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IoT and the connected home will edge out traditional alarm services

By Brian S Hall / May 9, 2014

IoT and the connected home will edge out traditional alarm services

It may be time to ditch the traditional home monitoring service. The Internet of Things (IoT) is headed for your doorstep and bringing with it greater functionality, more complete data, and lower monthly costs than traditional proprietary alarm and monitoring services.

Smartphones, tablets, low-cost sensors, Wi-Fi, Bluetooth low energy (BLE), ZigBee and NFC are enabling the IoT to flourish—not just ‘out there’ in the world, but inside our homes. As a result, property owners are now empowered to create a more personalized, affordable alarm and monitoring service for their most precious possessions.

Make room for IoT and the connected home

In isolation, certain aspects of this new world seem silly at first. For example, having your washing machine text you a reminder to add the fabric softener may be of little consequence. Setting up your refrigerator to alert you that you are running low on eggs as your connected car approaches the grocery store is more novelty than convenience. Using your iPhone to change the temperature of your oven or adjust your home cooling system while you are out for a run, or to set your coffeemaker to brew, is probably not worth any extra fees. Fair enough. But don’t be misled by these small, clever hacks. The IoT has the potential to greatly reduce the price of monitoring and alarm services that once cost thousands.

Take a quick trip to Amazon’s home automation and monitoring store, and you’ll find webcams, smartphone-controlled thermostats, automated lighting and sound systems that are easily managed from your laptop, sensors that can detect water leaks and a slew of other helpful, hi-tech appliances available for free 2-day shipping with your Amazon Prime membership.

These are all reasonably affordable, easy to set-up and maintain, and provide greater peace of mind than anything previously available. Having your smartphone alert you when motion is detected inside your home or receiving a text when a water leak is spotted are not just reassuring, but empowering. They may also save you thousands in repair costs, or possibly even save a life.

The changing home monitoring industry

ADT, the brand Americans have long associated with home alarm services, is under siege. A recent Morningstar analysis of ADT noted that while ADT controls the largest share of America’s $11 billion home monitoring market, it’s future prospects are limited. Telcos and cable companies, AT&T, DirecTV and Comcast are now aggressively leveraging their massive home Internet install base to offer competing services, often at a lower price.

It’s easy to understand why. You already get your smartphone, television and Internet service from these companies; what’s the harm in adding a home alarm service to the bundle? Indeed, one of the largest costs facing ADT, and similar companies, is customer acquisition. Morningstar estimates it takes 2-3 years for ADT to just break even on a new customer. Those steep initial costs are significantly reduced for carriers, which already have you as a customer and see you visit their store every time you wish to upgrade your smartphone, for example.

Another reason why the large cable and telecom companies should start aggressively pursuing the home monitoring industry is the unprecedented technological advances. That, along with the rise of smartphones and tablets, make it possible to remotely control thermostats, lighting, and locks, view video and receive custom texts and notifications, which is something telecom companies are already getting a little too comfortable with.

Intruder alerts

Why cut your ADT service just to pay another company a monthly fee? You could bypass these newer entrants as well and go DIY. After all, do you really need to drop $35-$75 every month on an AT&T alarm service? For those with a smartphone and Wi-Fi—which would constitute most of us—it’s never been easier to create your own home monitoring service, no “maker” experience required. If you can connect your laptop to your home Wi-Fi, odds are extremely high you can set-up a webcam, a connected thermostat, smoke detector or other protective sensors. The IoT is democratizing home security and monitoring. Embrace it.

According to several industry estimates, only about 17% of homes now pay for traditional home monitoring services. This shouldn’t be very surprising, considering there is often a hefty installation fee (sometimes priced above $1,000) and a monthly service fee (often in the $35 – $75 range). However, if you are concerned for the safety of yourself and your loved ones, try setting up a Dropcam, which allows users to stream a live feed of their home to any smartphone, tablet or computer.


In addition to its 24/7 surveillance stream and night vision capabilities, the Dropcam can record and store a week’s worth of activity for the reasonable price of just $10 a month. The footage is stored on a cloud that can be accessed from any computer or mobile device. And to sweeten the deal, Dropcam just announced they will be releasing a software update to their cloud subscribers that enables people detection. Why is this important? Because there’s a big difference between a mischievous house cat that knocks over a lamp and a cat burglar prowling for family heirlooms. Although the broken lamp may be an inconvenience when you get home, it’s not exactly worthy of an urgent text notification.

For even greater property protection, Dropcam is releasing a new product called Tabs. Tabs are discrete BLE sensors that can be attached to windows, doors, appliances and other objects, notifying the user when something is out of the norm. For example, if you place a Tab on the back of your big-screen TV, you’ll receive a text the second someone removes it from its mount. You’ll be the first to know your goods are potentially being stolen, rather than some middle man like ADT.

Other dangers lurking in your home

Any resident of a cold climate is no stranger to the danger of burst pipes. You leave for work in the morning, only to return nine hours later to a lagoon in your kitchen, laundry room, bathrooms and/or basement. The INSTEON leak sensor helps prevent such disasters by sending you a text or automatically closing the valve as soon as it feels water. And at $35 a sensor, it’s a lot cheaper than new carpet or flooring.


Then there’s the Nest Protect, a state-of-the-art smoke and CO2 detector that notifies you about the presence of these silent killers whether you’re at home or out and about. The corresponding app allows you to keep a constant watch on your house’s CO2 level via smartphone or tablet. You can also program Nest Protect to say, “Emergency, there’s smoke in the bedroom,” rather than blast your eardrums out with a high-pitched cry if a fire occurs in your house.

Nest Protect

IoT and home monitoring investments

The array of available tools are rather amazing. However, we are still only at the dawn of the connected home. Google’s $3.2 billion purchase of Nest Labs is only the most obvious example of how home monitoring is undergoing a profound transformation, encompassing home monitoring, alarm services, automation and data analysis.

There’s also a litany of eager and capable developers looking to create profitable apps and services that integrate your smartphone, home Wi-Fi, low-cost sensors, wireless camera, appliances, television, heating and cooling systems, fitness wearables, plumbing and anything that can be connected to the web. CB Insights notes that the rapidly growing home automation sector has attracted $468 million in early stage investments since 2012. Expect much more to come.

Home Automation Market

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