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GE home security dealers cast aside in UTC deal?

GE home security dealers cast aside in UTC deal?

HARTFORD, Conn.—If GE home security dealers were worried about becoming the red-headed stepchild of the UTC/GE Security deal, a presentation to the Citi Industrial Manufacturing & Transportation Conference this morning did little to alleviate their fears of being cast aside and forgotten.

“Residential monitoring, what you and I have in our homes, we've avoided that and we don't want that, but monitoring for commercial installations, this we are developing aggressively,” said Ari Bousbib, president, commercial companies, UTC.

Will home security dealers flee en masse from GE security? Some dealers and one long-time industry analyst said it's too early to tell.

Jeff Kessler, managing director at Imperial Capital, called it a tough question. “They've been both well served and not well served by GE. GE service has improved substantially over the last several years, the management has improved substantially, but that's after years of GE not having as good a focus as perhaps some other large companies in the industry.”

Kessler believes that UTC “has a good enough brand to keep a lot of these dealers from fleeing to someplace like Honeywell, which is the obvious beneficiary if there's a problem here. But Honeywell is so big and they have their own distribution business and that will make some of these folks think twice. I think a lot of dealers will give UTC a chance.”

The response to news of the UTC/GE deal from GE security dealers contacted by Security Systems News today was varied. There is some indication that the deal is less worrisome to large GE dealers than it is to smaller independents. 

“I'm sure the entire network of GE dealers will be evaluating moving to another dealer network, I can see that conversation going on in every office. There is a lot of disappointment going on,” said Norman Adelman, president of Alarm King, a GE Security dealer in New Jersey.

Platinum Protection, a more nationally-minded GE dealer, which sold roughly 30,000 accounts in 2009 responded differently: “We have been partners with GE Security since 2008 and are confident that the recent sale will have a positive effect on the security industry,” said Platinum Protection partner Jeremy Pixton.

Pixton said that Platinum had received assurances from GE Security that Platinum “wouldn't see any changes in terms of getting equipment and services for 2010.” 

Adelman, on the other hand, said he had not been contacted by UTC or GE Security about the deal nor about the home security dealers' status.

Adelman said the GE logo was important to him as a marketing tool. “The value of the GE logo was quite nice. The UTC logo is not. They own Otis elevator, some big companies,” he said. “I'm very concerned with the management philosophy and what they're going to do [with the network].”

So where will dealers' turn if they want to shop around? Honeywell's First Alert Professionals' program is similarly structured to the GE Security Dealer's program in that the dealers typically hold onto their own accounts while dealer networks such as Broadview Security and ADT, on the other hand, purchase all of the accounts from their dealers.

Asked for their response to the UTC/GE deal, Honeywell spokesperson Jim Green gave this response via email:  “Honeywell continues to be focused on serving our customers and growing our business in fire and security. Our stable industry leadership, superior customer service, brand recognition and new product pipeline will continue to position Honeywell as a strong industry leader.”

If GE home security dealers decide they want to sell their accounts, they may turn to Broadview or ADT, both of whom are investing in expanding their dealer network. ADT's corporate parent, Tyco, held an investor call this week, where Tyco CEO Ed Breen said, “In 2009 we increased or capital and dealer spending level over the prior year, and coupled with the early stages of a multi-year ramp up in our residential sales force in ADT, we grew our account base by three percent.”

Similarly, a Broadview representative told Security Systems News that Broadview is “still working on our dealer network, building out our secondary and tertiary markets, regardless of events in the marketplace.” It's the same strategy they've pursued “over the past several quarters if not even longer, [nevertheless] if something makes sense to pursue, it makes sense to pursue.”

Should UTC decide it wants to keep the home security business, how can they talk dealers like Adelman into staying?

“They could tell me who we're going to be when we grow up,” he said. “I'm game. I'm in for the ride, just tell me what the ride is going to be.”

EDIT: Shortly after our interview, Adelman was contacted by GE/UTC via memo. Go here for his reaction.

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