US alarm market to reach $4.9 billion by 2021

CLEVELAND, Ohio—The Freedonia Group, a research firm based here, projects that the U.S. security alarm systems market will reach $4.9 billion by 2021, starting at $3.8 billion in 2016, with a CAGR of 5.1 percent between 2016 and 2021.

“The biggest driving factor … is going to be the continued growth of construction activity going forward,” Katherine Brink, industry analyst, Freedonia Industry Studies, told Security Systems News. Brink added that this factor effects both residential and non-residential.

Residential and non-residential sides of the alarm systems market both show demand between 2016 and 2021, according to Brink, “but nonresidential markets will account for slightly more, with about 52% of demand growth.” The market growth is slowing down but is still encouraging, Brink said.

Life safety systems accounted for 57 percent of the total demand in the U.S. security alarm market in 2016, according to Freedonia. Intrusion held 39 percent of the market's demand that year, and PERS made up 4 percent of the demand.

In 2021 Freedonia predicts that the demand will be 55 percent for life safety, 40 percent for intrusion and 5 percent for PERS.

Freedonia highlighted PERS as an interesting segment of the market. “It's a very dynamic market and it's one where there's been a lot of technical advances. So, it's something that we wanted to highlight as a point of interest even though its effect on the overall market is limited,” Brink said.

Freedonia valued the U.S. PERS market at $155 million in 2016, and forecasts the market segment to reach $220 million by 2021 at a CAGR of 7.3 percent.

Verification will play a role in the overall security alarm market. “Key technological trends that we're going to be seeing over the time period include the ongoing interest in video verification in the residential market for the intrusion alarms,” Brink said. “There's also been a lot of interest in alarm systems that are interoperable, especially on the commercial side, but also on the residential [side] that can connect with smart homes.”

Brink pointed to an increasing desire among seniors to age in place as a motivating factor in the PERS side of the market, as well as the increasing number of seniors. PERS devices working with other medical monitoring systems will be a key technological trend in this part of the U.S. alarm market, she said.

PERS devices also have use cases outside of the senior market, Freedonia noted, such as with abuse survivors or latchkey children.

A potential challenge for PERS systems is the competition from smart phone apps that seek to provide a similar service, according to Brink.

System replacement might be a challenge for the U.S. alarm market to 2021, Brink said. “There's not always consistent replacement rates, not only for intrusion alarms, but also for the life safety alarms as well. Even though there's recommended replacement times—especially for life safety alarms—building owners don't always necessarily replace them on time,” Brink said, adding that this effects both residential and non-residential sides of the market.

Facilities under more scrutiny, such as “some government facilities or financial institutions,” are more likely to replace or upgrade their system when it is recommended, Brink continued.

“In addition, there's always going to be a share of end users that just don't think that intrusion alarms are going to be worth the cost—both the upfront cost of the equipment, as well as the ongoing cost of having them monitored,” Brink said.

Freedonia sees a rising interest in self-monitored alarms in the residential market, which can “act as a gateway product,” according to Brink. “A lot of individuals who are looking into self-monitored alarms may install them and then find that they would prefer to go ahead and just pay the extra money to have them monitored, to get the full benefits, rather than relying on themselves and possibly missing alerts,” she said.