Google’s Dropcam security push and Apple’s smart home “big play”—should security companies be worried?

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05/28/2014

Recent news reports say that Google may buy startup Dropcam, which makes video cameras that stream video to a user’s computer or cellphone, as a way to get into home security. And The Financial Times has reported that Apple is soon expected to make a “big play” into the smart home, launching a new software platform that will allow users to control security systems and home features such as lights directly from their iPhones.

Should security companies be worried? Not really, according to a report today from Imperial Capital, a New York-based full-service investment bank.

If the Dropcam report turns out to be true, it would mean Google is adding a security component on the heels of its entrance into home automation with its recent $3.2 billion purchase of Nest Labs, maker of smart thermostats and smoke alarms.

But the report, authored by Jeff Kessler, Imperial Capital’s managing director of institutional research, said it doesn’t believe the Dropcam purchase would have a negative impact on security companies or other pure play home automation companies, like Control4.

The reason, it says, is that “security companies generally are not participants in the do-it-yourself (DIY) market and do not target particular groups that may be interested in such products (e.g., college students, young professionals living in high rises).” Also, the report said, although “Dropcam could be a good entry product for those that do not understand or are not familiar with security products, it does not replace the security, home automation, and customer service capabilities which the likes of ADT or Control4 provide, and nor do we believe that it wants to.”

What about the potential Apple smart home/security play?

The report says: “We wonder if Apple will open up its “big play” to allow a broad base of installers, service, and responders to interact with it, or will it be another closed end system, in which the homeowner, or more likely the apartment owner, can check on what is going on at home on an Apple iPhone, and then have the responsibility of “making the call” to police or health responders based on what they have just seen on the iPhone. Another uncertainty is if the police would trust this system, or would law enforcement be more likely to respond to a more familiar source that has verified the same incident.”

The report summarized by saying that while the new developments are exciting and will be particularly attractive to those who don’t own homes, the lack of professional monitoring is a drawback.

“Remember, these monitoring stations (to be accredited) have to show that their average time to make a decision to dispatch or not to dispatch is less that 30-35 seconds, have tremendous redundancy, and can typically be trusted. We simply do not believe that Apple users will get that service.”

In fact, the report says that these DIY products could indirectly help professional security companies by introducing a younger generation to the idea of home security/home automation, which could lead those customers to “potentially switch to a larger, more powerful, and more comprehensive platform in the out years.”

Alarm.com, a leading provider of interactive security services, also weighed in to me on the new developments involving Google and Apple.

That Vienna, Va.-based company stressed that security is the backbone of the smart home and noted that professional monitoring is a key differentiator, but said security companies need to make sure homeowners know that.

"The key purchase driver for home automation is security.  We see this in both consumer surveys and purchasing trends," Alarm.com said, in a statement.

Also, Alarm.com said, the announcements "validate the popularity of a growing range of connected devices and services. Security dealers should tap into this underlying consumer demand by aggressively marketing and selling a complete range of connected home technologies with professionally monitored security at its core."

 

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