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Home security companies fight to be the gateway drug for smart homes

June 20, 2017 by Stacey Higginbotham Leave a Comment

The Notion sensor measures temperature, motion and humidity, and can hear when a smoke or carbon dioxide alarm goes off.

Home security is a massive industry with security services ranging from a simple Locksmith Austin to security cameras to security sensors. The home security niche is getting interesting and heating up. At the high end, there is a battle between service providers such as ADT, Honeywell and Alarm.com to roll out new services and connected offerings that cost less and provide more home automation. This involves partnerships with startups and legal battles galore.

Not content to let the existing players win, there are a host of new entrants, ranging from broadband providers like AT&T and Comcast to startups such as Korner, Ring and Notion. This week’s profile company, Notion, has raised $10 million in new funding that will be used in part to boost partnerships it has with home insurance companies.
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Notion, which was formed in 2013 and has raised a total of $15 million, offers a starter kit that consists of three sensors, a bridge and a simple app. Customers can spend as little as $219 on a bridge and three sensors to start getting the benefits of basic home security.

The pricing is designed to break into the roughly three-fourths of the U.S. market that doesn’t currently have a monitored home security solution. At this low price, home security can make sense for both homeowners and renters. There’s no monthly fee for the app.

Notion CEO Brett Jurgens thinks there may be an opportunity for larger home security companies to provide their own monitored offerings on top of the Notion setups as Notion customers get more familiar with the benefits of a security system. He also says the startup has partnership deals with three of the top five insurance providers in the US. These partnerships offer Notion customers a discount for installing the device.

Insurance companies may do more with home security in the future. For example, in conversations I’ve had with USAA and American Family Insurance, there is interest in sending customers a technology package of connected devices that come with the policy. The package would be full of tech gear to help prevent loss and insurance claims.

When evaluating Notion’s chances for success, I think it makes sense to think about where the market is heading and the challenges each segment of the security market faces. The traditional security companies are likely to keep a large portion of their base that wants monitored security. Their challenge is a dealer and installer network that can make adding new products a tough sell.

Dealers don’t know how to program all of the connected devices on the market and may not look forward to the increasing number of service calls a varied and new stable of products can generate. Meanwhile, at the startup end, there are a significant number of folks okay with DIY installs, but if they aren’t willing to pay for additional services on a monthly basis it’s tough to see how these companies can support continued R&D and cloud services.

It’s likely that the growth in home security will accrue to the startup companies like Home Security San Diego, and perhaps the telcos, especially if they can offer low pricing and/or a more exciting stable of connected security and home automation devices. The biggest question will be how the business models break down.

Will a cloud-based storage model, like the one offered by Ring, win out and support a large security business? Or will an inexpensive DIY hardware package that might be supported by insurance providers or other businesses that have an interest in loss prevention win out?

I know I’m not supposed to leave you guys with a question I can’t answer, but in this case, I truly don’t know. Home security is one place where IoT can generate a lot of value and benefits, but it’s not clear yet who captures that value.

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Filed Under: Featured, Startups Tagged With: adt, comcast, home security, Honeywell, Korner, Notion, Ring

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