The 800-pound gorilla issue in the security device space is the prospect of colliding market segments. Market segments in the residential security industry continue to experience a blurring of lines between professional and DIY solutions. Professional installation and monitoring providers, such as ADT, Brinks, and Comcast, have added self-installation and monitoring options. At the same time, companies that started in the DIY space now offer professional installation and monitoring.
Providers expanding their solutions to address both professional- and self-installation provide consumers with the ultimate choice, increasing the reach of companies to new consumer segments. But it also increases competition in the industry, driving down pricing and making product differentiation more difficult. The bottom line is, however, that the incremental revenue opportunity associated with monitoring is huge: just 1% (~1% of new monitored households) could produce $1B, assuming a $40 monthly ASP with a three-year contract. Dealers, manufacturers and resellers who recognize the significance of “lifetime value of a customer” (LTV) dynamic during the sales engagement phase can reap enormous profitable long-term value. (read more)
Consumers do benefit from this trend with lower pricing, but the risk of consumer confusion is heightened as feature differentiation among offerings is blurred. Moving forward, it is likely more companies will continue to “smudge” the lines and offer both professional- and self-installation. In addition to the growth in DIY, there will always be a customer base that prefers professional installation.
Companies will need to learn how to balance both preferences to remain competitive.
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