How the Internet of Things Inspired a New Startup Niche Is the next startup gold-rush in IoT home security?

Once upon a time, computers were pretty much the only devices that connected to the internet. These days, that idea is a fairytale.

The reality is an incredible number of products are now connected to the web, from refrigerators to watches, clothing, cars, thermostats, light bulbs, and alarm systems. By 2020, an estimated 20-plus billion items will belong to the so-called "Internet of Things" (IoT).

That's a big number. And entrepreneurs are taking notice. Here's how the IoT has inspired a new startup niche and is transforming the home security industry in the process.

How the Internet of Things is Transforming Home Security

The Internet of Things has hugely expanded the number of home security products on the market. These range from smart locks, lights, radios, garage doors, and cameras that can be operated remotely via a smartphone to sensory devices that operate like wireless eyes and ears. The sensory category includes products such as:

• Cocoon, which uses unique sound technology to monitor activity in a home. It also tracks regular comings and goings to identify unusual activity
• iSensor HD, which features WiFi-enabled cameras that pan 180-degrees and can be operated with a mobile device
• Nest, which connects thermostats and smoke alarms to monitor the home's internal environment for safety threats
• Point, which listens for potentially suspect sounds in a home (e.g. breaking windows) and sends real-time alerts in response to these triggers

These innovations are just the beginning for the IoT-inspired transformation of the home security market.

The Rise of the Home Security Niche

The Internet of Things has made possible unprecedented innovations in home security. But that's not the only reason IoT-inspired home security has caught the attention of entrepreneurs. Here are some of the factors contributing to the rise of this new startup niche.

Tech firms cash in.

It used to be that home security companies were the only ones focused on innovating home security. That's changed with the growth of IoT. Silicon Valley and a plethora of tech startups have identified opportunities to expand their technology and applications to the home security market.

This has led to the emergence of point solutions. Homeowners are investing in home security solutions in an a la carte manner—an alarm system from this company, a camera setup from another company, a garage door app from a third company, and so on. Startups can diversify or specialize; there's a demand for it all.

Integrated applications emerge.

Point solutions are both an outcome and an instigator of the rise of home security startups. The trouble with point solutions belonging to different companies is they're not connected to each other. That's opened up an opportunity for startups to create applications that integrate various smart home solutions for greater security and user-friendliness.

Startup Neurio, for example, developed a sensor that can monitor both older devices and smart products. Piper offers integrated control of household devices including lights and video monitoring.

Acquisitions are on the rise.

Big corporations such as Amazon and Google (which acquired Nest for $3.2 billion) have helped drive startup development through acquisitions. Investments are also going strong— -- or example, Sequoia invested $57 million in SimpliSafe in 2014. This activity has inspired confidence in startups and helped rapidly expand the market's reach.

Surveillance becomes cost-effective.

Tech advancements and the rise of third-party monitors are driving down the costs of home security. That means startups can develop security solutions for less. It also means home security is accessible to more homeowners. This has expanded the consumer base available to startups in this niche.

The need to secure home security devices arises.

The irony of IoT home security products is that while they enhance home security, they can also undermine it. Cybercriminal activity poses a threat to smart security products. This means there's an opportunity for startups to capitalize on these risks with additional security solutions. For example, some startups are working on devices that identify malware and unfamiliar IP addresses and alert homeowners to potentially threatening activity.

As the Internet of Things transforms the home security market, industry leaders and homeowners alike are changing the way they think about home security. The market is moving toward a "home systems" approach emphasizing integrated security solutions that allow homeowners to manage and secure virtually every aspect of their home.