Inst-analysis: Interlogix to shut down by end of year

UTC/Carrier to focus on other fire and security businesses while maker of Simon, IFS, UltraSync and other products to cease operations

Simon products from Interlogix are one of the many product lines being discontinued with the announcement of the company's 'wind down.'
Simon products from Interlogix are one of the many product lines being discontinued with the announcement of the company's "wind down."

UTC’s Interlogix division, makers of a variety of residential and commercial security product lines, has notified its employees and dealers that it has begun the process of “winding down” business in the United States and Canada, and will no longer manufacture new products by the end of 2019.

“After a thorough portfolio review of our security business, we have communicated our plans to wind down our Interlogix U.S. and Canada businesses,” a company spokesperson for Carrier Fire & Security Products – the division of UTC where Interlogix is situated – told SecurityInfoWatch via a written statement. “This decision will allow us to focus on the significant growth opportunities for our other fire and security businesses, including LenelS2.

“After considering a variety of options, we decided that winding down Interlogix U.S. and Canada was the best go-forward plan for our business,” the statement continues. “This was a difficult decision and one we did not take lightly.”

The statement adds that the company communicated the decision to dealers, distributors and customers about what this move means for the manufacture and support of a variety of products and services during and after the wind-down of the business. The Interlogix product line includes many of the acquired brands from the old GE Security, including TruVision (video surveillance), IFS (fiber optics and data transmission), Simon and Concord (intrusion), and others. Interlogix also notably sells UltraSync smart home and residential security products.

“We plan to stop manufacturing new Interlogix products once final orders have been fulfilled, anticipated to be at the end of 2019, based on supply,” the statement reads. “We will continue to provide customer support related to product technical services, timely fulfillment and comprehensive product warranty into 2020 and beyond. Dealers can continue to purchase, install, register and service Interlogix products with complete confidence.”

Market Impact

According to research from Parks Associates, despite falling numbers in recent years, Interlogix still manufactures one of the most widely used alarm control panel brands among security dealers. In 2017, its research revealed that 11% used Interlogix panels, although that number fell to 6% in its 2018 dealer survey (see chart).

“The security landscape is changing, (and) security panel providers are seeking ways to differentiate,” says Parks Associates Senior Analyst Dina Abdelrazik. “Innovation and future-focused features such as voice, video verification, and AI to disarm panels and reduce false alarms will be key to differentiation, and dealers will remain loyal to brands that are easy to sell and win over customers.”

“The news of Interlogix closing its USA and Canadian business by end of 2019 comes as a surprise,” says Blake Kozak, IHS Markit’s Senior Principal Analyst for Smart Home, Appliances and Security Technology. “For the Americas region, UTC’s market share growth for intruder alarm equipment in 2018 was flat compared to 2017, but UTC remained a top player, estimated to rank third overall for the Americas region.”

While Interlogix seemed to thrive over the years in the alarm panel space, Kozak says it struggled to keep pace in the smart home segment.

“This news comes at a time when the competition in residential security is skyrocketing,” Kozak says. “Companies such as Resideo have been laser-focused in terms of bringing automation and AI to the home through its new security panel and recent acquisitions. Interlogix, on the other hand, always struggled with its proprietary UltraSync offering and instead relied on its open platform. Despite recent product releases, such as a video doorbell in 2018 and a DIY package that never made it to store shelves, hardware advancements from Interlogix have been slow, at least compared to Resideo.”

In addition to Resideo, Kozak cites competition from other low-cost equipment manufacturers in the space. “Others are also starting to put pressure on traditional residential intruder manufacturers, such as Ring, with low-cost equipment and low-cost monitoring fees,” he says. “Although it is unlikely DIY competitors such as Ring or SimpliSafe had a significant (negative) impact on Interlogix’s current market share and business, the long-term challenges and competition that (is coming) from DIY players is tangible.”

Impact on UTC/Carrier

United Technologies Corp., announced in November that it intended to separate into three independent companies following the closing of its $30 billion acquisition of aerospace firm Rockwell Collins. Its Climate, Controls & Security (CCS) division was renamed Carrier and spun off.  

Interlogix, which in April 2019 announced it had revamped and relaunched its dealer program, is a part of the Carrier division, and as the statement indicated, Carrier is expected to increase its focus on its other fire and security businesses, including LenelS2, Edwards, Chubb, Kidde, Onity and others.

“We believe in security, and we are committed to investing as demonstrated by the acquisition of S2 and formation of LenelS2 in Q4 of last year," says Alex Housten, VP & GM of Carrier Fire & Security Products. "As LenelS2, we will continue to develop and innovate our OnGuard and Netbox and future product lines, enhancing access, video and unified security capabilities. We will also continue advancing our electronic access products. Supra leads the residential real estate and commercial electronic lock market, and Onity focuses on access control for the hospitality and multi-unit dwelling industry. Both companies have market leading digital key offerings, to enable seamless site access.”

“For UTC, perhaps this is the first step toward bigger ambitions around smart buildings and enterprise systems,” Kozak speculates. “Customers and installers of Interlogix residential security will now be forced into another direction – although support will continue for existing dealers – for better or worse.”

According to the supplied statement, Interlogix employees were notified on Thursday (Sept. 19). “The company is committed to providing a fair and comprehensive transition benefits package, which in the U.S. includes severance, benefits continuation, outplacement services, and up to one year of paid college tuition through the Employee Scholar Program,” it reads. “We expect most employee separations to be in Q4 of 2019.”

Paul Rothman is Editor-in-Chief of Security Business magazine. Access the current issue, archives and subscribe to the magazine at www.securitybusinessmag.com.  

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