European Residential Security Markets: Industry Research Report

European Residential Security Markets

Published Date: December 2006

Published By: Frost & Sullivan

Page Count: 187

Order Code: R1-5691

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This Frost & Sullivan research service titled European Residential Security Markets provides an overview of the trends and revenues in the markets. It provides a description of the key market drivers and restraints. The study also includes strategic recommendations to enable manufacturers and security service providers to gain from the tremendous market potential. In this research, Frost & Sullivan's expert analysts thoroughly examine the following markets: intruder alarms, security services and smoke/fire detectors.

Market Overview

Benefits of Wireless Technology Propel Growth in the Residential Security Markets

With the commercial security markets in Europe approaching maturity, several participants have turned their attention to the residential security markets, which are currently in their development stage. So far, market participants have been unable to exploit the market potential completely. This is due to the vagaries of false alarms, perceived high prices of security equipment and services, as well as the lack of awareness of security products. However, with technological advances, particularly in wireless technology, market participants have been successful in reducing the number of false alarms, as well as providing security equipment and services at competitive prices.

"While security remains the most important driver in the residential security market, the advantages of wireless technology have been a key factor promoting market growth," notes the analyst of this research service. "The markets are also witnessing a trend towards Internet protocol (IP) technology and video surveillance." End users are also demonstrating interest in video surveillance and the integration of home security with building technologies. These factors, combined with growing awareness of the availability of residential security products and increasing confidence in the products are guiding the markets in the right direction.

End User Education Vital for Market Success

As wireless technology has matured, it has found greater application in voice and messaging (such as cell-phones and pagers) devices, hand-held and Internet-enabled devices (such as Internet-enabled cell phones and personal digital assistants), as well as data networking (including WLAN and broadband wireless). The technology enables a quick and easy installation, does not affect the interior of the house, provides reliability and eventually cuts down on the total cost of installation. As a result, end users are displaying a preference for wireless technology. Manufacturing and security services companies have seized this opportunity to promote the technology further. In most regions in Europe, wireless products account for more than 50 per cent of the total new installations and this figure is expected to rise further.

In the last few years of sluggish growth, increased competition and downward pricing pressure, key market participants in the European residential security market have strived to maintain their market share and profitability. However, the most important factor that has restrained market growth is the lack of end user education. Security companies, so far, have failed to change the perception of end users. "In the residential sector, a security system remains a ‘grudge purchase’ and therefore, a speciality product," explains the analyst. "A security product is usually purchased by the owner of valuable property due to the perceived increase in crime or sometimes, on the recommendation of an insurance company." The fact that only 5.5 per cent of homes in Europe are equipped with an intrusion alarm denotes the low penetration level of security products.

Thus, unless end users will need to be educated about the benefits of these products and thereby encouraged to invest in them willingly, security systems are likely to remain a speciality product. Security companies would do well to partner with security associations and local authorities to promote the importance of residential security. In the past few years, competition has increased, followed by market consolidation in the form of mergers and acquisitions. Key market participants, which are multinational companies, have expanded their market share through active acquisitions of specialised companies, as well as distributors to improve their market presence. Overall, market success will rely on innovation, not only in terms of product technology, but also by way of enhanced focus on end user needs and their perceptions on security systems.

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