Colliding Market Segments for Home Security
Parks Associates will be at ISC West next week checking out what's new for the security industry - not just for single family homes, but also multifamily, SMB, and we are starting to look at the commercial building market especially as it relates to access and control. If you are ISC, we would love to stop by and see what you are showing off! Contact Ashton Gambrell or myself to make sure we connect!
The 800-pound gorilla issue in the security device space is the prospect of colliding market segments. Market segments in the residential security industry continue to experience a blurring of lines between professional and DIY solutions. Professional installation and monitoring providers, such as ADT, Brinks, and Comcast, have added self-installation and monitoring options. At the same time, companies that started in the DIY space now offer professional installation and monitoring.
Providers expanding their solutions to address both professional- and self-installation provide consumers with the ultimate choice, increasing the reach of companies to new consumer segments. But it also increases competition in the industry, driving down pricing and making product differentiation more difficult. The bottom line is, however, that the incremental revenue opportunity associate with monitoring is huge: just 1% (~1% of new monitored households) could produce $1B, assuming a $40 monthly ASP with a three-year contract. Dealers, manufacturers, and resellers who recognize the significance of “lifetime value of a customer” (LTV) dynamic during the sales engagement phase can reap enormous profitable long-term value.
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