Features Research
Disruption coming to professional smart home market, IHS Markit says

Alarm.com and Comcast’s acquisition of Icontrol, finalized March 8, will mean stiff competition in the coming years for other providers of professional home automation systems, report analysts Blake Kozak and Anna Sliwon. Although Comcast is a telecom, and telecoms often get poor customer service reviews, this has not slowed its growth as a home automation and security provider, the two analysts found.

Considering that professionally monitored alarm systems comprise only 23 per cent of all residential households, both Honeywell and Alarm.com remain “well positioned to take advantage of existing connected home conversions as well as the market that is untapped”, IHS says, adding that connected alarm systems for residential applications are forecast to grow at a CAGR of 18 per cent, reaching $7.2 billion dollars in 2020.

“Perhaps the merger’s real significance is the realization that software and platforms require equal or more emphasis compared with the hardware”, says Kozak’s and Sliwon’s report. “Many intruder alarm manufacturers have had to do a 180-degree turn on strategy because hardware is no longer going to win business.”

The report also noted how “the software platforms emphasizing hassle-free, user-friendly interface and seamless integration possibilities with existing equipment open the path for innovating product offerings and attracting new customers. Continued success of intruder alarm providers will depend on their ability to integrate their products with multiple platforms.”

Lastly, Alarm.com acquired ObjectVideo on March 14, IHS states. “The significance of this acquisition is the ability for alarm.com to focus on the hardware side and to potentially build out its much-discussed drone program by using the advanced analytics provided by ObjectVideo,” the report explains.

This acquisition is also interesting compared with Honeywell’s acquisition of RSI Video Technologies in March 2016, IHS says, as the Honeywell one helped them draw out their DragonFly program, which supports dealers with a hybrid approach of DIY installation with professional monitoring.

Overall, smart home is “a fragmented market” and consolidation will help dealers reduce the number of systems they have to be trained on, according to Kozak and Sliwon, and also help consumers by reducing the number of options available.

As the industry reaches “near saturation of converting existing monitored accounts to smart home accounts, industry players will have to find a way to expand penetration beyond existing accounts”, the analysts conclude. “This expansion will occur through systems with intuitive interfaces and advanced analytical capabilities, not through hardware itself.”