Security System Services Industry Overview

Excerpt from Security System Services Report

The security systems services industry in the US includes about 5,000 companies with combined annual revenue of about $16 billion. Major companies include ADT Security Services, Convergint Technologies, Monitronics, and Protection One. The industry is concentrated: the 50 largest companies generate about 60 percent of industry revenue.

Competitive Landscape

Demand is driven partly by home sales, new home construction, and new commercial and office construction. The profitability of monitoring companies depends on the volume of customers, as most costs are fixed. Large companies have advantages of scale in operating monitoring centers and in national advertising and brand recognition. Small companies often compete by selling customer contracts to the large monitoring companies, or reselling the monitoring companies’ services, which they buy wholesale. The industry is labor-intensive: average annual revenue per employee is about $140,000.

Products, Operations & Technology

Major services are the sales, installation, and monitoring of electronic security systems. The industry consists of commercial and residential segments, each of which uses different types of equipment and monitoring. Most companies operate in only one segment. Monitored commercial and residential services each account for about 40 percent of industry revenue; security systems without monitoring account for most of the rest. The main components of a security system are door, window and motion sensors, control keypads, alarms, and communications modules.