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Silicon Valley will soon become a massive player in home security

Google security guard
Google security guard

(Paul Sakuma/AP) Google could soon be guarding more than just its campus.

Tech companies like Google and Apple seem like they're trying to do just about everything, from helping you watch cat videos to driving your car for you. Soon, they may also help you protect your house from burglars.

According to a note on home-security firm ADT from Citi, Silicon Valley-backed security systems that are self-installed and self-monitored are going to become the new norm for home security.

Currently, there are three types of home security on the market. The industry giants run traditional professionally installed and monitored systems, like what ADT offers and telecoms such as Comcast and AT&T have begun to roll out. These represent 93% of the home-security market, says Citi.

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The next is self-installed and professionally monitored in which a customer installs the hardware and then pays a subscriber fee to have the house monitored by professionals. This category includes companies like SimpliSafe, Frontpoint, and Protect America. These companies have 4.7% market share.

Finally, self-installed and monitored systems such as Google's Nest and Dropcam or Apple's HomeKit-enabled devices leave it up to the user to set up their home security and use notifications to enabled devices to alert people. For these services there is no human monitoring the home security. They control 2.3% of the market, but not for long says Citi.

Based on research projections, Citi estimates that self-installed and monitored systems will control 34% of the market in five years, with professional system slipping to 61.6%. In the longer term, 20 years from now, these numbers are projected to basically switch with self-monitored systems holding 62.5% of the market and professional services making up 31.3%.

Nest Cam
Nest Cam

(Business Insider / Jillian D'Onfro)

The note offers up a few reasons for this growth, chief among them the adoption by younger consumers. "Younger consumers (under 45 years old) are apt to purchase the equipment from a tech firm or repair store, spend a lot of money ($2500) and install it themselves," said Citi.

This is important, because as more and more millennials begin to purchase homes, Citi seems to think their preference for tech companies and knowledge of smart devices will translate into more self-installed systems.

On the other hand, there are some reasons why there may be some hope for ADT and other professionally monitored systems, at least in the short term.

Citi highlighted two reasons:

  1. "First, connected-home devices still haven’t shed the reputation of being complicated to install and operate. Connecting a smart thermostat, for example, might require installing a home automation controller, installing the thermostat physically, linking the thermostat with the controller, and ultimately learning how to operate the device."

  2. "Second, consumers are sensitive to the steep upfront costs of automating the home a la carte. With the benefit of purchasing services individually as a customer sees fit, comes the inconvenience and elevated expense of assembling a comprehensive DIY security system. Given the expected expense as well as the abundance of devices highlighted below, it may take consumers several years to catch up to the market."

Additionally, many professionally monitored companies like ADT are beginning to offer self-monitored apps and connectivity with hardware such as Nest and others in order to try to capture some of the market.

Based on Citi's projections, Silicon Valley may soon be just as concerned with protecting customers at home as they are when they're online.

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