The intruder alarm equipment industry has traditionally been driven by two factors, either local legislation and the insurance provider requirements that business owners install intrusion systems or by residential consumers that purchase an intrusion system from a local dealer.

The first is fairly common, regardless of geographical location. Insurance companies have calculated that intrusion systems decrease the number of burglaries, which would cost the insurance company money and so offer incentives such as discounts on their premiums. However the second factor, according to Jim Dearing, is unique to North America – with the exception of Australia. In fact according to the latest IHS Intruder Alarms Report, aggressive marketing of intrusion products to the residential sector has caused the U.S. residential market to reach heights of $500 million per year - comparable to the value of the entire residential market in Europe – a level that is almost unimaginable in other countries.

A standard, fully wired system with a few basic sensors satisfies legislator and insurance provider demands for the commercial sector, while a smaller system is affordable enough to sell to individual homeowners. The foundation of the industry, in terms of equipment sales, has always been one hybrid control panel per installation, one wired keypad installed at the entrance of the building and a few motion sensors scattered around the premises.

Recent developments might threaten the industry’s tranquil low-single-digit growth, however. An influx of new companies has flooded the residential market with new product offerings that emphasise the importance of additional end-user functionality and usability. Consumers can now use their smartphones to log into their home cameras, or to arm and disarm their alarm systems - an age away from the traditional system that end users forgot about once it was installed.

Comcast, Time-Warner, AT&T and other large multi-system operators (MSOs) have also entered the market, selling their own home security offerings to their expansive customer bases, while launching huge advertising campaigns to raise consumer awareness and drive up the overall residential penetration rate. It is not just the residential market that is opting for the increased functionality, however. Earlier this year ADT announced that 49 percent of new small-business and commercial customers were opting for the company’s Pulse system that offers both remote interactive services and video surveillance capabilities.

The sale of products manufactured for these services, including self-contained wireless panels, wireless PIR detectors and magnetic contacts, are forecast to grow at a rate of 7 percent to 9 percent per year, over the next five years. That growth is in stark contrast to their wired counterparts languishing at rates of 2 percent to 4 percent.

Looking further ahead, the rise of building automation will continue to be a recurrent theme in the residential sector. One of the main problems when selling to the commercial sector is that there is no tangible return on investment (ROI) – the value of not being burgled cannot be quantified. It is therefore very common for businesses to purchase the minimum equipment required to meet legislative and insurance requirements and call it a day; however, if a manufacturer could successfully integrate their intrusion system with a building management system – and offer ROI in the form of energy savings or workflow management efficiencies at a competitive price – they could very well go on to become “the next big thing.”

Unfortunately, according to Dearing, the current options available to business owners are also too polarised. On one side you have something like the ADT Pulse business package, offering a few additional video cameras and maybe a thermostat to integrate into their intrusion systems. At prices starting at $99, it is extremely affordable, but it falls short of being able to provide companies with any significant ROI. At the other end of the scale, you have something like the Havel building automation system, which provides complete control over every aspect of a property - from intrusion to HVAC to lighting control systems -- but this system is expensive, which means only very large facilities can realise the savings necessary to justify the cost. Currently there is a complete lack of mid-range products that are affordable and functional enough for mass-market appeal and adoption. Jim Dearing of IHS believes that this is a gaping hole in the market that will surely be filled sometime in the near future – but, he concludes, "the company that will be first to market such a solution remains a mystery."