Are DIY solutions a legitimate threat to traditional alarm dealers?

Feb. 14, 2014
Consumers seemingly becoming more interested in setting up their own systems

With all of the technology innovations the alarm industry has seen in recent years with the rise in demand for interactive services, one trend that has flown relatively underneath the radar is the growing market for do-it-yourself (DIY) security systems. Although the concept of letting consumers buy and install their own alarm panels, motion detectors and cameras is not new to the industry, technology has advanced to a point where it’s at least more feasible now than in the past.

DIY alarm solutions also present an opportunity for the industry to reach apartment and home renters, which is a segment of the market that has been largely underserved to this point. The question is, how much of a potential impact could do-it-yourselfers have on traditional alarm dealers?

Michael Barnes, founder of advisory and consulting firm Barnes Associates, said that the industry got a really good look at the DIY market in 2013 and that it is a segment that’s growing very, very quickly. Barnes admitted that he, like many in the industry, had been a bit skeptical about the viability of DIY until he recently worked with a company that specialized in providing these types of systems. In working with that company, he soon realized that one of his neighbors had purchased a DIY system to protect his home and that not only was he able to install it quickly and effectively, he was also familiar with the ins and outs of all of its capabilities. However, Barnes said he was “absolutely floored” when he learned that the customer attrition rates of the company he was working with were lower than those of traditional alarm dealers.

Paul Sargenti, founder and CEO of San Ramon, Calif.-based SAFE Security, which has over 290 dealers nationwide, also believes there is a bright future for the DIY market. One year ago this month, his company launched a new division called SAFE@home, which enables consumers to install a wireless security system in their homes by themselves. As with the company’s dealer installed systems, the DIY solution includes professional monitoring services and can be controlled via a smartphone or tablet. Although they experienced some hiccups with the roll out, Sargenti said there has been significant interest from customers for this offering.

“We think there is a market (for DIY) that is equally as good as the traditional market,” Sargenti told attendees at the conference.

 While DIY solutions allow consumers to cut out the expense and hassle of having to pay for and schedule professional alarm installation, most still require the customer to pay a customary monthly monitoring fee, which is the lifeblood of the industry. However, even that model is beginning to be shaken up a bit.

Last fall, Oplink Security entered the market with a new suite of DIY home security systems that are self-monitoring and controlled by the customer using their cellphone. While the company does charge monthly monitoring rates starting at $9.99 per month for their basic AlarmShield package, the customer has the ability to verify alarms prior to having them sent to a dispatcher.

“The system is designed to where our customers effectively become an operator for their own system if you will,” said Evan Tree, vice president of business development for Oplink Security. “We will have the professional, UL-listed central station dispatch available to the customers, but what we do is our cloud service sends the signal through the cloud to the customer base and their authorized users so they can instantly know that the alarm went off and they can use the video portion of our service to verify whether or not that was a legitimate alarm. At that point, they can either cancel the alarm or they can confirm the dispatch, in which case the signal will be relayed through to the central station for immediate dispatch because the operator at that point doesn’t have to call the homeowner because they’re the one sending the verified dispatch through.”

Another advantage for sellers of DIY home security kits, according to Barnes, is that they’re not encumbered by the geographic hurdles that many traditional dealers are. For example, there may consumers in remote areas of the country who are interested in having a home security system, but it’s not financially prudent for a dealer to send a salesman and a subsequent installer out to that person because they’re so far away. With a DIY system, they can order the system online, get it shipped to them the next day and have it up and running within an hour or so.

One thing is for certain when it comes to DIY and that is that the industry, as a whole, is definitely beginning to take notice of the opportunities that exist there. “I think the DIY segment has some real staying power,” said Barnes. “I love the (business) model, absolutely love the model. I think it has got legs.”    

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