Doubling residential penetration: Pie in the sky or an eventuality?

YARMOUTH, Maine—Forty percent residential penetration.

ADT CEO Naren Gursahaney said recently that it's not a “moonshot,” and Honeywell Security Products President Scott Harkins said his company shared the expectation that it could happen. But given that the rate has hovered at 20 percent for years, is it realistic to believe it can be doubled? Or is that just optimism from the corner office?

The latest SSN News Poll shows that Gursahaney and Harkins aren't alone in their thinking. Thirty-seven percent of respondents said a 40 percent rate could be achieved, and a majority of those readers—58 percent—believe it could happen within five years.

“Aiming for 40 percent market penetration, now that there are so many interactive services, is a fair number but not an overnight number,” an SSN reader wrote. “With everything in business it takes time to get from A to B, but within five years it's possible.”

“Now they are selling interfaces so you can shut your lights off with your phone, and folks are seeing that the ADTs of the world are offering the same [features] for their security systems, complete with CCTV,” said another reader. “None of this is out of the realm for the average homeowner, except the physical installation maybe. … I think 40 percent is a low-ball figure.”

The rest of the respondents to the unscientific poll split about 50-50 on the 40 percent projection, either disagreeing with it or hedging their bets. Twenty percent said the doubling of the penetration rate wouldn't happen, while 18 percent said it was possible given the infusion of connected-home ads from telecoms and cablecos getting into the market.

“This is the umpteenth time someone from some big leading security company—usually an executive relatively new to the scene—has declared that an astronomical percentage increase is possible,” a reader wrote. “Of course they [believe that], seeing they have the big salaries, but unless they intend to double the sales force for every 10 percent increase and do much more to provide support by a trained staff, it's the same old, same old.”

With new players like AT&T and Comcast entering security, “some increase in penetration will happen, largely from the increased publicity,” another reader said. “But as times remain tough, adding home security will appear to be nonessential. DIY will cannibalize some weaker customers, increasing churn, and it will be a competitive factor versus monitored systems.”

The 76 poll respondents split evenly on the impact of do-it-yourself security systems on the residential penetration rate. Thirty-six percent said homeowners would embrace DIY, while 36 percent said it would be too intimidating for customers. Twenty-eight percent were unsure about DIY's impact.

“I personally think that the DIY alarms offered by Lowe's will only increase the penetration rate as people realize alarm installations aren't as easy as they think and [they] will turn to professionals for help,” one respondent said.

Another reader took the opposite view, saying “DIY will impact the professionally installed system market much like the poor installation and service of the fly-by-night, sales-driven organizations. Customers will enter the market and then leave it forever when the systems don't perform as advertised or become a nuisance rather than a deterrent.”