AT&T Intends to Find Margins in Home Alarm Market

AT&T, the chief U.S. cellphone firm and one of the most renowned companies worldwide, will begin offering alarm Atlanta GA and nationwide to expand its services to look for gains beyond cellphones. It seems to be a tremendous challenge to ADT, home security industry head in the United States.

Several competitors of AT&T, including Comcast Corp. (CMCSA) and Verizon Communications Inc. (VZ), have ventured into the so-called smart-home market. And now AT&T joins them. This move shows these cellphone and cable companies’ requirements for finding sales profits opportunities beyond the slowing wireless-subscriber and pay TV business. President of AT&T emerging devices, said that it’s the perfect time for them to join in, because it’s still a fragmentary industry at present.

This service, which is named Digital Life, allows residents to monitor their houses via cameras and turn on their households remotely by using computers or mobile phones as well as obtain a 24 hours monitoring service, AT&T declared the service today at the International CTIA Wireless event in New Orleans. The technology, which comes from Xanboo, a company AT&T purchased in 2010, makes use of its central control panel to wirelessly connect with home owners’ cameras, lights, thermostats and all the detectors in the homes.

AT&T intends to sell the Digital Life services nationally to anyone with a fast Internet connection, beginning with a trial this summer in Dallas and Atlanta. AT&T didn’t say what its Digital Life service would charge.

As the present greatest home alarm monitoring firm, Tyco International Ltd. (TYC)’s ADT unit dominates the home alarm monitoring industry and the volume of Tyco’s security-solution business sales reached $8.63 billion last year, according to Bloomberg data. ADT sells its security and home alarm monitoring package for $50 per month with a $200 installation fee. Verizon sells this for $220 with a $10 monthly fee. But in some other small home security companies, they make their prices much lower than them. For example, a smart home automation package from Atlanta security company only sells for $45.95 per month with a $49 installation fee.

Despite the fact that there’re a variety of home alarm companies in the marketplace, AT&T owns the advantage of its simplified user controls and technology to let users handle the system via the Internet or cellphones no matter where they are. The new system can be a great leap for AT&T as well as the world market.

Since nearly every adult in America has already had cellphones, and just one in five houses have home alarm systems, the incentive for AT&T is to try to win a market share that still has plenty of room for growth.

Bloomberg data also shows that operating profit at AT&T’s wire-free business was more than 24 percent while it’s less than 16 percent for Tyco’s security-solutions unit. This may imply that one challenge that AT&T has to face is to provide the service without sacrificing profit margins. Atlanta based AT&T is showing more ambition with its stated target of selling nationally, rather than sticking to its home alarm monitoring services in Atlanta, as Verizon does. As the president Lurie said, they have been assessing this profit issue for a long time and AT&T’s Digital Life doesn’t harm the profits. They have faith in growing profits in this security field.