This year's IFSEC International show in London will provide a reflection of the physical security industry's rapid growth, especially in the video sector, says one industry observer who is also a speaker at the show, coming up 16-18 June.
“If we look at the overall trend, it is no surprise to anyone that IP is driving the growth and the future of the security business,” says Jim McHale, managing director of research company Memoori, and a speaker at IFSEC.
Security industry estimates
Memoori's latest report on the security industry estimates a total worldwide market value of $25 billion, showing a growth rate of 7.5% in 2014. “The market is being driven by what’s happening in video,” says McHale. “The three main drivers for growth are IP video networks, higher demand from Asia, and greater success in selling into vertical markets such as transport, retail, healthcare and education.”
According to Memoori, video accounts for approximately 53% of the total market at $13.5 billion, access control takes a 23% share at $5.6 billion, and intruder alarms at $6.2 billion take a 24% share. The developed markets of North America and the EU are losing market share to Asia – in particular China – which will be the largest single market by the end of this decade.
"The market is being driven by what’s happening in video. The three main drivers for growth are IP video networks, higher demand from Asia, and greater success in selling into vertical markets such as transport, retail, healthcare and education"
Security systems for greater business value
The use of security systems and the position security has in an organisation is also affecting buying trends, says McHale. “Security should be more than just a cost centre; it should be adding value to the business by optimising processes. This will require a fundamental change in perspective from both end users and suppliers and a greater understanding of how security will fit into the wider Internet of Things in both cities and buildings. I expect to see more integration of systems at IFSEC this year.”
This move to optimise systems beyond security is not a quick process. “I don’t think we’ve reached the point yet where your average security manager is really thinking about how they can use their system to optimise business processes. But there are early adaptors such as data analytics in retail, people counting and heat-mapping, giving valuable insights into the retail environment.”
High growth in Asia
Moving to an international context, McHale sees strong growth in Asia and expects this to be reflected in a larger representation of Asian companies at IFSEC, especially video surveillance companies. They have done very well in their domestic markets but are looking to grow in Europe and North America.
Like the rest of the security industry, intruder alarms are also following the trend towards IP. “There is a trend across the whole security business towards IP. With a 24% share of the total security market, intruder alarms are still a significant share of the business but the sector is not growing as fast as the others.”
As far as the surveillance sector is concerned, growth through innovation has come from "middle market" players – such as Avigilon and Axis Communications – rather than the major conglomerates, which have seen a decline in their share of the product market.
The developed markets of North America and the EU are losing market share to Asia – in particular China – which will be the largest single market by the end of this decade.
“Are the major conglomerates losing interest in the security market?” asks McHale, citing the sale of Siemens’ security products business to Vanderbilt and Ingersoll Rand’s spinoff of Allegion. Most conglomerates have made major acquisitions in their other businesses and they have significant cash reserves on their balance sheets. In contrast, Canon is now showing serious interest in video surveillance with its acquisitions of Axis Communications and Milestone Systems.
“Security manufacturers now need to look towards the Internet of Things and understand how and why their products / services will fit into this new world of ubiquitous sensor networks,” concludes McHale.