Research Question: Are home security/monitoring solutions from cable and telco companies causing a significant drop in ADT’s business?
Companies Covered: ADT Corporation (ADT), Comcast, (CMCSA), Time Warner Cable (TWC), Verizon (VZ), Honeywell (HON)
Report Available: March 13, 2014
Blueshift’s initial research shows ADT’s market position potentially being eroded as increased competition from cable and telecommunication companies starts to take hold, while ADT remakes its marketing strategy to fend off competitors.
- In ADT’s Q1 conference call, management discussed being faced with significant uncertainties as it grapples with the challenges of new competition. ADT cited consumers’ increasing brand awareness of competing products offered by telecommunications and cable companies as being a major concern. ADT faces another source of competition when their non-compete agreement with Tyco expires later in 2014. While ADT saw 36.5% gross adds for its new Pulse technology compared to 19% the previous year, revenue grew only 3.7% year-over-year.
- The increasing integration between everyday objects and technology, termed “The Internet of Things” could have significant ramifications for the future of home security and automation, giving rise to even more competition for ADT and its Pulse product. Google’s recent acquisition of Nest raises the potential for ADT’s position in the home security market to be eroded via increasingly sophisticated home automation technologies.
- ADT is coming out with a new marketing strategy in February, building awareness of its products in the context of everyday security concerns and solutions to those common stresses. The new ads are designed to keep ADT at the front of consumers’ minds as cable and telco companies boast about their new home security/monitoring solutions.
- Blueshift’s early Oct. 2013 report found that ADT and other traditional security companies were not losing sales or customers to upstart cable and telco home automation offerings. Sources noted a significant marketing increase from cable and telco competitors, but said cable/telco companies’ offerings were limited to home automation and viewed as more of a novelty than a true protection system. Sources said cable and telco customers are new to the market and are not switching from established security players, thus growing the total addressable market.
To assess whether ADT is succumbing to increasing competition in the home security/monitoring business, Blueshift will gather data and issue a market research report from independent sources in the following silos: home security system dealers from traditional players, home security system dealers from cable and telco companies, home security installers from traditional players, home security installers from cable and telco companies, and industry specialists.
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