On the heels of Alarm.com and Comcast’s acquisition of Icontrol which closed earlier this month, IHS Markit is predicting increased competition in the years to come for other smart home services providers. Despite the poor customer services reputation that many telecoms have, IHS said it has not slowed the growth of Comcast as a home automation and security provider. In fact, it is estimated that Comcast represented about two percent of the $13 billion American residential remote monitoring market in 2016.
The market research firm forecasts that professionally monitored smart home accounts will surpass traditionally monitored accounts in 2022, when about nine percent of all homes will have a professionally monitored smart home, up from one percent in 2011. Considering that professionally monitored alarm systems comprise only 23 percent of all residential households, IHS said that both Honeywell and Alarm.com remain well positioned to take advantage of existing connected home conversions as well as the market that is untapped. Connected alarm systems for residential applications are forecast to grow at a compound annual growth rate (CAGR) of 18 percent, reaching $7.2 billion in 2020.
Emphasis on Software and Interface
Additionally, IHS said that perhaps the real significance of the merger between Icontrol and Alarm.com and Comcast is the realization that software and platforms require equal or more emphasis compared with hardware. It’s for that reason that IHS believes many intrusion alarm makers have had to reverse their business strategies realizing that hardware alone is no longer going to win business.
“In essence, the scope for innovation in technologies used in intruder alarms equipment is limited. 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,” wrote IHS analysts Blake Kozak and Anna Sliwon in a research note. “Continued success of intruder alarm providers will depend on their ability to integrate their products with multiple platforms. Despite the clear trend toward openness, some manufactures are looking to diversify by offering both closed and open hardware (systems), such as with Interlogix’s UltraSync.”
That’s why companies, such as Comcast, Alarm.com and Vivint have placed an increased emphasis on platform, user experience, ease of setup for dealers and continuity of product design for the past 12 months, IHS said. For example, Comcast has been rolling out a more unified look for its products while integrating its voice-controlled remote into its home offering. Alarm.com recently announced Insights Engine along with a potential drone program, while Vivint has also created a unified product look with its own Sky Platform for advanced automation.
Reaching New Customers Remains the long-term challenge
Overall, according to IHS, the smart home is still a fragmented market. Consolidation is expected to help dealers reduce the number of systems they have to be trained on and also help consumers by reducing the number of options available.
IHS says that although this merger may reduce the dealer opportunity for various competing platforms, such as Honeywell Total Connect, the U.S. is only at a penetration of about 23 percent of homes.
“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. This expansion will occur through systems with intuitive interfaces and advanced analytical capabilities, not through hardware itself,” wrote Kozak and Sliwon.
