The sales growth curve of the residential security market has flat lined for the last year or so and market researchers, security dealers and technical writers have several theories to explain the disappointing bottom line for what was is usually regarded as a cash cow / golden goose for alarm manufacturers, installers and monitoring services.
New home sales are an important profit center, but the weak economy has crippled new home construction. Also impacted are home resales owing to a limited availability of funding for re-sale and refinanced home mortgages by banks nervous about lending in uncertain times of unemployment and foreclosures, in these days of declining home values.
Market saturation may also account for some of the stagnation, with many homeowners having already either had an alarm installed, deadbolts installed, or have just decided to wait before updating. Some homeowners wish to wait for a new innovation to be introduced so incredible it will compel them to take the plunge.
It is estimated that about 17 percent of homes have alarms, 77 percent have computers; 68 percent have broadband; and about 5 percent know how to use it. There is no statistic on how many homes have locks on the doors, but most probably do.
Market research further indicates that buying decisions start with an understanding by the homeowner of the benefits and features of a product. It is not a matter of availability; it is a matter of perceived need. A significant number of homes have the infrastructure already for these new products, and it is up to the security industry to explain to them how they work then convince them they need it.
Another possible explanation may be all the deadbolts, cameras and alarm systems are actually deterring criminal activity, especially criminal activity which involves the elements of risk of being arrested, shot by a homeowner or gored by a pit bull.
Another trend in the residential market which is cutting into the bottom line are the DIYers (do it yourselfers). Some homeowners hope the usage of Internet technologies and smartphones will reduce or eliminate those annoying monthly monitoring fees (the RMR which has been and continues to be a major revenue stream and major element in the electronic security business model).
The home centers are entering the security market too, selling locks and integrated appliances, and offering monitoring agreements for them.
Many homeowners have started to question the value of central station monitoring owing to the Slow/No response by police, and the vulnerability of landlines to attack and service interruptions.
I still remember the call from a client for whom I had just installed a several thousand-dollar alarm system. The home was huge and located on the North Shore of Long Island. The system had every feature except a live-in bodyguard. It was state of the art. (This was years ago before non-response policies and false alarm ordinances.) He called and sarcastically asked why he spent all this money. He had set off the alarm to test it and it took the police over a half an hour to respond. What good is that?
The major alarm companies performed a major transformation of the residential alarm market decades ago with mass marketing techniques, and the low/no money down alarm system which was tied to a multi-year commitment from the homeowner.
Consequently many people looking for an alarm system have been programmed by media ads to expect the alarm system to be free. Well not exactly free, but no big payment up front.
Wireless alarm system technologies first, and now Internet, Z-Wave and Zigbee continue to distance the customer from the professional security provider and promise to threaten the classic recurring monthly revenue (RMR) stream for the dealer.