Home automation: There’s an app for that
February 25, 2010 By Vawn Himmelsbach
Home automation boils down to proactive remote control and notification. “That’s not revolutionary in and of itself,” says Gordon Hope, general manager of Honeywell’s AlarmNet. Dealers have had the ability to remotely control alarm systems for several years — the problem was technology hadn’t advanced to the point where it was feasible to do so from a mobile device. In fact, it wasn’t long ago the most you could get was a text to a pager.
Now we’re seeing the evolution of a younger generation of buyers combined with increased horsepower of mobile devices. Hope says there isn’t a chance his kids are ever going to have a wired phone service and they’ll have at least one cell phone, if not two. “There are some radical changes going on in that space,” he says. “That consumer wants control from their portable device.”
Kids are used to colour, motion, sound and time-slicing — they’re watching three TV stations at the same time while texting their friends. “That’s the buyer I’ve got to appeal to in five or 10 years,” says Hope. “We’re anticipating where the growth trends are moving and making sure our services adapt to the needs of those buyers.”
Today’s dealer is confronted with holding onto his basic core business because of changes in the telephone infrastructure and wireless technology in North America. When customers start swapping their phone lines for voice-over-IP or cell-only service, the dealer loses his ability to get alarm signals out of that account.
“You need to get in a position to future-proof your accounts and in order to do that you’re either going to need a radio solution or combination of radio and Internet,” says Hope. But because it costs more for the setup, dealers can entice customers with a high-bandwidth connection that allows them to control the system over their iPhone, BlackBerry or other mobile device.
“It’s becoming an additional way for the dealer to make money in a tough economy and in light of the fact the entire communications infrastructure in the world is changing,” says Hope. “It’s not rocket science, but it is strategic, and it does create value in the eyes of the consumer.” And if the system is used more, it tends to stay on contract longer.
Honeywell has a home automation app for the iPhone, for example, and it’s launching a video system where the keypad functions as a digital picture frame. In a residential setting, the customer can upload personal photos, while in a commercial setting it could be used to post advertising, a floor plan or even a fire escape route.
Honeywell’s Total Connect and My Keypad are competitive with other products on the market such as Alarm.com, where a customer can remotely control their security settings via the Internet or PDA. “There’s an app for that,” says Patrick Soo, director of Canadian operations with Monitronics. “Products like this provide a lot more value to the end-user — they now have full access and flexibility in terms of arming and disarming.” They know when the system is being disarmed by their kids, for example, or they can add remote video and see what’s happening with the nanny while they’re at work.
This also addresses another issue: VoIP is detrimental to standard telephone line transmission. “VoIP is an obvious concern for our business,” says Soo. “A product like Alarm.com or Total Connect overcomes that VoIP challenge.” He’s been in the business 18 years, and nothing has really changed — until now. It’s about time manufacturers stepped up to the technology curve, he says. Not only does it make these systems more user-friendly, it reduces false alarms and increases retention.
With the advent of 3G and 4G networks, the market is changing rapidly — and it could even change the competitive landscape. Bell recently made a run in the market, and Rogers has previously tried to break into the security realm. But telephone and cable are not as competitive as security systems, says Soo, since there are more than 1,000 security dealers in the Canadian marketplace.
“In terms of the service required from subscribers nowadays, it’s really beyond the capacity of what the telcos can and are willing to do,” he says. “So are they looking at it? I’m sure they are because the recurring revenue is certainly attractive, but are they prepared to make a commitment to the market? That has yet to be seen, because so far every telco that has tried has not succeeded.”
Monitronics has a number of interactive services coming down the pipe, such as remote video and two-way voice-over-GSM. A restaurant owner, for example, could punch in remotely at lunch hour and use the system for real-time management of staff. Or, if the freezer drops below a certain temperature, it could send a notification to the owner’s PDA.
“We’re providing full funding, so if a dealer needs cash flow, we’d be in a position to purchase their accounts from them,” says Soo. “They also have the ability to do it via the Internet or GSM, so if they don’t need the GSM option, you can cut out the cell phone carrier, which makes the Internet option far more affordable.” Remote indoor and outdoor cameras are also more affordable. Previously, video was priced out of the market for most residential customers.
Later this year, ADT will launch its own interactive services solution, which will provide life safety, lifestyle and productivity service enhancements to homeowners and business customers, from single sites to multiple locations. “We think there is significant demand given that only a small percentage of homes in the U.S. and Canada are currently equipped with security systems,” says Bob Tucker, corporate spokesperson for ADT Security Services. “The new solution will be easily upgradeable to many of ADT’s four million-plus customers and millions of other potential clients throughout North America.”
For dealers, customization is key. ADT’s solution will integrate security, energy and lighting controls with live video, event-driven video clips, pictures, appliances, door locks and other functions to personalize home and business management — accessible through a personalized Web site or Web-enabled mobile device.
“Besides the personalization, it’s also important for salespeople to keep accentuating the peace-of-mind benefits, telling customers that someone is always watching their home and helping protect them not only from intrusion, but also fire, carbon monoxide and even water damage,” says Tucker. And this can be obtained for a low monthly monitoring fee, with a potential discount of up to 20 per cent off homeowners’ policies (which many insurance companies offer for homes that have monitored protection).
While new products and services will be hitting the market this year, the biggest challenge for dealers is recognizing they need to change, says Hope, and then finding a way to include these features and price them properly to the market. “It makes an existing account stickier and it gives the dealer an opportunity to increase his reach.”
Not only does it represent increased opportunities, it could represent survival in a changing industry. The next generation of buyers is still going to want life safety, but they’re not going to accept it delivered to them the same way it has traditionally been delivered. Players like Google, Apple and RIM are all in the game.
“These guys are not kidding around,” says Hope. “They’re all playing high-stakes poker and raising the ante every six months. You’ve got to stay in tune with that, because if you miss it, you’re going to miss the younger generation as you try to sell to them.”
Vawn Himmelsbach is a Toronto-based freelance writer.
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