Can Amazon Become The Next ADT? (2013)

By: Brian Rhodes, Published on Sep 19, 2013

The world's largest online retailer wants to sell you security. Amazon, who sold over $60 billion direct to end users last year, wants to add security, surveillance, and home automation to your orders for books, movies, and breakfast cereal. Will customers change the security market by cutting out the multinational alarm companies like ADT, Vivint, and Protection1, and choose Amazon? We look at those dynamics in this note.

The Amazon Threat

In the sections below, we detail three elements that provide an opportunity for Amazon:
  1. Amazon is much more trusted than alarm dealers
  2. Alarm dealers charge / gouge customers on high recurring fees
  3. Amazon is able to live off much lower margins and no RMR

New 'Home Automation' Portal

Amazon offers a huge selection of household items, and has recently consolidated a new category called 'Home Automation' that includes door locks, security cameras, alarm systems, and smart thermostats. Traditionally, this mix of offerings has been the domain of security installers and dealers, but Amazon now lists over 4,000 'home automation' products it sells direct to end users:

Headline Offerings

A quick check of the brands Amazon groups in their portal include industry names like:

  • SimpliSafe: Well marketed in the US 'talk radio' markets, this DIY intrusion system features the same sensor types, a GSM dialer, and month-to-month monitoring as a $15 option.
  • Mace Security: Offerings include a sub-$100 'basic' system to monitor 2 doors/windows
  • Swann: Portfolio includes both video and intrusion systems
  • Dropcam: Backed by almost $50M, this VSaaS offering is built with 'DIY' in mind
  • Kwikset Kevo: Upgrading mechanical doorlocks to be opened with cellphones
  • Lockitron: Residential access control, with remote monitoring and accessibility
  • Z-Wave: Amazon includes thousands of 'home automation' products using 802.15.4 networking 
  • Lorex: Hosted video, remote notifications, and more
  • Q-See: See our test for more 'HD Video done cheap'

Indeed, while these offerings are not traditional 'channel brands' with field performance that can be dubious or subpar compared with mainstream commercial offsets, these offerings are available to consumers with a huge upside: the purchase price is final.

Amazon's Trust and Reach

While lots of companies sell alarm systems on line, most of them are niche players without much brand nor business with the average consumer. Amazon has ~200 million customers and an estimated 10+ million 'Prime members'. 

Get Notified of Video Surveillance Breaking News
Get Notified of Video Surveillance Breaking News

Peer Reviews

That trust comes heavily from Amazon's customer reviews. Unlike incumbent offerings that are sold as 'all or nothing' prospects by alarm dealers to end users hoping for the best, products on Amazon sidestep 'caveat emptor' through making reviews a central aspect of all product pages. Consumers are able to find the best performers by reading direct, pointed feedback, that often reveals bad product despite whatever marketing is pushed. While Amazon Reviews are vulnerable to manipulation, they are central to the marketplace and not otherwise available for most home security products.

No Strings Attached

Buying directly from Amazon is that products come with 'no strings attached' - there are no monitoring contracts, hidden fees, and installation/maintenance service schedules to work around and endure. If a user wants an intrusion alarm, they simply pay to have it shipped and the transaction is complete, contrasted with an 'ADT Special' that ultimately costs thousands.

A Compelling DIY Option

For many, 'doing it yourself' is an appealing alternative to the invasive models of the past. Rather that entering into a multi-year contracts with any number of alarm companies beset with insufferable customer service and class action lawsuits, Amazon is taking cues from what customers want: home security without being hassled by predatory alarm companies.

Limitations

Obviously, Amazon's approach, even as it matures, will have significant limitations for those who want, and can afford, a turnkey, service with immediate live response.

Strongest Impact

Alarm dealers regularly bemoan the failure to penetrate more than 20% of homes. Most certainly, the cost, contracts and the complaints about alarm providers all contribute to this constraint.

Amazon, as it ramps up, will be most effective for non consumers of traditional access control and those existing customers who have lower needs and cramped budgets. While Amazon may take very little alarm business from the rich, it could prove to a major barrier to further growth or expansion of traditional alarm dealers.

1 report cite this report:

Smart Integrators Should Lead With Access Control on Nov 10, 2015
3 years ago, we asked "Should Smart Integrators Lead with Access Control?" pointing out some of the relative strengths of access control and...
Comments (7) : Members only. Login. or Join.

Related Reports

Amazon Ring Public Subsidy Program Aims To Dominate Residential Security on May 20, 2019
Amazon dominates market after market. Quitely, but increasingly, they are doing so in residential security, through a combination of significant...
Amazon Touts Home Security Market Disruption on Oct 15, 2018
Amazon is coming for ADT and all of home security. Indeed, Amazon is advertising this as, in their own words, calling home security a: Inside...
Alexa Guard Expands Amazon's Security Offerings, Boosts ADT's Stock on Sep 21, 2018
Amazon is expanding their security offerings yet again, this time with Alexa Guard that delivers security audio analytics and a virtual "Fake...
Bad Move: ADT Markets Rival Amazon on Aug 08, 2018
Amazon may be lining up ADT as its next victim but ADT is happy to promote Amazon. Amazon has made major moves recently, including acquiring...
Amazon Ring Partners With Rapid Response For $10 Monitoring on Jul 10, 2018
Amazon's Ring alarm system is using Rapid Response for monitoring, IPVM has confirmed in our testing. Amazon is arguably the most feared new...
Amazon Enters Home Security Services on Apr 26, 2018
Move over ADT? It is certainly what investors have feared for ADT, especially since Amazon acquired Ring. [Update: We spoke with Amazon and have...
Amazon Acquires Blink on Dec 22, 2017
Amazon has made their first significant acquisition in the connected home space, buying wire-free camera manufacturer Blink. We examine Amazon's...
Amazon Key In-Home Package Delivery Examined on Nov 21, 2017
Interesting idea or invitation for criminals to rob you? Amazon's recent announcement of Key, a service that will help manage visitors, welcoming...
Amazon Cloud Cam Is Poor (Tested) on Nov 17, 2017
Retail behemoth Amazon has entered the surveillance market with the Amazon Cloud Cam, the eyes of its just-announced Amazon Key delivery...
Amazon Techs Installing IP Cameras Tested on May 18, 2017
In 2015, Amazon started offering video surveillance installation. Now, Amazon has made it a lot easier, with automatic add-on options and...

Most Recent Industry Reports

Access Control Online Show - July 2020 - With 40+ Manufacturers - Register Now on Jul 01, 2020
IPVM is excited to announce our July 2020 Access Control Show. With 40+ companies presenting across 4 days, this is a unique opportunity to hear...
Hanwha Face Mask Detection Tested on Jul 01, 2020
Face mask detection or, more specifically lack-of-face-mask detection, is an expanding offering in the midst of coronavirus. Hanwha in partnership...
UK Government Says Fever Cameras "Unsuitable" on Jul 01, 2020
The UK government's medical device regulator, MHRA, told IPVM that fever-seeking thermal cameras are "unsuitable for this purpose" and recommends...
Camera Course Summer 2020 on Jun 30, 2020
This is the only independent surveillance camera course, based on in-depth product and technology testing. Lots of manufacturer training...
Worst Over But Integrators Still Dealing With Coronavirus Problems (June Statistics) on Jun 30, 2020
While numbers of integrators very impacted by Coronavirus continue to drop, most are still moderately dealing with the pandemic's problems, June...
FLIR Screen-EST Screening Software Tested on Jun 30, 2020
In our FLIR A Series Test, the cameras' biggest drawback was their lack of face detection, requiring manual adjustment when screening each...
Dahua Buenos Aires Bus Screening Violates IEC Standards and Dahua's Own Instructions on Jun 30, 2020
Dahua has promoted Buenos Aires bus deployments as "solutions that facilitate community safety". However, they violate IEC standards and,...
UK Firm Markets False Fever Screening, Hikvision Disavows on Jun 30, 2020
A UK security firm falsely claimed its Hikvision-based thermal solution could be used for "accurately detecting fever in any person", even claiming...
Industry Study: 83% of US Temperature Screening Sellers Falsely Say Not Medical Devices on Jun 29, 2020
83% of US companies selling temperature screening devices, aka 'fever' detectors, claim they are not medical devices, contrary to FDA definition,...
Manufacturers on Virtual 'ISC West' 2020 and Potential ISC West 2021 on Jun 29, 2020
With the 2020 ISC West show now officially canceled, attention turns to Reed's new "ISC West 2020 Virtual Event" planned for October and for the...