems. 

“I don’t see DIY as my competition,” he says. “That has always existed. A DIYer would hook up their own turntable, their surround sound, etc. They have always been there.” 

Vanden Berg adds that, although awareness is definitely up, customers still don’t typically ask for a “smart home.” That term can even be considered a negative for some customers, who associate it with what he calls “half-baked” solutions from the likes of Google and Amazon. “People want a single remote on a coffee table. They want better video and sound quality and for everything to have a nice fit and finish, to work well and be easy, something the babysitter or grandma can pick up and use. They may not use the name, but they are effectively getting a smart home.”

Often this comes after a homeowner has installed several DIY products and realizes they have several apps and it becomes cumbersome, Harkins says. “This space has primarily been a smart product or connected device space. Lots of singular devices were sold like locks, lights, thermostats, etc. We saw in 2018 and continuing in 2019 these products are now being tied together … We also see in our security channel a constantly increasing attach rate, meaning when a security system is sold, what is the attach rate of app services on top of that? In 2017 that was in the 40 percent range. Now it is in the 65 to 75 percent range. Our dealers are responding to consumer requests by selling not only home security solutions, but smart home solutions for the whole home.”

Harkins also points to DIWM as a burgeoning opportunity for dealers. “We all like to say thermostats are DIY, but the homeowner takes that off the wall and sees wires, and it can be intimidating. Lights are tied to high voltage. If you go into air conditioning or hot water sensors, these are not install-it-yourself solutions. Consumers might buy something with the intention of installing it themselves, but end up contacting a contractor.”

This fear may have a short shelf life, Russell cautions. “Many of these devices are growing in terms of the percentage of self-installation. For instance, two years ago 49 percent reported installing a networked camera themselves. Now it’s 68 percent. Smart thermostats were 43 percent; now they are 59 percent. There used to be a notion a consumer won’t touch electric. In 2018, 74 percent did. They are overcoming the fear, if they had it, because the out-of-the box experience is much easier to understand.” 

That said, he also adds that just because they can, doesn’t mean they want to. “From a tech support side, we know that of people who in the past who have self-installed a device, 41 percent say next time they would like more help. The DIY experience is not all roses.” That is where the promise of DIWM comes in, and Russell predicts the market will see many more security companies trying that in the coming year or so. 

The opportunity for security dealers to capitalize on the smart home is absolutely there now, say the experts; but it will require something different than they have done before. As Jennifer Doctor, senior director of product management for intrusion security products, Johnson Controls, Milwaukee, says, “What got you here isn’t going to get you there. That is where we are. But you can’t forget what got you here, because there is still a market for that.

“It is about changing the conversation,” she adds. “[DIY and self-monitoring] are great when I want to look in at my dog. But if there is an emergency at my house I am not getting the coverage. We need to change how we talk so we let people understand the value of what a professional system can offer over going to Amazon or Best Buy.”

Heneveld says security dealers are in a perfect spot to take advantage of growing consumer interest in smart home systems. “You security guys are in the catbird seat. You are already trusted, already in the home.” The key, she says, is claiming a position as a smart home specialist. “There are opportunities from existing customers. Tell them, and tell them again what you offer, and build that relationship.”

Telling a new story is all about use cases, Klein says. “The focus has been on selling ‘thingies.’ What is the thing? I’m selling security, or a door lock or a light switch, but the reality is no consumer needs another light switch. We should be presenting the why. What are the compelling use cases?”

In order to tell that story, however, the security dealer needs to first get the chance. This is why Klein and many others recommend that dealers strongly consider answering those calls for help from homeowners that bought a DIY product and want help installing it. 

“Dealers have to look at this not as, ‘I’m going in to install stuff they bought on their own,’ but as an opportunity to show them what else they can attach to it and what else they can do for that customer,” Klein says. “If they are really thinking about it, they can say, ‘I have some devices on the truck’ and sell something on the spot. This is a business opportunity. They are already in the house.”

Langdon says this type of response has been an opportunity for his company. “Our typical answer [to that call] is we will look at what they have got, but be prepared to say we will have to get rid of some of this and put in some sort of central control. We explain to them this is what you might be looking at but we will get you where you want to be. Quite often that is an opportunity for us. We have become quite specialized in different areas to allow us to break that down for them. We want to make customers happy and keep them as long as possible.”

Harkins takes it even further. “I think our security dealers should offer DIY solutions. I have dealers today that take the same products they have sold in the normal way, pre-program them and sell them to the consumer. DIY is just about how it gets installed. In every meeting I have I strongly suggest they start thinking about new business models, and one is taking products that can be easily programmed to be installed by homeowners and selling them in ways that are different. Maybe that is online, or by working with property management firms.”

He also suggests looking ahead to future-proof against some of the trends that are being talked about now, even if the channel hasn’t seen it yet, such as lower RMR. “In a new model, they can afford a lower RMR. Maybe instead of $40, for DIY it should be $30, for example. They don’t have to send a tech to install it so there are reasons it could be less expensive.”

DIY may be key to growth, based on Parks Associates’ statistics, Russell says. “If you look at the number of people who have added on a smart device after they have installed a security system, almost one-fourth of security owners have acquired additional devices. But what is interesting about that is if you break that out between pro-installed or self-installed, almost 40 percent of self-installed report after-market buying of devices but only 19 percent of pro-installed report the same. The DIY buyer is inherently more likely to add devices because they can install it themselves. There is a lot less friction in device acquisition.”

This is a key lesson for dealers, he says. “To capture what is a very real market of add-on device sales they have to reduce as much friction as possible in the ordering and installation and compete on price with retailers.” He even suggests taking advantage of the retail sales cycle and offering holiday sales and promotions, such as Memorial Day and Labor Day by offering their own discounts and promotions around those traditional shopping days. “This is something that hasn’t been part of marketing for security dealers before,” he says.

Another change is in the up-front cost of the system. In 2019 Brinks started trying something different with financing, Gardner says. “We started offering, instead of a deeply subsidized system, interest-free financing and/or if they didn’t do that, they paid for the service. That allowed us to get the right equipment to customers and provide a lower monthly monitoring rate. The way I think about it is a path to the future. We want to be competitive with some of the new entrants; not that we are matching them, but we are at least recognizing that we need to change. We are reacting to some of the disruptors that are getting into this market.”

Gardner says the competition has sharpened the focus for the professional dealer channel in a positive way. “What they have made us do is we have had to get better at distinguishing our product from the new entrants, making sure customers understand the differences … It has really allowed us to up our game.”

Xfinity is starting to experiment with no-term contracts, Mathew says. “We made a really big change earlier this year in one of our divisions,” he says. “We have done away with term contracts. We have also created simple equipment packs to make it easier to buy equipment. They can pay upfront or over 24 months.” Mathew says this model, which started in their Northeast market, will be rolled out nationwide over the course of 2019.

“We did this for a couple reasons,” he adds. “The concept of the contract is a bit antiquated and has been a barrier and a challenge from the customer and front-line perspective. We knew our customers wanted to buy more equipment, so we did research about how to do that in a simple way.”


Lessons From Google

One of the most talked about recent developments in the smart home space was the decision announced by Google in May to end its “Works with Nest” program in favor of a “Works with Google Assistant” program instead. While the initial announcement didn’t include ongoing support for those who already have the Works with Nest solution, they backed off that pretty quickly in favor of retroactive support. However, the episode did shake up the industry, showing the power a large company has to quickly change things.

“It is pretty nuts to see what is going on with Google and Nest,” says Control4’s Brad Hintze. “Google announced a transition away from one integration approach to a different one. That is all fine. You have to have evolution. The problem was they were going to abandon certain homeowners that didn’t have a path forward within two months. For us, we are going to move to the new approach so we will be able to offer ongoing integration. But the short timeline was going to present a problem.”

Luckily, Google reversed its stance; but it left a bad taste for many.

“Big companies that promote this stuff don’t always have the tolerance to see that growth occur,” says Z-Wave Alliance’s Mitchell Klein. “Look at what Google has done with Nest … In large part, companies just find better opportunities and fail to understand it has an adverse impact on the marketplace.

“Honestly I don’t think Google even considers the professional market. I don’t think they care, which is demonstrated by what they did. They are fickle from a tech perspective and they will pivot quickly.” Dealers should be cautious, whether of Google or just the latest and greatest from a new player, he adds. 

“When I look at the Google [situation] I didn’t do a lot of those because I had the feeling I didn’t want to rely on a big tech company to do my HVAC and I think I was right,” says dealer Doug Vanden Berg of Vanden Berg Stereo. “Things like that can be a liability. We have hundreds of customers where you have helped them integrate their thermostat into a smart home and all of a sudden that functionality breaks and you need the staff to go fix it. That is pretty concerning.” 

Vanden Berg sees it as a symptom of a larger trend in such a fast-moving market. “Technology can change too fast for it to be really reliable.”

Todd Langdon of Audio Security and Automation Providers Inc. says the key is to diversify. “You have to try to pick your product wisely and that is why we have always tried to stay with companies that have been in the market for a while and stable. But you can’t always do that because there are always new products out there everyone likes and wants to have. You need to keep an open mind and be diversified. That way you can play the balancing act and have something in your back pocket to slip in there [if a company folds or changes their functionality].”

That is what Xfinity does as well, says Dennis Mathew. “We have a disciplined approach of which categories matter and identifying a few partners in those categories. The thermostat category matters, and Google has made this announcement and it is unfortunate. But we have integrated other thermostat partners so we can have some options.”

Brinks’ Jeff Gardener points to the Google/Nest situation as a good example of why it is critical for dealers to pick their partners wisely; although as a partner with Google, he sees Google’s decision as a positive one, ultimately. “We try to pick partners with longevity. Google is very interested in this category. They have made some tremendous progress in innovation … They are definitely more focused on their ecosystem, but more so they can provide a higher level of service. They are careful with their customers and will do it in a way that is beneficial in the long run to new customers but won’t harm existing customers.

“Some of the naysayers are trying to make a big deal of this but this is Google. They know what they are doing.”

However, Gardner does acknowledge the need to be very aware of what any partner is doing, particularly the large tech companies with the biggest potential to make sweeping changes. “They are all about disruption. It is incumbent on us to understand what is going on in the marketplace. Whether they will continue to play friendly, I don’t know. We have an exclusive relationship with Nest and have a great partnership. But we have to be on our A game. How many industries get disrupted because they think these new entrants don’t have a chance? We have to be better, faster and more innovative.”

Blake Kozak of IHS Markit explains the long-term implications of decisions such as this: “They are essentially tightening their ecosystem for a safer and better user experience. Although this is at the expense of some players, especially startups, the long-term model is the direction the rest of the smart home will eventually move. For Apple, they are looking to offer free cloud storage for cameras like Netatmo that didn’t previously have any cloud storage options. This could have big implications for other companies looking to charge.”


Manufacturers are also starting to do their part, whether that means making products that are easier to install or sell over the internet, or giving dealers more options for ways to sell and install systems. For example, Miotta, Freemont, Calif., offers a platform license that allows the traditional security dealer to compete with the SimpliSafes of the world, says CEO Joe Liu.

“What we offer is a virtual DIY system. We will ship you a pre-programmed system and the dealer gets the professional monitoring.” Another benefit, he says, is it allows the smaller independent dealer to compete nationwide, which is something they couldn’t do on their own. 

Napco will soon introduce a cellular alarm system with connected home features to help its dealers compete in the smart home space as well, Jones-Shand says. “It is designed to help security pros fast-track adding new accounts with [our] lowest acquisition costs ever. From $79.95, iSecure gives dealers the ability to provide professional security protection and remote smartphone consumer alerts and conveniences better, faster and more economically.”

Even Control4 has considered looking into the DIWM idea, Hintze says, although he doesn’t feel it is quite ready. “We are constantly looking at new ways to offer products to our dealers. We don’t offer it yet because it is really important to have a fantastic customer experience end-to-end and we are not sure that is quite there yet … I do see a time not too far away where we will see more and more of these opportunities with products that are straightforward for the homeowner to plug in such as the Amazon Alexa. We will continue to expand that over time.”

The customer experience is critical, and one reason why Nick English, national sales manager for Kwikset, Lake Forest, Calif., cautions that dealers who do try the DIWM or “fix-it” model of selling be careful not to push too hard or use some of the strong-arm sales techniques the industry is sometimes accused of. “Most definitely dealers should consider doing that. But you want a good customer experience. You have to have it be pretty low-pressure so the customer feels good about [buying from them]. It has to be a positive experience, not a negative one. They went DIY for a reason.”

McLaughlin says there is great reason for optimism on the part of security dealers. “You can’t just keep using the same outdated technology; you have to up your game, and I think dealers are realizing that. A lot of the reason the industry has been stuck at 25 percent is because people were fine with that. The market was pretty content with it. Then everything changed when DIY and new technology trends came across … It has woken people up to needing to be better marketers and drive down creation costs, be more efficient. The dealers I have talked to that have … made the switch have been re-energized. It’s a whole new world and they are excited again. Sure there are challenges, but it is neat to see the industry wake up and evolve."