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Security providers early winners in home automation/home security space

But telecoms and cable companies also are ‘in it to win’ and shouldn’t be discounted, an industry analyst says
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05/29/2012

DALLAS—Security providers have a “first mover” advantage in home automation/home security right now, but the big telecoms and cable companies entering the space are serious competitors who may be game-changers in the future, according to a market research company analyst.

Tyco's Breen talks about new entrants, PULSE, ADT spin-off

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Tuesday, January 31, 2012

There were some interesting tidbits on today’s Tyco earnings call—about earnings of course, but also about new cable/telco entrants into the security industry, stats on ADT’s PULSE offering, and a progress report on the conglomerate's split into three, separate, publicly traded companies.

On the new entrants: In response to a question about how/if new cable/telco entrants into the security industry is affecting ADT, Tyco CEO Ed Breen said: “We track every market we’re in very closely, and we know where the cable guys are and where we’re competing with them [and the metrics in those markets where we have cable/telco competitors] are there’s no difference in those markets compared to any other markets.”
Breen said he feels “very good about our competitive position.” He said that the question of partnerships is a “question for the future” one that ADT will look into “if that opportunity makes sense.”

He didn’t mention that ADT is in fact, already partnering with Frontier Communications in New York.  Frontier Communications—which calls itself the nation’s largest provider of communications services focused on rural America, offering Broadband, Phone, Satellite television, wireless Internet data access, in 27 states. It has 15,200 employees—Frontier gave security a go four years ago, but then decided it wanted to partner with big nationals. It’s now partnering with Pro1 in Pennsylvania and ADT in New York.

Breen shared some stats on the PULSE product. ADT currently has 105,000 PULSE units in field. All of those have been sold by ADT’s internal sales force. The average monthly revenue for those units is $50, which is a nice bump from legacy ADT accounts which average $36 and the Brink’s/Broadview legacy accounts which average $33 per month.

The ADT dealer base has been in training for months and will begin to sell the PULSE product at the end of the current quarter (Q2). When ADT first started selling Pulse, the take rate was 14 percent, last quarter it was 23 percent and this most recent quarter it was 28 percent, Breen said. A 30-percnet take rate is the goal, he said “and we’re nicely on our way.” In addition, he said it’s “clearly a stickier account.”

Breen said the separation of Tyco into three separate companies is progressing, with most of the work centered on finance and legal considerations.

In this, the first quarter of 2012, Tyco finished reorganizing its reporting segments to align with its reporting and management structure. Breen said the company is “nearing completion in filling out he management teams and boards of directors for the three companies,” though no new personnel announcements other than the CEOs of the three companies (George Oliver, Commercial Fire and Security; Naren Gursahaney, ADT North America Residential; and Patrick Decker, Flow Control) have been publicly announced.

Tyco has filed its tax ruling requests, is getting ready to talk to rating agencies in Feburary (so is holding tight to its $1b cash reserve right now.)

In late March the company will file important statements: From 10s for the the spincos—ADT North amercia Resi and Flow Control, as well as the preliminary proxy statement –which will include pro forma info on the Commercial Fire and Security Company—which by the way, is losing the ADT name.

Breen pointed out that it still has the right to the Tyco and SimplexGrinnell brands and said that this company’s commercial customers know who they’re working with, so the loss of the ADT name for the commercial company, he seemed to imply, is not a big concern.

Oh, yes, and earnings:  Q1 revenue was $4.2b, which is down from the same time period one year ago when it was $4.3b. Its operating income was up—at $549m compared to $495m one year ago. Likewise, its operating margin was 13 percent, up from 11.3 percent a year ago. For the security segment, from the release: "Revenue of $2.2 billion increased 2% in the quarter with organic revenue growth of 3%. Recurring revenue grew 4% organically with growth in all geographic regions. Non-recurring revenue grew 1% with strong growth in Asia Pacific and Latin America partially offset by modest declines in the North America and EMEA regions. Operating income was $339 million and the operating margin was 15.7%. Special items of $36 million primarily consisted of separation-related impairment and restructuring charges. Operating income before special items was $375 million and the operating margin improved 70 basis points to 17.4%. The increase in operating margin resulted from faster growth in ADT's higher margin recurring revenue business and the continued benefit of restructuring and cost reduction activities."

And for the fire segment" "Revenue of $1.1 billion increased 3% in the quarter with organic revenue growth of 2%. Organic revenue growth of 8% in fire products and 2% in service partially was offset by a 5% organic revenue decline in systems installation due to continued softness in the non-residential construction market. Excluding the impact of foreign currency, orders increased 6% year-over-year and backlog increased 4% to $1.2 billion on a quarter sequential basis. Operating income was $144 million and the operating margin was 12.7%. Operating income before special items was $147 million and the operating margin was 13.0%. The 140 basis point margin improvement was driven by increased volume in products and a higher mix of service revenue as well as the continued benefit of cost-containment and restructuring actions."

Comcast ahead of curve in security space

Telecom led others in launching a home security/home automation option and will add Tucson to its markets this year
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01/04/2012

PHILADELPHIA—Many telecoms decided that 2011 was the year to launch a home security/home automation offering—Verizon, Time Warner Cable, Frontier Communications, AT&T and Cox Communications among them.
But Comcast, based here, was ahead of the curve, launching Xfinity Home Security in Houston in June 2010. The company, with millions of customers nationwide, has so far made the product available in other major markets around the country, and plans to launch it in Tucson, Ariz. sometime this year.

The Cable Guy goes pro as telecoms enter security space

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Wednesday, January 4, 2012

Watch out security industry! Here comes the new version of the Cable Guy—one that’s more likely to wear a suit and have a computer science background than be a rube who’s always late.

As the telecoms enter the security space at a fast and furious pace—I’ve recently written about the new home security/home automation offerings of Verizon, Time Warner Cable, Frontier Communications, AT&T, Cox Communications, and Comcast—the security industry has expressed confidence that small, professional security companies will outperform those giant companies when it comes to service.

That’s because the archetypal Cable Guy in everyone’s mind is someone who’s always late and barely seems to know what he’s doing. But as the telecoms offer new products such as professionally installed and monitored home security systems, they’re also creating new teams of professional Cable Guys to install and service those products, according to a recent The New York Times article.

Here’s more from the article, entitled “Today’s Cable Guy, Upgraded and Better-Dressed:”
 

“Long depicted as slovenly cranks who dodged growling dogs and tracked mud on the living room carpet, cable guys (and gals) these days often have backgrounds in engineering and computer science. That kind of training is now required — along with a new dress code for some, calling for button-down dress shirts and slacks — as cable companies and their telephone rivals try to lure customers and increase revenue with a suite of [new] products. ... That means added pressure for installers and new requirements for a job that traditionally appealed to high-school graduates looking for reliable blue-collar work. …

… Robert Kolb, a 33-year-old installation and service supervisor for Comcast’s Xfinity television, phone and Internet service, has a one-year certification in network engineering. He wore pressed slacks and a sporty fleece jacket on an Internet upgrade job in the Philadelphia suburbs recently, where he worked on a company-issued MacBook laptop and had a waterproof hand-held computer that could withstand a five-foot drop.

… To make sure he stays up to date, Comcast requires him and other installers to take classes at an in-house training facility known as Comcast University.

OK, the advent of the upgraded Cable Guy doesn’t mean that small professional security companies won’t still have a service edge with customers who continue to view them as their trusted security provider.

But I do think it shows that no security company should be complacent about the telecoms entering the market this time around—and that having professional, well-trained staff that provides excellent customer service is a key to success, no matter what size your company is.

 

Cox at home with security in Arizona

The telecom has joined the state alarm association and plans to launch in other markets in 2012
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12/21/2011

MESA, Ariz.—Cox Communications, one of the largest cable entertainment and broadband service providers in the country, has been offering a home security/home automation product in Tucson, Ariz., since last summer, and expects to launch it in additional markets in the new year, a company spokesman said.

2011: The Year of the Telecom

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Wednesday, December 21, 2011

The year is not quite over yet, but it’s clear that 2011 has earned a new name as far as security is concerned: The Year of the Telecom.

That’s because the year has been marked by at least five telecoms entering the security space. And those who have yawned and said, “What else is new? The telecoms have tried this before and failed,” had better take note. There are some indications the telecoms are doing things differently this time—for example, they’re teaming up with other professional security companies and joining industry associations.

Verizon led off in January, debuting its home security/home automation product at the Consumer Electronics show. After beta testing in New Jersey, it followed up in October by launching the product to its broadband customers nationwide.

While Verizon’s product is designed to be self-installed and self-monitored, it appears other telecoms are going with professionally installed and monitored products—and in some cases using professional security companies to do the installation and monitoring.

Cox Communications launched a home security/home automation product in Tucson, Ariz. this summer and is planning to launch in other markets in 2012.

Also in the fall, Time Warner Cable and Frontier Communications joined in by launching home security/home automation offerings in upstate New York, and Frontier also is experimenting with a security product in Pennsylvania .

Frontier, which tried going it alone previously a few years ago, is now partnering with professional security companies—with ADT for its New York offering, and with Protection 1 in Pennsylvania.

There’s also recent news that AT&T is creating a new Atlanta-based division to offer customers home security and home automation.

The Georgia Electronic Life Safety and Security Association (GELSSA) is urging AT&T to join that group and be a good, ethical participant in the industry. That’s what Cox has already done in connection with its Tucson launch, joining the Arizona Alarm Association and attending seminars.

In 2012, we’re likely to see more activity from these telecoms and maybe additional players jumping in. Will the telecoms turn out to be competitive players this time around? Only time will tell.

AT&T to enter Atlanta security market

The telecom is not yet revealing details of its products and services, but it will reportedly open its own monitoring station
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12/07/2011

KENNESAW, Ga.—The news that AT&T is creating a new Atlanta-based division to offer customers home security and home automation—and that it reportedly will open its own monitoring station—carries some positive implications for local alarm companies, said John Loud, owner of Loud Security Systems, which is based here.

Telecom partners with professional security companies in second go-round

After going it alone in beta, Frontier decides partnering with big national security companies is the way to go
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12/01/2011

STAMFORD, Conn.—Frontier Communications about four years ago tried a go-it-alone experiment offering home security in a small town in Pennsylvania. The telecom, based here, did everything from marketing the product to monitoring it through a third-party monitoring center.
Now Frontier is taking a different approach in a second foray into the security market: It’s partnering with two security giants, ADT and Protection 1, to offer security products in two separate six-month trial programs, one in upstate New York and one in Pennsylvania.

Yet another telecom enters security space!

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Wednesday, November 23, 2011

Whew! It just doesn't stop. First, there was the news in October that Verizon had launched to its broadband customers nationwide the home security product it had debuted in January at the Consumer Electronics show.

Then I just wrote about Time Warner Cable and Frontier Communications now joining other cableco and telecom companies in launching home security/home automation offerings.

And now AT&T has entered the security space, according to a recent report of the Atlanta Business Chronicle. Here’s what that publication had to say:
 

AT&T plans to launch a new division focusing on connected digital services, as it seeks to diversify revenue streams.

The unit is called Digital Life Services, a company spokeswoman said, declining to offer details on employment.

The division will focus on services such as home security, home monitoring, home automation and control, home healthcare and personal energy management, according to a description on AT&T Careers website.

AT&T is looking to hire sales, marketing and IT professionals to support that division, according to the website.

I’ll be writing more as I learn more—and exploring what this new competition means for the industry.

 

Time Warner Cable, Frontier enter home security market

The companies launch home security/home automation options in upstate New York and other markets
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11/22/2011

YARMOUTH, Maine—Time Warner Cable and Frontier Communications are now joining other cableco and telecom companies in launching home security/home automation offerings.