Google investment in ADT raises profile, competitive edge

Google’s $450 million investment in ADT Inc., raises the public and investment profile of the electronic security and alarm monitoring provider headquartered in Boca Raton another notch.  But the partnership also gives ADT the opportunity to sell and install Google’s Internet-connected devices such as Nest cameras and Nest Hub Max, all powered by Google Assistant, in millions of customers’ homes.  With a presence in Boca Raton since the 1990s, ADT is four times larger than its nearest residential competitor, and says it is the industry’s largest provider. It has more than 6.6 million customers, and 20,000 employees in 200 locations across the country, CEO and president Jim DeVries said Monday in a call with financial analysts.  Mountain Valley, Calif.-based search engine giant Google will become a 6.6% owner of ADT. The deal awaits SEC approval and is expected to close by the end of September. In addition, when certain milestones are reached, the companies will contribute $150 million each for marketing and product development.

“We are exceptionally excited about the partnership and our shared future,” DeVries said. “We think the deal has come at exactly the right time. The partnership has come at exactly the right time. Customers are focused on safety and home automation. ADT is the trusted partner in the home. Along with Google we are going to transform this customer experience.”

ADT expects to benefit from Google’s expertise in artificial intelligence and data analytics.  The investment will also boost the county’s profile across Corporate America, said Kelly Smallridge, president and CEO, Business Development Board of Palm Beach County Inc.

“We were thrilled to learn of Google’s investment in ADT,” Smallridge said. “This type of news involving one of the most recognizable companies in the world certainly elevates the prominence of ADT, which proudly calls Boca Raton their headquarters.”

ADT has 500 employees in Boca and another in West Palm Beach, making the company one of county’s major private employers. About half of the approximately 70 national corporate headquarters in Palm Beach County are in the City of Boca Raton.

Boca Mayor Scott Singer said added that “Boca’s strong corporate presence and growing number of high-paying technology jobs should increase further with the expanded participation of an innovation leader like Google.”

In 2012, Boca Raton became ADT’s headquarters and ADT became a publicly traded company following a spin-off from Tyco International, now known as Johnson Controls, Tucker said. ADT is celebrating its 146th year in business. Founded in Baltimore in 1875, it started as a telegraph delivery business, American District Telegraph.  ADT’s DeVries said both companies will be better positioned to attract new customers with the launch of ADT + Google Nest this year. He expects that both ADT’s professionally installed systems and do-it-yourself systems will experience growth.  “We have been historically product agnostic. Now we will be working more in alignment with Google on their hardware. The intent is to go to market together,” DeVries said.

Rishi Chandra, Nest vice president and general manager, said, said he believed Nest’s devices, powered by Google’s machine learning capabilities, will enhance ADT’s security monitoring and become the cornerstone of ADT’s smart home offering.  “The goal is to give customers fewer false alarms more ways to receive alarm events, and better detection of potential incidents inside and around the home,” he said.

Timothy Ralph, managing partner and portfolio manager, Biltmore Capital, Boca Raton, said, ADT benefits by gaining a huge brand name.  “ADT has come under a lot of pressure with do-it-yourself systems such as Ring.com and Simply Safe, with easier setups,” Ralph said.

“The big underlying story is that Google will be able to integrate ADT into their Nest products and gain access to their call centers,” Ralph said. “Among other things, the Nest is most famous for controlling the temperature in your home.”  Ralph foresees ADT offering bundled services, and that due to synergies, consumers could pay less than they would have previously for the same services.  “It’s a good outcome for consumers. You will get a little more bang for your buck with the technology,” Ralph said the alliance with ADT is a way for Google to broaden its business model and become part of an automated home network. The increase in monitoring will not appeal to everyone.  “Now Google will not only be monitoring me online but will be monitoring my home,” Ralph said. “Every time I open my door, they will know about it.”

“It’s an interesting dynamic. Google has a number of different products, such as the thermostat and security cameras, Ralph said. “Safety and security may be one of the more prominent issues they will have to face. They will have a lot of information. Google employees could look at it if they wanted to.  “There could be some feedback from regulators on privacy concerns. I don’t think that will prevent the deal from going through,” Ralph said.

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