The total valueof physical security world production at factory gate prices is $US19.17billion. Of this video surveillance products at $9.1bn take a share of 47 percent. The developed markets of North America and Europe are losing market shareto Asia and particularly China, which will be the largest single market by theend of this decade.
The anticipatedaftershocks from the 2008 financial meltdown and current sovereign debt crisiswill dampen future growth, but the industry is resilient and demand will edgeforward at a rate of 3.7 per cent (CAGR) over the next 5 year period. Thisgrowth will need to come from the enormous latent demand for security equipmentwaiting to be exploited in the emerging markets of the world.
In a troubledeconomic climate the physical security industry has increased revenues andprofitability whilst M&A has surged ahead by more than double in the last 2years, to $9.847bn.
This is still afragmented market despite 2 per cent of the players taking 49 per cent of theproduct business. The reason for this is that the massive growth inconsolidation during the last 2 years has centered on acquisitions at the topend of the market and much of this has been made by companies outside the business.
Many of thetraditional major suppliers have not taken part in the recent surge in dealsbut have chosen to expand their systems integration services over their productbusiness. The report questions why the market leaders, hitherto major exponentsof growth through acquisition, have adopted this policy when 49 per cent of thevalue of acquisitions made in the last 12 months came from companies outsidethe industry.
These newentrants from Defense and IT related industries see opportunities to leveragetheir technological expertise and with their financial muscle will contributemuch to the future growth of this industry.
Falling IP pricestogether with easier to install products and improved performance have allconspired to increase the Return on Investment (ROI) and total cost ofownership of this fast growing technology. The manufacturers and systemintegrators that will lead in the future are those that have invested in thistechnology and skilled staff, according to MEMOORI.
Unsurprisingly,the report found the only way to reduce the impact of a recession on demand isto continue delivering more effective systems at lower prices. This was themain reason for the electronic security industry coming out of the recession in2010, faster and in a much better shape than others.
