European Research Update
Smart Home Technology Enables Expansion of European Security Services
The leading European security companies have always invested heavily in direct marketing and sales to overcome low awareness for professional residential security services. However, new entrants like Securitas AB may be able to utilize and expand the independent dealer channel in Europe due to smart home technology.
This approach has already been successful in the U.S., with smart home technology enhancing the traditional security service value proposition by improving both operational processes and the user experience. This ultimately increases customer engagement, drives up Net Promoter Scores (NPS), enables premium price points, and reduces churn.
The State of Security and Smart Home in Europe
Currently, the majority of professionally monitored systems in Europe are professionally installed, but the combination of professional monitoring and DIY installation is still very rare. Although the U.S. home security and smart home markets appear to be significantly more robust than the European markets, Securitas Direct – Verisure has successfully added smart home elements to their product and service offerings to make them the largest smart home implementer in Europe.
A growing amount of hype surrounds the smart home concept in Europe, but consumer awareness in the four largest Western European countries continues to remain relatively low. However, smart home ‘hero’ products—those that are gaining a disproportionate amount of notoriety and word-of-mouth support given consumer excitement about their design or functionality—are gaining traction and helping to increase awareness and adoption of both smart home products and interactive security systems.
In addition to security, energy management is seen as a key driver for smart home diffusion in Europe, especially in countries where professional security services show low adoption rates. Utilities have started to use smart home technologies and smart home products to fight churn, using enhanced service offerings based on smart home technologies and products. Meanwhile, insurance companies have taken a clear self-interest in smart home technology to counter the risk of home damage and to create an online service relationship with their customers.
Smart Home Devices: Spurring Security Growth and Competition
The smart home market is still in its infancy, with many service companies enthusiastically pursuing the promise of new opportunities created by smart home technologies and with the belief that consumers will find value in connected offerings. An increasing number of connected products from companies like Nest Labs are hitting the market and helping to drive awareness and adoption of these products.
For residential security channels, the U.S. market seems years ahead of the European market, with professional monitoring services and interactive smart home platform providers proving instrumental for growth in the U.S.
While the state of professional security is different between the continents, the distribution segments are common, with four primary means of distribution for professional systems:
Viable substitute devices include IP cameras, smart door locks, smart garage doors, or a combination of these devices, with each device and category offering a different approach to its security functions. Nearly all of the IP camera manufacturers name home security as one of their applications. The video camera, when fitted with a motion sensor, not only provides a potential deterrent to an intruder, but also provides evidence to authorities or even just to the home dweller. Alerts are sent to smartphones, tablets, or computers.
Smart home products from Samsung (SmartThings), Piper, and Canary are examples of products that are being positioned as home security solutions, despite not having the features considered requisite for security systems, such as a keypad, door and window contacts, and the option for professional monitoring.
Manufacturers of smart products will increasingly offer upgrade paths, enabling consumers to expand their smart home systems with other devices and with additional services, such as video storage for IP cameras or for monitoring services to connect devices and allow the dispatch of guards or health responders.
As in North America, we are seeing smart home and interactive features transform the professional home security market in Europe. However, unlike the nearly 20% adoption rate for professionally monitored home security in the U.S., adoption in Western Europe remains far lower. Continued implementation of these products will ultimately help close that gap.
European Partner Alliance
Erik Overbeeke, principal of OIMC, partners with Parks Associates on several of its European projects. He researches the connected consumer market in the EU, providing insight on IoT evolution for the security, home controls, energy management, connected health, and entertainment industries.Erik has served as a marketing, strategy, and M&A consultant in the residential security industry, focused most recently on IoT, helping a number of leading companies develop market entry and partnership strategies.
Prior to that, Erik worked for eight years at KPN, the incumbent telecommunication company in the Netherlands, and 15 years at Philips Electronics in the Netherlands. He fulfilled several senior management, business development, and business consulting positions. He holds a college degree in electronics and a Master of Business Economics - Erasmus University, The Netherlands.