2014 SECURITY INDUSTRY LANDSCAPE Laura Stepanek, SDM Editor Securing New Ground – 2013

SDM = The Security Channel Published since 1971, SDM provides management and technical professionals with a comprehensive overview of the security channel marketplace – in print, online and in person.

‘The Channel’ According to SDM

SDM Research SDM Subscriber Market Forecast Study Mail-out and Web-based survey conducted among SDM’s subscribers that are installing-based businesses, measuring revenue and other business conditions. Conducted annually since SDM 100 Report A ranking of the industry’s 100 largest electronic security firms in the installation, service and monitoring business, ranked by RMR and other results. Conducted annually since SDM Top Systems Integrators Report A ranking of the industry’s 100+ largest security systems integrators, ranked by North American systems integration revenue. Conducted annually since 1996.

The Landscape: Top 3 Factors Affecting Sales SDM subscribers were asked: ‘Check three factors you feel will most significantly affect sales of security systems by your company in 2014.’ 78% ECONOMIC CONDITIONS (compared with 77% in 2013) 47% CAPITAL SPENDING BY BUSINESS (compared with 46% in 2013) 43% CRIME (compared with 40% in 2013)

Sales up 38% in 2013 Mean sales per-location 2013: $2,182,678 25% of people participating in the 2014 SDM Subscriber Market Forecast Study indicated their 2013 sales would be less than $100, % of people participating in the 2014 SDM Subscriber Market Forecast Study indicated their 2013 sales would be $1 million or more.

The Landscape: Major Challenges to Channel Companies SDM subscribers were asked: ‘Check three factors you feel will be major challenges to your company in 2014.’ 55% INCREASING SALES (compared with 48% in 2013) 36% PROTECTING PROFIT MARGINS (compared with 39% in 2013) 29% COMPETING EFFECTIVELY (compared with 30% in 2013) Inability/difficulty obtaining credit 2012: 10% of respondents 2013: 2% of respondents

Toughest Competition for the Channel Google “do it yourself security” 214,000,000 results

Growth Among Channel Companies 2012 Revenue Among SDM Subscriber Market: $43.6 billion This was 0.7% below Preliminary results from SDM’s Subscriber Market Forecast indicate a 9.9% increase in 2013… with projections for a 12.2% increase in 2014.

Company Revenue by Type of Product

Company Revenue by Type of Service

RMR Performance in the Channel Survey respondents were asked: Approximately what will be your recurring monthly revenue (RMR) – generated by this location – on Dec. 31, 2013 and 2012? 2013 Mean RMR: $58,986 Median RMR: $10, Mean RMR: $55,955 Median RMR: $9,000

Composition of SDM 100 TOP 10 SECURITY DEALER FIRMS: ADT * Tyco Integrated Security * Protection 1 Monitronics Int’l * Vivint * Stanley Security Slomin’s * Diebold Security * Vector Security Guardian Protection Services RMR range of SDM 100 firms in 2012 was $252.5 M to $191 K. RMR range of SDM 100 firms in 2012 was $252.5 M to $191 K. Grew RMR 16% in Grew RMR 16% in 2012.

RMR Growth Among SDM 100

Average Monthly Monitoring Prices Median monthly monitoring price: $25

Average Installation Prices: RESIDENTIAL Mean: $1,957 Median: $1,200

Average Installation Prices: NON-RESIDENTIAL Mean: $3,474 Median: $1,100 Mean: $395,766 Median: $25,000

Strongest Sales Potential in 2014: Video SDM subscribers were asked: How would you rate the potential for sales in 2014 in each of the following markets? (On a scale of 1 to 5, where 1 = poor and 5 = excellent)

Equipment Spending Outlook These are the top 5 equipment categories in which dealers and integrators expect to increase their spending in Video surveillance/CCTV 2. DVRs/NVRs 3. IP-network-based video equipment 4. Monitoring 5. Intrusion alarm systems Note that 4 in 10 survey respondents expect their spending on video surveillance to increase by more than 10 percent.

Markets Expected to Offer the Best Growth Top 3 Residential: 1. Middle-market homes (existing) – 47% 2. High-end homes (existing) – 20% 3. New construction (custom-built) – 18%

Markets Expected to Offer the Best Growth Top 5 Non-Residential: 1 Education: schools, colleges, universities 2 Commercial office space 3 Retail 4 Hospitals, healthcare 5 Government facilities 6 Industrial, manufacturing, distribution

2014 SDM Subscriber Market Forecast The new SDM 2014 Subscriber Market Forecast contains much more detail including installation pricing, service pricing, operational practices, expected spending on products and more. Please watch for SDM’s January 2014 issue for the full report.

Renewathon Results in Donation to AIREF SDM magazine launched our first ever Summer of 2013 Renewathon this past June. Through a series of ads in the magazine, renewal reminders, e-newsletter links and cooperative efforts with outside partners, we guaranteed a donation of $0.50 to the Alarm Industry Research & Educational Foundation for each renewal or new subscription processed as part of the Renewathon. We’re pleased to announce that we will be presenting a check to AIREF for more than $1,200 later this month at ISC East.

SDM Congratulates 2013 Systems Integrator of the Year G4S Technology