Alarm system sales up 80% since '86


February 23, 1992|By Ted Shelsby | Ted Shelsby,Staff Writer

Who says crime doesn't pay?

Crime and the fear of crime have turned home security into a growth industry.

Sales of residential alarm systems have risen 80 percent since 1986 and totaled $1.4 billion last year. Looking at the broader market, which includes the protection of commercial and industrial sites, security becomes a $16 billion-a-year business.

The increase in crime is just one of the reasons for the growth in home security systems. A dramatic drop in the installation price of home alarm systems paralleled by a rise in the number of two-income families is another factor.

A home security system that would have cost $2,000 in the mid-1980s can now be purchased for about $300, says Joseph Freeman, head of J. P. Freeman & Co., a Newtown, Conn.-based research and consultant company specializing in home security.

These trends haven't gone unnoticed by the management of Westinghouse Electronic Systems Group in Linthicum, which two years ago created Commercial Systems Divisions to find ways to apply the group's expertise in defense electronics to the development of new commercial markets.

After more than a year's study, Edward N. Silcott, general manager of Commercial Systems, settled on security as a major component of the plan, said Ric Campbell, manager of Security Systems at Westinghouse.

"We saw a very large market with a high growth rate and an excellent fit with our technologies" in communications, radio frequency wireless equipment, marketing and management skills, he said.

Once the strategic decision was reached, two moves made Westinghouse an immediate force in the market. It acquired Schlage Electronics, a well-known company in the commercial security market in Santa Clara, Calif., from Ingersoll-Rand Co. in late 1990. Its customers included the White House, the Taj Mahal hotel-casino in Atlantic City and the Pentagon.

That same year, Westinghouse entered the home security market with the opening of its Security Systems National Support Center, designed to monitor about 250,000 homes, in Las Colinas, Texas.

In terms of the number of security accounts monitored, Westinghouse says it's the fourth-largest company in the industry behind Brinks Inc., ADT Inc. and Network Systems Inc. Mr. Campbell says Westinghouse monitors about 115,000 residential accounts. He expects that figure to be 180,000 by the end of the year, 270,000 next year and 420,000 by 1995.

But being fourth is not good enough for Westinghouse, which is aiming to be the industry leader.

It took another step in that direction last month when it teamed up with a subsidiary of New York Life Insurance Co. in a $50 million plan to purchase home security monitoring accounts from regional companies across the country.

Westinghouse is going to have "a major impact on the industry," Mr. Freeman said. "They have a very aggressive marketing program" and they are the first major company to offer a completely wireless system for residential use, he said.

Most electronic alarm systems, he said, have wiring that runs from door and window sensors to the control box. There were problems with wireless systems when they were introduced in the early 1980s, he said, but the technology has improved a much since then.

Westinghouse is beginning to offer its home security service in the Baltimore-Annapolis-Washington region. It is also looking at this area as the site for its second monitoring station, which could be established before the end of the year.

A monitoring station keeps track of the alarm systems in commercial establishments and homes. Westinghouse says that each station can handle about 250,000 accounts.

Scattering home security electronic devices about the table before him, Mr. Campbell says, "We built this residential business from the ground up. Unlike the commercial operation, we started this business."

PTC He says a basic system -- a control box, three window or door sensors and an infrared motion detector can be installed for $95.

Most people add an extra motion detector, a smoke detector that alerts the Fire Department and an electronic key pad that can turn the system on or off from anywhere in the house that pushes installation up to $300. The customer then pays a monthly monitoring fee of $24.90 a month. Telephone lines signal the monitoring station whenever the alarm is tripped. The monitoring system calls the homeowner to make sure it's not a false alarm before calling police.

Mr. Campbell says Westinghouse plans to offer the service nationally but will omit low-crime states, such as North Dakota, where the company feels it does not pay to even try to sell the system.

But home security sells in high-crime states such as Texas. Florida, with its high percentage of security-conscious senior citizens, is another prime market.

Baltimore's crime rate is high enough to lure Westinghouse into its home market, but Mr. Freeman says "Baltimore is kind of average" when he looks at a list of high crime areas.

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