Cepro Predicts Amazon Will Acquire A Security Installation/Alarm Monitoring Company

See CEPro: What Happens When Amazon Acquires a ‘Real’ Security Company Like Vivint, Guardian or Brink’s?

IPVM

Acquiring a national alarm company could help Amazon increase recurring monthly revenue (RMR), but also pave the way for Amazon to become a chief security officer (CSO) and managed service provider for the home.

It is a thorough, long analysis of the potential benefits of Amazon acquiring an install / alarm monitoring company.

I do not have a guess what Amazon's thoughts are on such things nor can I think of any parallel for Amazon acquiring such a large installation business (closest might be their warehouse workers?).

Hey, given how far ADT's stock price has fallen, they should buy ADT (not sure if that is a joke or not).

What do you think?

Vote / comment inside:

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John Honovich

IPVM

By the way that is that type of thoughtful coherent analysis that trade magazines generally lack. Interestingly, CEPro is a sibling company to the yolo bro's SSI.

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Ross Vander Klok

IPVMU Certified

Julie Jacobson has written a few really good articles for them. I am pretty sure hers are the only ones I recall more than five minutes after reading them so she is doing something right.

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Shannon Davis

IPVMU Certified

ADT is the obvious choice in my opinion. Had they not been merged with Protection One then what would have been a good choice as well. P1 never really recovered from the Multimedia Security acquisition and when purchased by Westar holdings back in the late 90's.

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John Honovich

In reply to Shannon Davis

IPVM

Maybe that is Amazon's genius move. Pummel ADT stock price, than buy it at a 'premium', get a great deal. I think I am mostly kidding because presumably Apollo (ADT's financier) does not want to accept such a loss, at least yet. But maybe Amazon pits ADT versus Vivint and see who blinks first (i.e., since the loser of such an Amazon selection might fear being hurt further).

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Undisclosed Integrator #1

Is Amazon in the business of acquiring install companies of any kind? They sell millions of products but do they own companies that install any of them, like plumbing or electrical? why would they buy an alarm company?

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John Honovich

In reply to Undisclosed Integrator #1

IPVM

Ignore the 'alarm' part for a second. Amazon wants to control the home 'network' or 'IoT' or 'smart home' (pick your term / buzzwords). The security installer company would then be their feet in the street / in the house making things work.

I am a little skeptical how well that would work but I also see it as being a reasonable thought process.

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Undisclosed Integrator #1

How about Best Buy? Geek Squad would be included in that deal

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John Honovich

In reply to Undisclosed Integrator #1

IPVM

Maybe I don't know, I could see some logic to that.

Btw, Best Buy's market cap is ~$22 billion, 4x that of ADT's but Best Buy is 1/30th the market cap of Amazon...

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Undisclosed #2

Amazon Direct Technologies.

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Lee Jones

Support Services Group

We believe in Amazon research ….. we believe Amazon would not want to buy the Kodak film business in this era of digital photography. Same applies to the alarm industry (sloppy analogy). Why would anybody want to buy outdated deterrent alarm systems that contain nasty legacy liability, in a space that has less than 25% of the viable market. It would cost much more $ and time to buy and convert, than attract fresh new customers.

Source: Lee Jones; Support Services Group; LeeSSG@att.net

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John Honovich

•May 19, 2018

IPVM

In reply to Lee Jones

Lee, it's less about buying the systems than buying the trucks in the neighborhood to service those systems that I would think is valuable to Amazon (again still not saying that it would happen but distinguishing between the two is reasonable).

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Lee Jones

•May 19, 2018

Support Services Group

Remember… the traditional alarm industry is still highly fragmented; including over 15,000 municipalities with fragmented legislative demands; including licensing requirements by most states; including conflicts with law enforcement about unauthorized unlawful use of public resources for private purposes; plus the nasty legacy liability; etc, etc. In our opinion, buying the ADT, or competitor “infrastructure” is not an option for Amazon. Knowing Amazon, they will simply re-invent and re-purpose the “private security industry”. Source: Lee Jones; Support Services Group

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John Honovich

•May 19, 2018

IPVM

In reply to Lee Jones

they will simply re-invent and re-purpose the “private security industry”.

And,in your thinking, who will install and service the equipment for Amazon?

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Lee Jones

Support Services Group

If/when Amazon (or another) re-invents and re-purposes the “deterrent alarm industry”, now dominated by 140 year old ADT, there will not be a need for fleets of trucks and platoons of technicians, nor restrictive legislation. Remember, the majority of monitored alarm systems(millions) have already been degraded into deterrent systems like auto alarms and yard signs, with slow or no emergency response. That old business model is outdated and broken, and needs to be re-invented and re-purposed, by somebody, like Amazon. Source: Lee Jones; Support Services Group; LeeSSG@att.net

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Larry Tracy

The consumer , ADT was trying to do this long ago. Simply Safe does not have trucks or feet on the street. It is a outdated model, which why I mentioned they have to do much more for the consumer.

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John Honovich

IPVM

In reply to Larry Tracy

The consumer

But how much of the market will the consumer install themselves? There are a lot of people who are either (a) bad with technology or (b) busy or (c) disabled, etc.

I am not discounting the value of a DIY offering, I am just wondering how far / how much of the market a DIY approach will go.

The fact that Amazon is offering and promoting their own installation services for security (albeit however poorly) signals that Amazon believes DIY misses a significant portion of the market, no?

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Paul Shah

John,

Doesn't Amazon offer installations through contracted independent installers and not thier own employees?

Shipping is contracted out to third parties, delivery drivers are independent contractors.

Even with the Whole Foods acquisition, it could be argued that it was for their distribution of the Fresh delivery.

I see Amazon as a technology company more than pushing thier own perfessional services

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John Honovich

IPVM

In reply to Paul Shah

Paul, I agree with you and that's a reason why I am somewhat skeptical, i.e., Amazon does not have a track record of making similar type installation type acquisitions. However, on the other hand they did not have much of a track record buying consumer hardware products until they bought Blink and Ring and no parallel to the Whole Foods acquisition, so I am reluctant to rule it out based on that.

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David Morgan