I've been on vacation this week, so slow to react to news coming out on smart home, but I had to write a quick analysis of this blockbuster:
ADT is working with LG to create an all-in-one security/smart home appliance and will offer a no-contract security service.
This is huge. Of course, I've been writing about how the security market is undergoing a slow-motion reinvention, largely because the market penetration for home security has been artificially constricted to only about a quarter of total households because the traditional security business model only works for a fairly limited number of consumers.
While companies like Alarm.com and Vivint been doing their part to recreate the managed security and smart home market with new models, new upstarts like Canary and Piper have been going down the truly DIY path with all-in-one appliances. As can be seen by the forecast below from NextMarket's smart security report, the DIY home security hardware market is going to be a fairly strong one over the next few years.
What isn't that surprising is that ADT is shaking things up, as the company has shown a willingness to offer new approaches. The company's investment in Life360 is a good example of how it's starting to view security as going beyond a person's home and instead through their whole day.
But what maybe is a bit surprising is the disruptive nature of such a move. It's a recognition by the largest provider that their current business model doesn't work for a large segment of the US, and instead of ceding those consumers left out by the legacy business model, ADT is going to try and capture those consumers themselves.
The biggest question ultimately is how cannibalistic the DIY market is to traditional security systems. I don't think very, and apparently either does ADT. However, having both systems under the ADT brand could be confusing from a messaging standpoint, particularly considering ADT has already started to message against DIY systems as not really being all that safe as 'grown up' systems.
Last thought: The timing of this news is interesting given this week's news of the Target distribution deal with Piper, an Icontrol company. Piper landing on Target shelves is a big win for Icontrol, but now we suddenly hear that they have a major new direct competitor in ADT/LG. The subtext here is also because Icontrol and ADT are partners on smart home, in that Icontrol's platform powers the ADT Pulse system. I've heard rumblings ADT might be evaluating new smart home platforms on the managed side, so this is intriguing to these two companies go head-to-head first the DIY space.
Last last thought: The smart home security appliance market is going to get even more crowded. These all-in-one solutions make sense as a first-step product in the smart home for many companies, so I expect others to enter the market through a variant of this category in 2015.
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