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January 2018 www.SecurityInfoWatch.com / Security Dealer & Integrator 41 have or are pulling out, so a caution flag is out for other potential entrants," Barnes points out. "I would think there are many large companies still looking at our indus- try," says former ESA President John Knox, President of Life & Property Security Systems Inc. "On paper, the RMR looks good for business; the problem is it requires a lot of hands-on work to maintain. Mid-size and smaller companies still have an advan- tage in customer care and service." In all, it seems the traditional alarm dealer business is being assaulted from every conceivable angle. is is having both a positive and negative effect on M&A; in the market, which is projected to continue in 2018. "e drivers of the market – such as availability of capital, well-estab- lished consolidation synergies, strong industry dynamic and potential new entrants looking for a pathway into the market – are intact," Barnes says. "ere is plenty of liquidity, with buy- ers for those that want to sell, and sellers for those that want to buy. e number of deals being consummated in today's market is driven more by the width of the bid/ask spread – sellers continue to expect and demand high valuations, while buyers are becoming more conservative." ■ » Paul Rothman is Editor in Chief of Security Dealer & Integrator (SD&I;) magazine. Joel Griffin is Editor in Chief of SecurityInfoWatch.com. entry opening for large players, they have also created a vast opportu- nity for most traditional residential security dealers. "It appears that the capabilities (of smart home products) are get- ting ahead of the defined preferences of consumers – this creates plenty of opportunity for security dealers to continue their function of helping the consumer decide, and getting (and keeping) the system up and running," Barnes explains. "e most successful players will be those that can take the capability and complexity and translate it into easy-to-understand, access and use offerings. "It is interesting to see the configu- ration Nest chose for its latest offer- ing – the focus is on friendly, usable, approachable technology," Barnes adds. "Security dealers need to differ- entiate by emphasizing those aspects of the service that require more of an expert, personalized, and local capabil- ity in order to be most effective." Meanwhile, large MSO players (i.e., cable and telecom companies) on the services side continue to enter this industry – the latest being Bell Can- ada, which added more than 100,000 home security subscribers in Novem- ber with its acquisition of AlarmForce. Another major player, Comcast's Xfinity Home, reported its millionth residential security customer in April. "While Comcast and Cox have had good success, Verizon and now AT&T; for both DIY and traditional security companies to be successful," DeMarco adds. "Although the traditional secu- rity dealer is far from becoming extinct, DIY providers are forcing them to rethink their go-to-market strategies. Consumers have more options than at any time in history, and this means traditional dealers need to figure out how to deliver a powerful and low-effort experience for their customers." Renowned industry analyst Michael Barnes, founder of Barnes Asso- ciates Inc., a consulting and advi- sory firm for security alarm compa- nies – which hosts the annual Barnes Buchanan Conference Feb. 8-10 (www.barnesbuchanan.com) – sees DIY as an opportunity for the industry. "Any alarm system sale is good for the industry," Barnes says. "e more end-users engage and learn about the features and capabilities of today's technologies, the better. e DIY play- ers are another group promoting the use of systems, and I think the rela- tively low penetration rate in the con- sumer sector is as much about a lack of sales and marketing effort on the part of the industry as it is a statement regarding consumer demand. Many of these products are good 'gateway' sys- tems – that is, a low-cost, easy-to-ac- cess way to learn about the benefits." As much as smart home technol- ogies have created a sizeable market Nest's move into the DIY security space in 2017 is seen by some analysts as a great opportunity for the industry. Security dealers need to differentiate by emphasizing those aspects of the (smart home) service that require more of an expert, personalized and local capability in order to be most effective." — Michael Barnes, Barnes Associates Inc.