The future of the physical security industry is looking up globally, and system integrators are playing a key role in its growth, according to an annual report from U.K.-based Memoori Business Intelligence.
The Memoori report, The Physical Security Business 2013-2017, forecasts a compound annual growth rate (CAGR) of 8 percent over the five-year period covered by the analysis.
If that seems bullish, Memoori says, it’s worth noting that the physical security market managed growth of 4 percent CAGR from 2007 to 2012 despite an unprecedented recession.
Growth in the physical security industry will be driven by technological advancement, expansion of product portfolios and growth in vertical markets, according to the Memoori report. That’s a great sign for integrators, who can continue to make an impact in these areas especially.
“The security industry is now in a much healthier state with a product portfolio that can deliver more attractive opportunities for their clients to improve security and at the same time profit from it,” the report says. “This together with the unstoppable growth of IP video network and access control, coupled with management identification and verification, will drive the market for- ward. In addition, further growth opportunities are opening up in relatively new vertical markets and the Smart Building sector, where system integrators from the security business are using their platforms to deliver holistic systems incorporating monitoring building and energy performance in addition to security and safety.”
Related: State of the Industry Report
With regard to advancements in technology, Memoori pointed to the explosion of IP networks in security products. The number of security products that operate over IP networks grew rapidly in 2011 and continued to increase in 2012 and 2013; these include access control, intruder alarms and video surveillance products.
“The consensus of opinion in the market is that for IP video surveillance, we are now into a strong and irreversible trend of IP taking market share from analog systems in their previous strong- hold of small systems and further driving up growth through value added services,” the report says. “Falling IP prices together with much easier to install products and improved performance have all conspired to increase the return on investment and reduce the total cost of ownership of this fast growing technology. The manufacturers and system integrators that will lead in the future are those that have invested in this technology and people.”
Related Slideshow: 12 Security Cameras to Watch for at ISC West 2014
Meanwhile, more companies have been offering an extended range of products to provide more complete “joined up” systems, Memoori notes. Previously, many manufacturers focused on one particular horizontal layer.
For example, video surveillance companies might specialize in IP video cameras, software platforms, storage hardware or video management systems. But now they have grown or merged with other companies, potentially making the job of integrators easier.
“Most of the leaders in these fields sold to other hardware suppliers that offered a package of products that could work together, so making it much easier for the system installers and integrators to install more efficiently,” Memoori says.
A good example is Axis Communications. The company has grown its business by adding video management software and edge storage to its cameras, and it recently unveiled plans to move into access control, another segment of the physical security market.
Finally, the demand for physical security in specific vertical markets will drive growth, and companies will call upon integrators to deliver solutions. Memoori analyzes 16 vertical markets and identifies significant changes in them, primarily in the transportation sector, which has grown to encompass 16 percent of the physical security market.
There’s optimism in many areas. “As net- work cameras continue to improve, integrators and their users will discover many more applications. City surveillance, transportation and healthcare verticals will experience increased growth as surveillance systems enable better operational efficiencies,” the report adds. “The new verticals that will be forced to install security systems are associated with the utilities, particularly the electrical, to monitor remote renewable power generation and electrical transmission and distribution networks.”
If you enjoyed this article and want to receive more valuable industry content like this, click here to sign up for our digital newsletters!