Alarm monitoring’s future continues to look nebulous – the only certain thing is that the future will not look anything like the past.
Will we see the demise of the traditional alarm panel, with its 8 or 16 input zones and single dialler comms path in coming years? Yes, definitely. The question is, what will take its place? The nature of future technology is an area of doubt. Will the majority of alarm systems retain limited traditional features locally and shake out automation in the cloud? Many seem to be going down that path.
Despite the fact some Z-Wave devices continue to cost upwards of $A200, alarm panel costs continue to tumble, suggesting a hardware price of $0 at some point in the not too distant future. Of course, $0 is not a lot to come and go on, which suggests the future, which the past has defined by a race to the bottom in hardware quality and stalled research and development, may turn out to be rather like the IT industry is now. Companies there exist on margins well under 5 per cent and economy of scale is king. It’s a market model ripe for the sort of hegemony telcos and internet companies love.
Which companies might have the scale to make money from a low cost or bundled home security and automation service? According to Citigroup, Google and Apple will make up 62.5 per cent of the home security market in 20 years and according to Citigroup, their entire share of the market will be self-monitored and self-installed. As we mentioned in an editorial last month, it’s hard to imagine a future in which organisations and individuals who require serious security monitoring of genuine security systems would opt for self monitoring, but there you are.
This part of the market currently accounts for only 2.3 per cent of the total but according to Citigroup, it’s younger consumers who will drive the change. Given the amount of time my nieces and nephews in the sub-30 age bracket spend on their smart devices, Citigroup’s prediction takes on more serious meaning. I’ve alluded to this before in SEN but the other day on Elizabeth St there were 10 young people waiting at a traffic light opposite me and all were on their smart devices.
Big change will come within 5 years, according to Citigroup, which predicts self-installed and monitored systems will control 34 per cent of the market by 2020, while traditional professionally installed and monitored systems will slip to 61.6 per cent. Another 15 years after than, Citigroup suggests the market positions will have reversed.
Predictions that spin out over 20 years are fraught, mind you. Consider that 20 years ago smart phones had just been born. Trouble was that IBM’s LCD Simon had no mobile internet on which to run and only one hour of battery life. Taking into account the growing hype over the internet of things, which is supported by an actual high bandwidth global mobile internet, the next 20 years are going to be nothing if not lateral. That’s because the substrate is already there.
The Citigroup study did underscore some things most of us already know. First, setting up a security and automation solution is not really plug and play. Sure, you can activate a Nest smoke sensor or a Dropcam, but putting together a meaningful automation solution inevitably demands the support of an electrician. There are also considerations of sensor placement and installation technique to take into account. Professional is better – and even more so with monitoring services.
Second, the cost to automate an entire home is still high. Z-wave switches are not too expensive but in-line switches are so, when taking into account installation. Furthermore, many Z-wave devices cost hundreds. It would cost many thousands to build a real automation system in a family home and most users don’t want to outlay that sort of money in one hit.
And there are plenty of other sharks in the sea. For instance, a recent Parks Associates report claims that in the U.S. 40 per cent of new security monitoring subscribers are signing up with non-traditional providers including telcos and cable companies. While TelstraSNP has not yet flexed serious muscle, it’s hard not to see the possibilities here in Australia.
“A lot of people, when cable and telecom entered the security space, said ‘they’ve done that before, they come and they go’, but I think this data says they are here to stay,” Tom Kerber, Parks Associates director of research, home controls and energy told Security Systems News recently.
“They’re going to market with a full suite of home controls and are taking a substantial portion of the strong growth in the market thanks in part to their ability to include security in triple and quad-play service bundles,” Kerber said. “New features, such as the ability to self-install and to check and control security solution through smart phones, are enticing consumers to buy these new services.”
How competitive could TelstraSNP be? Underscoring the economies of scale enjoyed by telcos, AT&T has modified its Digital Life home automation/security plans to offer 2 bundles that it says will deliver discounts. AT&T will continue to offer its previously available smart security package, which consists of monitored home security and safety features, including remote access, wireless keypad, 3 recessed sensors, 3 contact sensors, a motion sensor and an indoor siren at $US39.99 per month. There’s a one-time equipment fee of $49.99. Ouch.
Then there’s the smart security and automation package at $64.99 per month, plus a one-time equipment fee of $199.99. This package includes all smart security features plus an outdoor camera, pushbutton door lock and touchscreen controller for $54.99 per month, plus a one-time equipment fee of $149.99.
The premium security and automation package which adds additional security, energy and water-detection features, including a smart thermostat, 2 indoor smart plugs, 3 temperature and water sensors, a smoke sensor, a glass break sensor and a carbon monoxide (CO) sensor. plus a one-time equipment fee of $199.99. These are fearsome deals, considering the level of automation being offered.
Locally, there’s no official word on TelstraSNP’s decision over hardware, though market rumours suggest it’s an IT product from an IT manufacturer, not a traditional alarm panel at all. Looking at the river flow of digital technology it’s very difficult to mark fixed points. When you ask yourself what the alarm monitoring market will look like in 20 years there’s really only one answer. It will look very different, indeed. ♦