Smart home DIY is a market Vivint should not ignore

NRG’s $2.8 billion cash acquisition of Vivint Smart Home, announced in December, was completed this March. The combination of companies equips NRG, an energy provider to many markets in the US and Canada, with a leading smart home and home security platform and forms a platform for essential home services to be offered from a combined sales force to an audience of 7.4 million customers.

Energy utilities and retail energy providers have made numerous attempts to enter the smart home business for the purposes of equipping homes with energy management technologies. A few energy providers have also made attempts in the home security business and have found that the highly competitive security business is not a good marriage to heavily regulated providers of energy. NRG, however, is a competitive home services provider, well experienced in highly competitive industries such as HVAC services (Airtron subsidiary), appliance rental (AWHR), green energy and retail energy services (Green Mountain Energy, NRG, Reliant).

NRG’s portfolio companies understand the game of diversified home services and Vivint Smart Home should be a complementary addition. Moreover, Vivint’s unique door-to-door sales force will be eager to add additional services to home security installations. Bundling has typically been an effective sales strategy, and NRG now has opportunities to create multiple service bundles with attractive financial incentives.

Vivint, under NRG’s ownership, however, will be wise to follow the lead of its major competitor, ADT, by offering a self-installed option in addition to its pro-installation services. Interpret’s Smart Home Matrix research finds that owners of smart security systems purchased in the past year have, by a wide margin, self-installed their system (themselves or by a family member or friend). While home security solutions available at retail are gaining in popularity, so is consumer willingness to install them. Despite the rise in DIY solutions, Vivint’s professionally installed and monitored systems have continued to post year-over-year growth over the past several years. To complement its diverse services business, NRG will do well to also offer a DIY home security solution with the option to add-on Vivint’s professional monitoring services.