Home Security SOS
Broadband connectivity is the cure to residential security ailments
- By Paul Dawes
- Feb 29, 2008
Monitored security is a $30 billion industry with approximately
24 percent household penetration and consistent
year-over-year revenue growth. The top 100 home security
dealers rack up approximately $7 billion in revenue
each year; they added more than 400,000 new customers in 2006.
Given the industry’s growth and reach into households across the
United States, it may seem difficult to identify any major areas of concern.
But if you look closely, you’ll find the home security industry is
performing significantly below its potential.
The Industry in Perspective
Traditional monitored home security has been in the United States for
more than 30 years. It’s followed the same evolution as many other
industries with recurring monthly revenue—once an expensive luxury
item for the upper-middle class, now an affordable must-have for the
masses (albeit with a three-year contract required). With companies
now offering fully installed systems for $99 and monitoring fees from
$25 to $35 a month, home security never has been more accessible.
Although the industry has started appealing to the average American,
home security merely is limping along compared to other service industries.
Broadband Internet access is now in 60 percent of U.S. households.
More than 80 percent of U.S. homes have a mobile phone, and VoIP is
already at 10 percent penetration—even though it’s only been available for
three years and users need broadband service to get it. These successful
industries highlight the stagnancy of the home security industry.
Perhaps it seems more intriguing to whip out an iPhone at the tavern
instead of installing a motion detector in your living room. But, if you
step back from the details, what you find is that high-growth, recurringmonthly-
revenue industries, such as broadband, mobile and VoIP, have
something that home security doesn’t—a perceived daily value—making
them more appealing to the average consumer.
Peace of Mind
Home security dealers have done a wonderful job of stimulating purchases
by marketing the core benefit that security provides. But peace
of mind isn’t tangible and, in many cases, consumers forget the value
the service is supposed to provide and eventually stop using it. And
when the security monitoring bill arrives in the mail each month, the
consumer questions what they actually got for the $30—an unlikely
scenario for broadband and mobile users.
Perhaps the protection that home security provides is what causes its
own problem. If you don’t get burglarized, then why do you need a
security system? Or, is the fact that you haven’t gotten burglarized due
to your home security system? Who knows. But one thing is certain—
if you don’t use something, you forget its value. And if you forget its
value, you aren’t going to pay $25 to $35 a month for it.
Perhaps the answer is to add daily value for the customer to bring home
security in line with the other successful service industries.
The rapid growth of broadband offers the home security industry an
opportunity to enhance its product and service offering to build a better
mousetrap. Companies are starting to offer broadband connectivity to
security systems, allowing the end user to control the system from a
personal Web portal—a great first step on the road to innovation and
much-needed evolution in the home security industry. Web-based solutions
can deliver e-mail and text messages to end users so they know
instantly when events occur in their home. At the same time, the broadband
connection provides an always-on link to the central station.
While this is a baby step to providing daily value, consider the benefits
this offers consumers that traditional home security can’t. Now
you know when your children arrived home from school. You know
when the housekeeper arrived and left. You even know when the dog
walker picked up the dog for a stroll.
And this is only the beginning. Adding low-cost IP cameras to home
security offers an entirely new level of connectivity and solves a host of
problems that consumers didn’t know they had. Imagine seeing live
video of who’s at the front door and disarming the home security system
from your Web portal so the person can enter. Just received an email
that your front door was opened? How about having a picture or
video clip of the person entering the door attached to the e-mail so you
know who it is and when he entered? Imagine how many false alarms
will be negated because homeowners can validate a real emergency by
accessing their Web portal or mobile phone to see what’s happening.
The combination of monitored home security and remote home
monitoring offers a strong platform to build on. To further increase
daily value, add simple conveniences like remote home control functionality
to the value equation. There’s no reason a home security system
can’t do more than home security. Enabling end users to remotely
control lighting, thermostats, door locks and more connects consumers
to their homes in ways that have proved impossible to date.
Watch the Industry Grow
Integrating new and innovative functionality into the existing home
security paradigm is not only feasible, it’s already happening. Home
security companies have announced their intention to start offering a
fully integrated solution to customers. This is the perfect platform for
ISPs to leverage as they enter the home security industry. It allows them
to piggyback on the broadband pipe they’ve already connected, giving
them a better home security solution than traditional home security
companies offer today and providing an additional service.
Just as TiVo transformed the TV-watching habits of consumers, this
new concept can alter the way people think about home security. It provides
the consumer with enhanced functionality and greater peace of
mind, thus it’s a better value than what’s out there today. The real value
is the daily consumer interaction with the home that increases usage,
perceived value and end-user satisfaction. This is the type of innovation
the industry needs to grow, as it will appeal to more people and will
result in less customer turnover.
U.S. monitored security is poised to be a $75 billion industry—but
not without innovation. Combining peace of mind with features that
add the same type of daily value found in other consumer service industries
is the path to get there.