Report: MSOs in best position to benefit from smart security

AUSTIN, Texas—Multiple-service operators—the cable companies and the telecoms—are leading the way in integrating security equipment and home automation at the future expense of traditional monitoring companies and high-end providers according to an IHS report.

As a result, the industry can expect to see further acquisitions and a consolidation of the market “sooner rather than later, and smaller companies will fade away,” according to the report's author Blake Kozak.

“Who will be doing these acquisitions is up for debate,” Kozak told Security Systems News. “Will it be traditional alarm companies? How will Google and Apple join this market? It's interesting. We went from a slow-growing market to the same trends year after year. Now things are really taking off.”

The next six to eight months will show how many customers are sticking with their contracts and how the market is accepting security/home automation solutions, he said.

Service providers represent about 38 percent of the market this year, but by 2018, that market share should soar to about 58 percent.  IHS defines service providers as packaged solutions at a relatively lower cost sold mostly through security service providers and utilities that provide full backend support. Most are professionally installed by companies like Comcast, AT&T and ADT.

Meanwhile, traditional high-end solutions—specialist whole home automation systems supplied by companies such as AMX, Crestron and Control4, that provide an integrated suite of smart home products, controllers and professional installation and management services—will see its 32 percent market share this year fall to 22 percent by 2018, according to the report.

Device vendors, which IHS defines as individual modular smart home devices sold directly or through online/box retailers, are projected to expand penetration to more than 30 percent through 2016 when it will then lose ground.

“How long can the market sustain these hundreds of products and deal with all of these brands,” he said.

Customers likely will go with brand recognition, Kozak surmised.

The extent of the housing market recovery next year will be a factor in how the market plays out. While a strong recovery could mean more traditional high-end homes, a limited recovery could result in a more favorable market for device vendors, the report said.

Still, IHS says, most homeowners will seek out service providers for their home security/automation needs, and that makes service providers in the best position to offer smart security devices over the next three to five years.

The United States is driving the trend, Kozak said, followed by Canada. “It's really a North America trend at the moment. In Europe and Asia we don't see that demand yet.”