Lowe's Selling Alarms DirectBy: Ethan Ace, Published on May 23, 2012
Should RMR junkies start worrying? Home improvement giant Lowe's is entering the home automation and security market, selling equipment directly to users in-store, with low-cost or free monitoring services. In this note, we overview the offering and the potential impact it may have on dealers and the overall industry.
Lowe's has entered into an agreement to resell products from British automation manufacturer AlertMe in the US market, directly to end users, beginning in Q2 2012. The AlertMe platform uses a central controller, called the SmartHub [link no longer available], which connects to the internet via broadband, with wireless connectivity to devices in the home, seen here:
A variety of automation and security devices [link no longer available] are available, including door/window contacts, motion sensors, IP cameras, and "SmartPlugs", used to monitor and control appliances.
All functions of the system are controllable via the internet, through a cloud-based service, or via free iOS mobile apps. Users may view security status information, electricity usage, and live camera feeds via these interfaces.
Prices for the US release are currently unknown, but will likely be similar to current AlertMe products. A starter kit with the hub, motion sensor, magnetic contact, two keyfobs, and a pushbutton is available for £149 GBP, about $230 USD. Additional security devices (contacts, motion sensors) are £25, about $39.
AlertMe's current monitoring service is self-monitored only, with alarms reported only to the user, not a central station. Some users may not mind this configuration, as mobile devices are common and users may be available to receive and respond alarms in most cases. However, many users prefer the peace of mind of professional central station monitoring, or may not be readily available during vacations or sleeping and working hours, making other options more attractive.
Monthly monitoring service currently sells for £4.99 per month, about $8. Pricing for the Lowe's Iris service is not yet available, but according to one interview with a Lowe's VP/GM, the service is expected to be free.
US Market Impact
Free or reduced-cost service provided by Lowe's could have massive impact on the residential alarm market. Most residential systems subsidize the costs of equipment, partly or fully, with recurring monthly revenue from monitoring contracts, often with 2-3 year terms. If Lowe's should sell this equipment directly to end users, with free or even low-cost monitoring service, many DIY-prone homeowners may decide to go this route, disrupting revenue streams of incumbent vendors.
False alarms have historically been one of the biggest issues in the alarm industry, and this move may exacerbate the problem. When false alarms plague even professionally installed systems, placing equipment and installation directly into the hands of end users with little experience or guidance will likely only make things worse. Lowe's may offer installation through their services division, just as they do for electrical, plumbing, and other needs, but this is so far unknown.