This article originally appeared in the October 2021 issue of Security Business magazine. When sharing, don’t forget to mention Security Business magazine on LinkedIn and @SecBusinessMag on Twitter.
New competition and advanced technologies are dramatically changing the traditional offerings of security solution providers – especially in the safety and security categories like doorbells and networked security cameras – and recent data hacks and data leaks have not slowed consumer interest in these devices.
Smart video doorbells are winning, largely thanks to their affordable price, additional functionality, and easy installation. Currently, over a third of smart home product owners now own a smart video doorbell. In many cases, these stand-alone and previously DIY-only products now have attached professional installation and monitoring services. For example, Google Nest has partnered with OnTech, and last year they made professional installation services available in the Google Store. In contrast, earlier this year Wyze expanded their partnership with Noonlight to offer 24/7 professional monitoring of their smart home devices.
The smart home device market continues its slow and steady growth. Thirty-six percent of U.S. broadband households now own at least one smart home device, representing an upward market trend continuing through 2020 despite changes associated with the pandemic. Smart home buyers have continued to buy multiple products and add to their ecosystem over time.
As the collections of devices get more extensive, home ecosystems are getting more complex. Meanwhile, the devices themselves are also getting more sophisticated when interacting with the cloud and processing at the edge. Sensors and other inputs are also improving, and their data is being incorporated into more systems. These new advancements in local and edge computing are bringing the advantages of AI and machine learning into the smart home, allowing for new service opportunities and uses cases.
In the past few years, there has been a steady growth in the adoption of smart home devices in the safety and security category – including a 2% jump in networked camera adoption in early 2021. Consumers are buying these products for some of the same reasons they buy home security systems: to help protect their belongings, pets, and loved ones and provide information about what’s going on in the home. This growth is driving competition within the home security service offerings, especially as these stand-alone devices add professional monitoring services.
Adding monitoring services represents a significant opportunity for revenue in a marketplace made more challenging by the continued presence of giants like Amazon and Google.
Creating Differentiation
Most residential security integrators are now diversifying their offerings, with all but 15% now offering services beyond monitoring. These additional services will continue to be the way to differentiate offerings and grow revenues in the future. The residential security industry will also continue to see product innovation in AI and video and audio analytics throughout the year, and consumers are starting to get more interested in AI-driven features.
Recent Parks Associates surveys identified 1,300 intended buyers of network cameras and video doorbells, asking them to rate the importance of these features on a scale of one to seven.
Top product features that interest intended buyers include:
- Having the ability to detect strangers near the home or recognize a vehicle in the driveway or front of home.
- Identifying security and safety-related sounds.
- Recognizing the difference between a pet and person moving near the device.
This rising interest should encourage players to include some or all of these AI features in their future offerings.
New developments in technology and growing consumer interest are opening up new potential revenue streams and business models for smart home players, including integrators. In response, companies are experimenting with different business models and price points, from adding premium-tier products with AI to upselling buyers on storage or analysis for a monthly fee.
As consumers continue to embrace new innovations and technology advancements in the residential security market, expect to see more connected products with advanced AI capabilities, a wider adoption of smart home devices, and more new security use-cases across a broader range of product categories.
Chris White is a Senior Analyst for market research firm Parks Associates. For more information on Parks Associates research, visit www.parksassociates.com.
