ADT News

ADT’s Don Young On The Smart Home Security Market

August 18, 2021 at 3:00 PM EDT

By: ADT Staff

Don Young

 

We spoke with Don Young, Executive Vice President and Chief Operating Officer of ADT, ahead of his executive Q&A on Aug. 18 at Parks Associates Connections-US virtual conference to get his insight on the state of the smart home security market.  Don recently was named ADT’s Chief Operating Officer after serving as EVP and Chief Information Officer of ADT.  Additionally, Don serves as the executive sponsor for the ADT Veterans business employee resource group and as the current president of The Monitoring Association.

John Williams: In a few words, describe the state of the home security market today.

Don Young: I’d say it’s growing. Becoming more effective, relevant/resonating. It’s becoming more complex yet more simple at the same time. There are so many single products that are great at one thing -- but gluing them together is the new challenge.

JW: What are the most significant issues that are advancing the home security market?

DY: Right now, the biggest opportunity for our industry is how to respond to emergencies with more intelligent information and data. We all know there’s a big issue with false alarms, but this problem is tied to mostly individual data points from single sensors (i.e., door contacts, motion sensors, etc.). But as the smart and connected homes proliferate, we have way more data points that can dramatically improve our ability to correctly assess the situation and give better information to first responders.

JW: What are the most significant issues that are restricting the home security market?

DY: I think the biggest issue is balancing the equation between convenience and privacy. If customers don’t opt in, then it’s hard to produce more data. They need to trust that their data is being used appropriately. At the same time, all providers need to up their games on security and privacy and how we communicate that to the customer. Customers have to know – and trust – that we will take care of their data.

JW: What are some trends with consumer adoption that we should be aware of? What’s important to them?

DY: As I mentioned before, adoption is all about the convenience/privacy balance. We collect and use data in ways people anticipate, and we’re clear that we take information for the purpose of providing convenience services; it’s expected. Interestingly, we see a big difference in adoption between generations. The younger generation is more willing to accept convenience and smarter security in exchange for use of their data, which is necessary to provide the benefit. But the older generation often won’t. As providers, we have to find a way to meet in the middle - for now. That’s because, over time, privacy will be less of a concern as the new/next generation becomes the consumer majority. We believe that people will want to manage things in their home more easily – and if that means trading some privacy, they will likely do it.

JW: What are ADT’s most interesting developments that we can look forward to?

DY: There’s so much going on at ADT now it’s hard to cover it all. But broadly speaking, we segment our efforts in three areas: Connect & Protect; Smarter Security: and ADT Anywhere. Connect & Protect is our core – bread and butter – services. Complete protection for home and business backed by nearly 150 years of experience in the space. Smarter Security covers our in-house and back-office innovation, our partnership with Google, and investments/acquisitions of companies with leapfrog technologies in AI, machine learning, etc. And ADT Anywhere encompasses our products and services that put the ADT yard sign in your pocket via our mobile connections.

JW: Can you be more specific about what ADT is doing in those areas?

DY: We’re working on developing our own platform that will give us more control over the products, services and experience we’re able to provide to ADT customers.  We’re optimistic that by fully owning this aspect of our service, and the partnership we’re advancing with Google, that many of the what-if’s surrounding the promise of a truly integrated smart home security experience will become reality, particularly when we think about creating a friction-less, helpful and secure customer journey.

False alarm reduction - and the opportunity to improve not only customer protection but community safety - is incredibly exciting for us. We’re eager for the ratification of a new, modern alarm scoring protocol to come soon, which ADT has been developing and strongly advocating for alongside our industry’s most important trade organization for more than a year.

Not least, we’re deeply committed to the belief that everyone has the right to feel safe, and that right doesn’t stop at the front door of your home. Mobile protection, or what we refer to as having ADT Anywhere, has been well-received and integrated across our services, including personal wearables, mobile apps, integrations into popular ride share services and gig-economy delivery service apps. Practically anywhere you can have a data connection, ADT can help protect you and the things that matter most using our national network of professional monitoring centers and our deep relationships with police, fire and emergency services.

JW: Is there still a role for professional installation in the home, or will it be replaced by DIY?

DY: I think most would agree that the original thinking was that there would be hard segmentation, with DIFM giving way to DIY. But guess what? We’re actually seeing the emergence of a third option – DIWM – or “do it WITH me.” Call it the Goldilocks of home security if you will. But what many customers want is the ability to do the non-technical parts of the install themselves but call us up when they have questions about how to configure the device correctly, so it delivers for them. We’ve already split out 500 agents for DIWM service.

JW: How do you see the role of professional installers and technicians evolving in the coming years?

DY: There are some in the industry saying we should change their name to something more like “activation specialists” especially for us as we pivot to showing customers how our app can be used rather than the art of installing devices. As we develop our own platform, this transition should accelerate. That said, there is still plenty of “traditional installer” work for the foreseeable future. On the service side of the business the transition will take longer given all the legacy systems.

JW: How important are interoperability standards like Matter?

DY: In short, standards like Matter are critical for the long-term success of our industry. I’d also put Net Neutrality in that bucket too, even though it’s not technically a standard. Our customers have to have reliable access to bandwidth. But perhaps the focus for our industry is the work around the AVS-01 alarm scoring standard. This is a massive change from the existing standard. The new standard scores alarms as a 1,2,3 vs old way of treating them all the same. In this way, we can dramatically reduce false alarms while also prioritizing response to those alarms. Achieving the roll-out and adoption of this standard is good for customers, police and fire departments and our communities at large, when critical emergency response goes to true emergencies.

JW: How important is monitoring and response, overall, to today’s customer?

DY: That’s an existential question! I think for certain customers, and those who choose ADT for peace of mind – just knowing that you’ve got someone looking over you who can help you in an instant – that’s valuable. And for many, if not most of our customers, that’s the primary value proposition right there. That said, with new technologies, connected homes and smart devices and sensors, we have an opportunity to create a new value proposition. We can move from response to prevention, or prediction. By that I mean we are envisioning things like letting you know that your child didn’t come home at 3:30 like they normally do. Or automatically closing the garage door if it was left open when you left the home. Or shutting off lights and/or automatically setting the alarm once you go to bed. Many smart home customers appreciate this level of integration and convenience, and we believe connecting and protecting is the next frontier in home security.

JW: I want to go back to something you said about your focus. Let’s talk mobile apps or “out of home” developments. Does this represent a big opportunity for the industry?

DY:  I am huge fan of mobile security. For one, it allows our customers to have that peace of mind wherever they go. Like the commercial says, “You are free to move about the country.” Just knowing that you can tap the app or a button in your pocket and get help is a huge benefit. And for many of our customers, this gives them the confidence to try new things and go new places.

But you know who else benefits? 911 call centers. As we all know, our 911 centers are nowhere near able to help all the people who call, and they have to differentiate between what is a real emergency and what isn’t. In many ways, this is because not every situation needs a police response. Maybe someone is feeling nervous, but they don’t feel threatened. So, they can engage with a trained ADT monitoring agent who can help assess the situation – or even just stay on the line or text chat with that person until the uncomfortable situation passes or escalate immediately it if it evolves into a need for police.

In this way, we can help reduce the number of unnecessary 911 calls, or in some cases do basic due diligence on situations so that if 911 is needed, we have good information to share, including active GPS location.

Our apps are in use not just by consumers but by gig economy workers. You’d be amazed if you saw what we see from these folks. They get pulled into very difficult situations – from domestic violence, to suicides, to medical emergencies.

Few, if any, are trained as EMTs. Few, if any, are schooled in the arts of de-escalation. Few, if any, are equipped to deal with making split-second decisions that could save a life. We ask a lot of these people in the service of our convenience. Safe by ADT, our mobile safety platform, provides that additional layer of security and emergency response to reduce the risks that these workers face in their daily lives.

So yes – I think the out-of-home market is one of significant opportunity for our industry.

JW: Last, as the world still faces challenges from COVID-19, what should the industry be thinking about?

DY: Work from home. What started as an emergency response to the pandemic has fundamentally changed how we staff and house our call center personnel. Going forward, we expect the vast majority of our call center team may be able to work from home. We’re changing our business model to adapt. While other companies are concerned about work from home, we have metrics that demonstrate that this model works well.

FORWARD-LOOKING STATEMENTS

ADT has made statements in this article that are forward-looking and therefore subject to risks and uncertainties.  All statements, other than statements of historical fact, included in this article are, or could be, “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and are made in reliance on the safe harbor protections provided thereunder.  Any forward-looking statement made in this article speaks only as of the date on which it is made. ADT undertakes no obligation to publicly update or revise any forward-looking statement.  Forward-looking statements are based on management’s current beliefs and assumptions and on information currently available to management. ADT cautions that these statements are subject to risks and uncertainties, many of which are outside of ADT’s control, and could cause future events or results to be materially different from those stated or implied in this article.