Alarm monitoring companies' end user market can be divided into two segments, commercial and residential.

Commercial Monitoring

Owners and operators of commercial sties equipped with security systems conduct their own monitoring on site, have monitoring done remotely by others, or use some combination of the two. Commercial monitoring companies typically monitor anywhere from 500 to 500,000 remote premises from a single central station.

Residential Monitoring

The majority of residential premises owners and lessees with security systems have their systems monitored by a commercial central station as opposed to having systems directly dial the police, fire department or other party. Monitoring is typically done under a written contract with either a monitoring company or independent security dealers (ISD) that installs security systems and subcontracts the monitoring to a monitoring company. The monitoring business is the most profitable sector of the security industry.

A few large players dominate the industry. ADT, Protection One, Brinks Home Security, and Honeywell have at least 50% of the market. Additionally, ADT is a dominant player in the industry accounting for 35% market share. ADT has gained its dominant position through acquisitions and its long tenure in the business.

• During the period from 1991-2001, the alarm monitoring and installation marketplace grew at a compound rate of 6.4%, increasing from $10.1 billion to $19.2 billion over that time. Over the last five years of that period, the rate increased to 8.0% as a result of the surge in residential activity early on in the period
• However, the alarm industry sector faced a challenging business environment in 2002 as funding sources continued to be limited, companies focusing on slower internal growth in an ongoing effort to improve new account creation costs, the M&A activity has decreased, and multiples have come down from the late 90s to levels not seen since the early 90s
• Technology will continue to drive consumer adoption and product innovation
• New digital technology, networked systems, home automation and A/V integration are increasing revenues from sales and installation
• With their existing installed footprint, and life safety application, security systems will be a growth driver and integral component of home automation technology
• With only 18% penetration of the residential market there is significant opportunity for additional growth
• The commercial market is also showing strong signs of growth. Overall continued growth is expected in the 8-10% per year range

• ADT Security
• Protection One
• Brinks Home Security
• Honeywell Security
• Monitronics Intl.