Just when I thought the market for home security solutions was saturated, Alula, a company formed by merging ipDatatel and Resolution Products, launched this week with a product that offers security systems to dealers. It’s designed for dealers, but it purportedly lets them offer a DIY-type solution to their customers as well.
Alula Holdings CEO Brian McLaughlin says the company was created to help dealers compete in the rapidly changing environment for home security. Resolution Products made the physical hardware for the security systems while ipDatatel provided the connectivity. The two companies combined to create Alula, likely one of many consolidations to come in the residential and business security market.
Dealers can buy the gear and connectivity from Alula and use it to create any type of business model they want. They can resell the gear for a premium and let the user handle everything, or they can sell it at some level of loss and sign the user to a contract. This latter business model is common across large security companies such as Alarm.com and ADT.
What’s changed is the landscape of DIY options. Thanks to devices like the Nest Cam or easily linked door and window sensors, a whole new market for security gear has opened up. The people in this market might spend $500 to $1,000 on a few security products linked up through a smartphone app with no monitoring fees. Instead of getting a call from the police if and when a problem occurs, they’ll get a notification on their smartphone.
There are obvious downfalls to this scenario (to start, not everyone checks their smartphone for every notification), but for many people security doesn’t mean an alarm that calls the cops when it goes off. They just want to know what’s happening in their homes. The big security firms have responded to this newer market with their own low-cost systems and lower monitoring fees. For example, ADT offers a package of sensors and a camera with SmartThings.
ISPs are also looking at this space as an opportunity, such as with Comcast offering security and home automation through its Xfinity Home product. Meanwhile, Nest has a home security system offering that a user can connect and hire someone to monitor if they choose to do so. Nest’s system costs $500 for a hub, two sensors that offer motion and open/close detection, and two person tags that a user can swipe to arm or disarm the system. For $250 more, you can get a Nest Cam or a Nest video doorbell. Another vendor that offers DIY security, SimpliSafe, charges $359 for three open/close sensors, a motion detector, a camera, a hub, and a keypad.
We can’t make a direct comparison between Alula’s gear and DIY options because the dealer ultimately will decide how to price the system, but the company sent me two theoretical options on a configuration I set. Alula says the consumer cost of an outdoor camera, two door sensors, two window sensors, an indoor camera, and a motion sensor all tied to the Alula Connect+ with central station monitoring would likely be priced at $29.99 for a three-year contract with no up-front product cost. Without a contract, the system would cost about $500 up front, with monitoring for $9.99 a month. In this configuration there is no keypad, and the user would use his or her phone to arm and disarm the system.
Instead of focusing on the gear, I think that in order to remain competitive, the next-generation security company should think about services and tweaks to its product lines that incorporate new devices and machine learning. It’s asinine to think that a security system isn’t going to tie directly in with the home automation system to handle things like lights and gleaning information about which person is home and their preferred security settings.
While bringing in products and connectivity is a start, it’s not enough to keep a dealer in the fight. Alula should add more context-aware sensors and invest in integrations with devices that can offer that context. Much like Amazon or even Google, a true security system will just be part of an overarching AI system that controls the home.