Alula recently hosted an interactive panel discussion with insiders from various segments of the security industry to discuss a number of changes and developments impacting the security industry, from Google’s partnership with ADT to the effects of COVID-19 and social unrest. Below are some key takeaways from this wide-ranging and informative discussion:
Tech Giants Entering the Market
The recent partnership between Google and ADT highlighted a number of factors, the first of which is the value of the professional channel, specifically the “feet on the street” and technical leadership necessary to bring value to the connected home/connected business experience. That Google would partner with ADT to launch security offerings demonstrates how much value there is in the professional channel.
This deal also underscores the point that security is the lead technology that ties a lot of automation solutions together in the home or business. Security, life safety and protection services becomes the lead element and drives the adoption of other connected devices. Big tech hasn’t quite figured out how to monetize the connected home yet, but the security industry has. The value of the professional channel and the dealers who will participate in this deal are now highlighted in Google’s investment and their partnership with ADT.
Security is in a great position, with Google coming onto the professional installer’s turf, and if installers continue to innovate and differentiate themselves in the marketplace, everyone is going to have a bigger piece of pie.
More than Technology
Google has been making bets on devices with Nest and Dropcam. This latest development demonstrates Google’s desire to monetize those investments and its recognition that it takes more than technology to be a success in security.
This may be the first of many dominoes to fall because based on how this partnership works out, it’s safe to assume that we’ll see more movement into security from other tech giants like Amazon (which has already entered the market with its acquisition of Ring).
Like Google, Amazon hasn’t had a ton of success monetizing their devices, so you can be sure they’re watching the Google-ADT partnership to see what works and what doesn’t. And they’ll likely be looking for their own “feet on the street” partner – or straight-up acquisition – in the not-so-distant future.
Where the large tech companies have missed the boat is in the services aspect that goes along with the technology. Devices themselves are one-off sales, but the professional security market has long realized that the real money is made in the recurring revenue component from service offerings. Traditionally, that may have been monitored security intrusion going into a central station, but those services have become more all-encompassing in recent years. So while Google and others may have been entering security from a technology standpoint, a more accurate measure of their penetration going forward will have to include some consideration of recurring revenue elements around those companies’ devices.
Security in an Uncertain World
Security has long been an event-driven purchase, and pandemics and social unrest are certainly events. Uncertainly, anxiety and change seem to be the new normal in day-to-day life, and as a result there is a greater desire to settle in and protect. As a result, we’re seeing an uptick on security devices going into homes, and people turn to people they trust, and in security and life safety, that tends to be a company with a local presence. This is where an ADT comes into play from Google’s perspective. While we don’t know what the world is going to look like in the next 18 to 24 months, the good news is that recent events haven’t negatively impacted the security industry. It’s just forced people to rethink how they go to market and how they do business.
Between the global pandemic, social unrest, new players entering the market and other changes and uncertainty, the security industry needs to be flexible and creative. This opens up opportunities to bring a heightened level of service to emphasize the customer experience, support and professionalism. At the same time, we need to be mindful of the relationship we have with our customers, which, as Google recognized, is as much a factor in business success as the technology itself.