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ADT Pulse Cost Still a Mystery – But Tyco CEO Gets Something Right

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March 2, 2011
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ADT Pulse Cost Still a Mystery – But Tyco CEO Gets Something Right

Many of you reading this blog know that ADT is actually owned by Tyco International Ltd: the company where I used to work. And the “Security Solutions” portion of Tyco, which includes ADT, represents the lion’s share of Tyco’s revenues. A recent Tyco earnings report and analysis is making the rounds - especially some of the comments made by Ed Breen, Tyco’s CEO. He actually addressed the release of the ADT Pulse platform. But first, he talked about ADT’s commercial activities.

During the subsequent earnings call, Tyco CEO Breen noted that ADT's commercial orders were "surprisingly positive ... double-digit in all regions." And on the fire side, SimplexGrinnell’s orders were up 15 percent, he said.  In both cases, the increase is not due to new construction (not surprisingly) but to an increase in retrofits and upgrades he said. “People are upgrading their electronic panels because there's a lot of new features and software capability. You know, technology, it's got a five year life cycle to it, so in the last three years no one's done anything ... [now, it’s] a lot of retrofit and upgrades."

Homeowners in Last Place

I’ve posted before on my strong personal recollection of how ADT “ranks” their customers by segment for service response priority– starting with national accounts (multi-location chains), then commercial accounts, and finally residential accounts. In fact, this quote from ADT’s own web site sums it up pretty well:

Our National Account Division is comprised of our most experienced security consultants and personnel hand selected to service our top clients on a one to one basis to ensure the highest level of satisfaction.

Pulse Gets a Plug

On ADT's new interactive product, called Pulse, Breen said ADT is signing up customers they believe may not have signed up for a traditional security account. Pulse is currently being sold by ADT's direct sales team now, and Breen said "about 15% of our customers are taking Pulse, and about 85% of them are taking the first tier of the package." After more dealer training, those numbers will pick up, he surmised.

To those of us who follow ADT closely, this is really interesting. As I mentioned in a prior Pulse post on how the product is being rolled out, the ADT authorized dealers that account for half of ADT’s residential sales volume do not have access to the full Pulse product line. And from what we hear on the street, these estimates of Pulse penetration to consumers may be on the high side.

Where We Do Agree

One thing Breen says that makes perfect sense is that interactive monitoring services are attracting new buyers to purchase alarm system that can do more - and that expanded offering is increasing the overall market for integrated security and home automation services. While ADT Pulse may be more expensive and less reliable than other more established offerings (such as Alarm.com), it will command attention simply because ADT has a significant presence in US home security, and will advertise their version of interactive services heavily.

FrontPoint is an excellent example of a company that has been ahead of ADT on interactive wireless home security technology from the day we launched in 2007. We’re proud to partner with Alarm.com. In fact, FrontPoint is the only alarm company in the US that has installed Alarm.com technology in every system we sell. We are also the only US alarm company to use safer cellular monitoring in 100% of our systems – from day one. No wonder FrontPoint is ranked the #1 US alarm company for wireless, interactive home security. FrontPoint and Alarm.com: an undefeatable combination. ADT is still catching up – and is still behind.

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Comments
Alan
March 19, 2011 at 8:39 PM
Peter, thanks for the pulse updates... I'm way behind, but should make some headway here now...
Alan
March 19, 2011 at 8:39 PM
Peter, thanks for the pulse updates... I'm way behind, but should make some headway here now...
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