According to Blake Kozak, prinicipal analyst at IHS, the significance of the security packages from Amazon is less about what they offer today, but rather the foundation they lay for the next 12 months. The current packages are an enhancement to Amazon’s in-home consultations, which have been available since mid-2017. Moreover, these packages appear to include battery-operated devices only. This means outdoor wired cameras will not have the power cord pulled through the wall and doorbells will not be hardwired into mains power. As described by Amazon, the process of consultation and support (installation) is provided in two separate appointments. The description of the appointments suggests that more advanced installations could be available because pricing is based on the time it takes to install the devices, which can vary if customers add devices to the package offering.

In its current format, the Amazon service will not likely impact professional security providers such as ADT or Vivint, as there is no panel and the ability to arm and disarm the security system is based purely on the use of Alexa and a mobile device. If Amazon were to add key fobs and a keypad (such as the Nortek panel that comes with the Samsung Smartthings ADT Home Security Starter Kit), and keep the monthly professional monitoring fee under $20, then this service could bring about significant disruption in the professional alarm market.

Another gap in the Amazon offering is the lack of continuous access to a security professional. The actual installation of the security system is not the biggest value that security service providers offer; rather, it’s the peace of mind knowing that a professional truck roll to your home is just a phone call away. With Amazon, once the two appointments are complete, the consumer may have to spend another $99 to have an Amazon specialist come to the home.

Where the value of the new Amazon service shines is in the total cost of the “smartest” package offering. At $840, this package includes a siren, motion sensor, two contact sensors, Amazon Dot, video doorbell, security camera, waterproof speaker, air-quality sensor, smart home hub (Wink), outdoor motion light and motion LED spotlight.

In comparison, the new Samsung Smartthings ADT Home Security Starter Kit costs $500 (full MSRP) and includes a security panel (built-in Smartthings), motion sensor and two contact sensors. It doesn’t include installation or monitoring services. Since two of the biggest barriers to smart home adoption are price and education, the new Amazon service has great potential. Plus, there is talk in the professional security industry about how millennials are less concerned with UL certifications and 24/7 professional monitoring. This means that professional security providers may find it difficult to compete with Amazon’s price point, especially if they continue to provide only UL-certified products by licensed professionals.

Kozak believes that overall the bottom line is that in their current format, the security packages being offered by Amazon will not likely take a lot of business away from professional security providers. However, if a keypad, key fob and highly competitive remote monitoring pricing are added to the security packages, then the professional security market will be in for significant disruption due to the price point and devices offered.

With its current offering, Amazon is taking the in-home consultation to the next level by drastically reducing the learning curve that is needed to get into the smart home market; still, there will be some gaps for consumers who want professional service support and professional monitoring.

Perhaps the news of Amazon increasing Prime membership fees from $99 a year to $119 a year will allow Amazon to not only enhance delivery services and original media content, but also offer additional smart home monitoring/device services at a much lower cost than the rest of the market. Although not all 100 million Prime members pay the full rate, the price hike could mean more than $1 billion additional funds each year. Just the additional revenue from the $20 increase will equate to about 30 percent of ADT’s total revenue.