“The Market for Intruder Alarms – 2015,” a new study published last month by IHS Technology, revealed that the U.S. residential market for intrusion equipment was estimated to be worth just over $600 million in 2014.
“The Market for Intruder Alarms – 2015,” a new study published last month by IHS Technology, revealed that the U.S. residential market for intrusion equipment was estimated to be worth just over $600 million in 2014. Comparable in size to the entire European residential market, and with annual revenues more than double any other country, the United States market dwarfs all other nations. IHS predicts the U.S. market will continue to outperform its European counterparts, with a compound annual growth rate (CAGR) of 5.3 percent between 2015 and 2019.
Over the past decade, Tyco, Honeywell and other key players have traditionally dominated the U.S. market through acquisitions, competitive pricing and consistent product development. Nortek Security has recently joined this elite band of manufacturers, and over the past five years they have established a significant presence in the U.S. residential market, through acquisitions and strategic partnerships with the likes of private home security and automation company, Vivint, and a number of intrusion key dealers.
Growth in the residential market in the United States in recent years has been spurred by strong construction rates. In fact between 2012 and 2014 the number of completed multifamily residential construction projects nearly doubled, and while single-family home construction rates were relatively slower, they still grew 20 percent in 2012 and 2013. The large number of new households, and the increased number of people moving to new homes, has helped to facilitate intrusion equipment market growth. Growth in residential construction is forecast to continue through until 2016, when a significant dip is expected in the number of completed residential projects.
The evolution of smart-home and smart-security systems has also really started to take form in recent years, which has increased the penetration rate (installed base) of intrusion products and increased average consumer spending in the category. The capability to integrate the panel with the smartphone offers benefits to users, such as receiving alerts from children coming home from school, when the alarm is turned off, or the ability to remotely arm the system if first forgotten. This increased functionality is creating new opportunities in the residential market.
The residential market has also been lifted by developments in the communications industry. In August 2012 AT&T announced plans to sunset its 2G network by the end of 2016. A large proportion of intruder alarms at the time used the 2G network, to communicate with monitoring stations. As a result, a number of manufacturers and service providers had to begin implementing strategies to update their install base, so that when 2017 rolls around millions of homes do not suddenly become vulnerable to attack. The strategies employed for this effort range from having the communication module replaced in a current panel, to having the entire panel replaced completely. Many manufacturers have opted to use the 3G network, in spite of the fact that the 4G network has higher transmission speeds; the main reasoning behind this decision is to keep the cost of manufacturing low, since 4G-compatible components are considerably more expensive than their 3G cousins.
There are also a number of other trends currently affecting the market, including the following: increasingly significant effects of Comcast, Time Warner and AT&T and other multiple system operators (MSOs) entering the market; the trend towards greater use of wireless products; and the shift in the ratio of single family homes versus multifamily homes.
Source: IHS Technology