Who Will Own the Home Cybersecurity Market - Security Dealers, Home-Automation Pros, Comcast?
If traditional home-automation integrators don't get into the network-security business, it will be grabbed by companies like ADT, Comcast/Xfinity, Best Buy/Magnolia and a host of other competitors eager to own the smart home.
Some entity will come to own the business of residential cybersecurity, network monitoring and remote managed services, but it’s unclear who that might be. It could be big home-security dealers or central monitoring stations like ADT, commercial IT managed service providers like Accenture, cable companies like Comcast/Xfinity, electronics superstores like Best Buy/Magnolia, DIY networking companies like Eero or possibly, just possibly … home-automation integrators, aka the "CEDIA channel."
“Who will own the network-security business?” was a big topic of discussion at the recent ProSource conference attended by 60ish companies comprising the most accomplished home-technology integrators in the U.S.
Three themes emerged from those discussions:
- The most promising opportunity for recurring monthly revenue (RMR), which has evaded integrators for so long, will be network-security with remote monitoring. Consumers will pay for that. They have not shown a propensity to pay for remote diagnostics or other services related to network monitoring. It has to be about cybersecurity.
- Eventually, there will be network-security experts pitching managed services to home owners … all over the place. “So be that guy.”
- You’re already touching the network, exposing yourself to liabilities for breaches, so you may as well take over (and charge for) the network’s ongoing security.
For its part ProSource, a community of more than 600 dealers in three categories ranging from smaller integrators to industry giants, plans to launch a network-monitoring and tech-support service for dealers and their clients.
Using devices from Domotz and Ihiji at customer premises, ProSource will use a third-party provider such as PlumChoice or Trusource Labs to monitor users’ networks and provide tier-one tech support for the end user.
At launch time later this year, cybersecurity won’t be a part of the offerings, but ProSource suggests it could be a natural extension of its initial service.
In round-table discussions about network security (and RMR), dealers wondered aloud if security providers like ADT, or cable providers like Comcast/Xfinity, would capture residential customers with cybersecurity protection, and then become the de facto “integrator” for smart-home solutions.
Commercial Cybersecurity Analogs
In the commercial integration realm, experts warn that dedicated managed services firms are grabbing the network-security business and the associated RMR … after the alarm dealer or systems integrator leaves the premises.
In a panel discussion at the PSA TEC Panel last month, Chuck Wilson, executive director of the commercial-integration association NSCA, recommended integrators either have a full-time cybersecurity expert on staff or outsource one on a regular basis.
Matthew Rosenquist, cybersecurity strategist for Intel, said the need was urgent.
“Expect your customers to ask for it today,” he said during the PSA panel. “It is critical not only to have cybersecurity professionals on staff or as a partner, but also to make sure they are constantly trained because IT and cyber are moving so fast.”
David Sylvester, president of the physical-security M&A firm 3SE, echoed the sentiment: “Systems integrators have their foot in the door already but have to step up to the challenge where cybersecurity is concerned.”
Security/systems integrators might as well step up their game. They’ll get blamed for network security breaches anyway. When polled during the PSA session, the majority of attendees said end users likely will hold trades accountable for cyber attacks.
At the ProSource conference, home-technology integrators feared as much. The bane – and the benefit – of owning the network is the potential blame for breaches. You might as well go the next step and get paid for it.
Chicago-based Premiere Systems, a ProSource member, gives clients no choice in the matter. Principal Robert Anderson says they walk away from customers who won’t invest in rock-solid networking gear (Cisco Meraki in his case) and at least $500 per year for network monitoring and maintenance.
Network Security and the Opportunity for Integrators
Both ProSource and HTSA, another network of home-technology integrators, featured network-security experts as presenters during their respective conferences.
At ProSource, Ihiji’s Michael Maniscalco shared security best-practices with dealers, and urged them to take on the role of network-security specialist for their clients.
“Our industry needs to do a better job of protecting them, or how are we any different from the big boxes?” he says. “Adjust your business model. Look more like an IT guy or managed service provider.”
He says integrators are in a great position to sell enhanced firewalls, security appliances, regular network audits and firmware updates.
He noted the nascent “security appliance” category that includes such products as Cujo (exhibiting at CEDIA 2017) and Bitdefender, both of which monitor the network for anomalies in IP traffic. (Other related products include BitCircle, Dojo Labs, Luma, Daplie, PFP Keezel and F-Secure Sense. DIY networking devices like Eero also include some security provisions.)
Maniscalco suggested that these consumer-oriented devices “probably aren’t ready for clients today,” but notes that these types of solutions are “something you can actually sell.”
CE Pro knows of at least one solution launching at CEDIA in September that takes these DIY devices up a notch, providing end-to-end network security not just for network devices (routers, WAPs, computers, etc.) but smart-home devices as well, including home-automation systems and connected devices.
At the spring HTSA conference, an “ethical hacker” from SonicWall “scared the heck out of me,” said David Young, principal of St. Louis-based The Sound Room.
He thinks home-technology integrators could – and should – be the ones known by consumers as the network-security specialists.
“I think after every hacking episode, we can be the ones they go to,” he says. “It gives us a competitive advantage.”
The founders of HTSA member company Audiovisions in Southern California concur. Terence Murray refers to the “security awareness” company KnowBe4 as a potential partner. The firm offers end-user training on security best-practices, and periodically tries to “hack” clients to ensure they are keeping up with the protocol.
KnowBe4 has a partner program. Could one of the industry buying groups or associations offer such a service to members?
Murray’s partner Mark Hoffenberg says cybersecurity packages would be sold as part of a complete home-technology package, but the security angle could definitely open doors.
Potential Partners and Competitors in Network Security
As mentioned above, integrators worry if they don’t take on network security … someone else will, and those players could take over the entire smart home.
Here are some likely candidates for the job:
Security (Alarm) Companies. So far, there doesn’t seem to be a digital-security play among the major alarm providers, but we can bet that ADT and the others will tackle that business.
At the same time, there’s no move yet among central monitoring stations like MONI, COPS or Rapid Response to add network security to the things they monitor. Certainly that would be an interesting offering for a service (professional alarm monitoring) that is under siege.
Cable companies. Comcast/Xfinity isn’t quite there yet, but they will be soon. Integrators should be afraid. The cable giant now owns the SHaaS (smart home as a service) platform that used to be Icontrol, and they just launched Xfinity xFi, a cloud-based service for home-network management.
While Xfi is a self-monitoring solution, there’s no reason Comcast couldn’t offer professional monitoring in the future. It would be a nice adjunct to their Xfinity Home security and automation business, which already has about 1 million customers who pay at least $30 per month for the service.
Channel-oriented remote-monitoring providers. Domotz, Krika, Ihiji, Pakedge (Control4), Luxul (Legrand), SnapAV (OvrC), FireFx and others offer remote network-monitoring solutions to home-technology pros today. They could certainly sniff out anomalies in IP traffic and throw up a firewall if something wonky is going on. We should see something like this at CEDIA 2017.
We suspect any of these companies, SnapAV in particular, could and will offer a service for 24/7 professional network-monitoring.
DIY network device manufacturers. It wouldn't take much for the aforementioned makers of DIY network-security devices -- Cujo, Bitdefender, Eero, et al -- to provide a more robust cybersecurity service. It would be nice if they partnered with the home-technology channel to deploy such a service.
Best Buy. One of the last remaining big-box electronics retailers, Best Buy could come in with a digital-security service via Geek Squad and/or Magnolia. Magnolia recently launched the Magnolia Care service plan and consumer-facing Mag Care app for network monitoring and remote support, powered by Domotz.
As with Comcast’s Xfi, the MagCare app provides parental controls and network-security alerts, but doesn’t do anything to thwart cyber attacks. Yet.
Tech-support companies. Companies like PlumChoice, TruSource Labs, HelloTech and others wholesale their end-user tech-support services to home-automation firms like the Z-Wave Alliance and Savant. These companies should have the wherewithal to provide professional network monitoring, as well.
Commercial IT giants. Cognizant, Accenture, IBM, Wipro, Del, Infosys … they’re some of the top IT managed service providers in the world for commercial networks. Do they dare enter the residential market?
Local IT specialists. This is just me talking, but I envision a bunch of mom-and-pop cybersecurity companies popping up around the country. Home-technology integrators could be "that guy."
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Julie Jacobson is founding editor of CE Pro, the leading media brand for the home-technology channel. She has covered the smart-home industry since 1994, long before there was much of an Internet, let alone an Internet of things. Currently she studies, speaks, writes and rabble-rouses in the areas of home automation, security, networked A/V, wellness-related technology, biophilic design, and the business of home technology. Julie majored in Economics at the University of Michigan, spent a year abroad at Cambridge University, and earned an MBA from the University of Texas at Austin. She is a recipient of the annual CTA TechHome Leadership Award, and a CEDIA Fellows honoree. A washed-up Ultimate Frisbee player, Julie currently resides in San Antonio, Texas and sometimes St. Paul, Minn. Follow on Twitter: @juliejacobson Email Julie at firstname.lastname@example.org
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