I hope no one is still in Alarm

http://www.businessinsider.com/amazon-ring-acquisition-smart…

Amazon’s Acquisition Of Ring Points To Smart Home Security Focus

…Amazon has agreed to purchase Ring, the Santa Monica-based video doorbell manufacturer, according to GeekWire. Neither company confirmed the final acquisition price, though Recode reports the e-commerce titan paid somewhere between $1.2 billion and $1.8 billion.

That would make it Amazon’s second-largest acquisition ever, behind only its $14 billion deal for Whole Foods last summer. It’s still unknown when the companies expect to finalize the acquisition.

The deal comes only two months after Amazon bought smart camera and doorbell manufacturer Blink, and it reportedly expressed interest in smart lock maker August, indicating that the e-commerce titan’s honed in on the smart home security market. Blink and Ring together give the company a portfolio of internet-connected indoor and outdoor cameras, video doorbells, and battery-powered smart security cameras that it can sell through its e-commerce marketplace.

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Thanks for bringing this to our attention. Is there any limit to what Amazon can take over? I’m beginning to wonder. I do own a small position in Alarm. I guess I should probably sell it and deploy the money elsewhere. I never even thought of Amazon ever being a threat. Frankly, I’m beginning to find Amazon’s continued expansion and crushing of competitors to be very annoying and concerning. It’s like the giant blob in those old horror movies.

At what point does Amazon become an overly diversified conglomerate?

I happen to own some AMZN too and wish I had bought more.

dave

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The working thesis - I believe - is that home security could become an offering to Prime Membership, disrupting the ADP and Brinks business model of expensive components and expensive monthly fees and being able to socialize the costs across prime subscriptions to ward off Google Nest plays into a similar space.

I’m not unconvinced that Alarm.com isn’t an acquisition target, but it becomes very hard, very quickly, to compete with Amazons pricing platform through its Prime platform.

But would AMZN want to staff the 24/7 staffing, etc - or simply - acquire and leave that function in place with an acquisition? That’s what makes me lean towards an acquisition that brings a customer base and support system, with Amazon taking over pricing of services and selling of products.

Just my speculation

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AMZN wants to own the home with Alexa and now home security. Google is after the same target market with Nest.

Rob

So who has the best system? Seriously. I make enough enemies in the real world. I guess I enjoy thriving in world that knocks most others down and thus creates a lot of people who dislike me for just doing my job. I am so much of a kinder, gentler, fuzzy teddy bear type on line.

As such, for offline use, I have seriously been considering to add to the very effective security elements that my hounds provide, security cameras to my home. Never needed them before, but it appears the better I get at what I do, the more people I strike with the wrong chord.

Anyone have any experience with these systems? So many things to do and research, and I have reached my limit. So appreciate it if anyone has any insight. I am thinking 8 to 10 cameras should sufficiently cover the place, if I wanted coverage inside and out, but I do not even know how that would be allocated.

Thanks.

Tinker

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At least we’re safe with Shopify, where Amazon joined them because they couldn’t beat them.

At some point, the Justice Department / FTC / whatever will probably enforce some antitrust laws against Amazon, but who knows when? Most likely the European Union will do more first.

I can’t remember where I read it, but recently I read an interesting article that argued that even though Microsoft (and others like Apple and Google) didn’t seem to be affected much by the effects of antitrust enforcement, it actually did make a big difference in their behavior and the behavior of many other companies. They generally consult with the authorities when they are planning new features for their software, for instance.

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Tinker, I recently bought a home (here in the insufferable state of California) and did quite a bit of research into the home security and home automation services.

My takeaway was that I wished Google, Amazon, or Apple made a system. Most companies either rely on third party resellers (with aggressive sales tactics and upselling), make you buy their “packages” which are just consumer products sold after significant markups, or have very high monthly fees and annual (or multi-annual) contracts. I ended up deciding to just stick with Cox (who provides internet service and the previous owners had installed) for now until a better system arrives.

If I had to pick one for the long term I would research a highly rated local home security/automation company (many of which also do home audio/video) and just pay the higher cost for a customized system. The monitoring all seems to be relatively similar so it’s a question of what to install and how to do it properly.

Vivint and SimpliSafe seem to be the better newer systems. Vivint sounds better for you since they have better options for cameras. The cable companies seem to be respectfully mediocre but may be cheaper if you already have service with them. ADT, Alarm.com and the like, just depends on the reseller you get.

Nest Secure seems promising but I think you have to piece together things like window/door detectors. But Google seems to have a head start in this arena over Amazon. Though Amazon has been offering “expert installation” of smart home equipment so maybe they are building a network of installers.

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Everything Amazon (Bezos) does, he does with the intention of leveraging current offerings. I imagine the objective here is to further reduce friction for online buying/delivering. By controlling your home security, perhaps they can verify deliveries so you don’t have to physically be in to accept them.

I am aware there are security systems where when the delivery man rings the bell, it beeps your smartphone and you can watch and talk to the delivery man, and remotely open the door for them to drop off the goods/shopping. But what if even this can be automated? Amazon has their own delivery system, which will link up with their security system which is in your home, verifies everything is legit, and allows the deliveryman (or robot?) to enter and drop-off the goods. Seamless and effortless for the consumer.

If this is the end-game, Amazon can offer equivalent home-security for cheaper than their competitors, because they’ll be gaining from increased online buying. Just one idea. I have no idea what the final product will be like. Giving control of your front door to a corporation is not something that will be easily done. It will be a hard sell. But I don’t think impossible.

OT: my experience with home security systems. Having a coffee with a friend in the middle of the day when his phone beeped. The security camera was live streaming the front of his house where we could see a woman walk up the front porch, around towards the back, squat down and have a wee. She then got up and left. We were dumbfounded. Ten minutes later, he got a text from his wife letting him know that a friend with her kids were visiting so not to be alarmed if a stranger popped up on the security camera. Turns out she was desperate for the toilet and couldn’t find the spare key to get inside. Desperate measures. If only the home was Amazon secure with authorisation permitted to specific parties to enter.

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We’ve been with Vivint for about 3.5 years. My wife wanted it for the peace of mind that a security system would theoretically provide, I wanted it for the home automation. We got “free” installation of two programmable wifi thermostats, keyless wifi dead bolt, door sensors, a motion sensor, a heat (fire) sensor, and a video camera.

What I do like

  • The iphone app is great. The ability to add a door code for babysitter, contractor, friend, etc from my phone and be able to change the A/C and heat remotely.
  • I can see the activity list when doors were opened, if the kitchen door was left unlocked, and lock it.
  • It works great with Alexa so I can say “turn down the A/C 2 degrees” or “lock the kitchen door” (you can’t unlock the door from Alexa, for obvious reasons).
  • The functionality of the thermostas from the iphone is also great. The camera was great initially but after about 2 years the infrared stopped working so it can’t see anything with the lights off.
  • We saved a good amount on our utility bills by fine tuning the boiler/AC schedules. You could do this with any programmable thermostat but the wifi option is great for when you’re coming back from a trip or just want to change the schedule remotely because the kids are off school and home for the day.

What i don’t like

  • I have no use for the security system. I can count on one hand how many times the alarm has been on, including one time that i pocket turned it on with my iphone and set it off.
  • The cost at ~72 per month with a 4.5 year contract.
  • Unsure if I can plug into the equipment myself if I end the contract.

Overall I would recommend them if it’s what you’re looking for. If it were just me i would prefer to have all the home automation stuff and leave off the alarm and monitoring system.

Greg

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I am aware there are security systems where when the delivery man rings the bell, it beeps your smartphone and you can watch and talk to the delivery man, and remotely open the door for them to drop off the goods/shopping. But what if even this can be automated?

News from 2021…
Today announced that hackers had stolen door entry codes and street addresses of 10 million homes. The company said that this is more than the previously reported 2 million homes and the data breach included when the homes were empty and occupied and what type of dogs the own, their recent purchase histories and the names and ages of all family members…

No danger here!

Mike

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Wow! The Blob, going back to the 50s. Steve McQueen’s first feature role I believe.

Setting that aside, I don’t expect Amazon to ever sit still so long as Bezos is running the show. They are in the business of building low friction infrastructure for their own business needs, but then the lease it out for others to use. This is just the beginning. Amazon will disrupt the entire home security market. All the vendors do the same thing, they almost give you the equipment, but then make you pay for the installation and sign up for an expensive monitoring contract. I’m willing to bet that Amazon will develop AI monitoring tools and completely upend the business. The AI tools will be more attentive and work better than human monitors and cost way less.

Oh, BTW, they will eliminate the growing crime of Amazon deliveries being stolen off one’s doorstep.

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Saul,

I guess I would push back slightly on whether or not this is a crushing blow for Alarm. I sold because I believed their growth rate would slow eventually, as they didn’t really have anything super compelling that others (Amazon, Google, Simplisafe, etc) couldn’t match. But I don’t know if that means Amazon or anyone else will immediately and decisively steamroll them. It’s interesting to me that ALRM’s SaaS revenue has grown 39%-40% YoY the last three quarters. I expect the growth rate to drop, but they tend to retain their customers strongly. I believe 95%+ of subscriptions renew? Anyway, even if growth gets cut in half, or worse, they’re still making money, and I don’t think the valuation is troubling.

This year operating profit has soared:


Mar Q:  4.5M
Jun Q:  5.9M
Sep Q: 10.4M
Dec Q: 12.6M

If they hold expenses steady (you’d think if they stop growing they could possibly even reduce S&M more), then it’s easy to see how they might make 50M in 2018. Or substantially more with if they can keep up anything close to 39% growth. EPS was 26 cents in the Dec Q. 26 x 4 would be 1.04 for the year. I could easily see 1.25…maybe 1.50. 1.50 would put their fwd PE at 25 currently.

Maybe not a company you or I would choose to own based on the likely future growth potential (they’ll never be a 50 billion dollar company), but still an interesting value play, in my opinion. Not exactly something I’d expect you to spend a lot of time on, but in light of what I’ve written here, I’d be curious to know if you’d agree with that appraisal, or if you think they’re just plain doomed.

Bear

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