Take a Pulse on International Market Dynamics
Editor / Provider: The Editorial Team | Updated: 6/3/2011 | Article type: Hot Topics
Almost halfway into 2011, a&s surveys and gathers regional market updates for your reference, with specific focus on the analog-to-IP transition and HD development in the real world.
Global markets have enjoyed a rather fruitful year from 2010 to 2011, and growth opportunities and potential for 2012 look very promising. Although some regions see slower growth than others, the effects of the 2008/2009 recession have worn off for many.
In North America, growth has been steadily returning, although no sharp increase in revenue or sales volume is witnessed. "Government spending in the U.S. is still tight due to the weak economy, although the market continues to grow at a steady pace," said Peter Simmons, Marketing Director for Seon Design. "In particular, biometrics sees a growth in demand for US schools."
On the Western European front, the Italian security market continues to expand after the recession, although a
|Robert Hufton, Applications Engineering of Video Networks, Teleste
concern over civilian privacy is creating mixed feelings toward implementing security systems. "Privacy is highly regarded by the Italian general public," said Roberto Terranova, Sales Director of Securitaly. "For this reason, we're not seeing as much activity in the market as anticipated."
In the U.K., residual effects of the recession linger. "Many projects are on hold, and IP uptake is slow," said Robert Hufton, Applications Engineering of Video Networks, Teleste. "Some verticals such as railways are going to do well, especially in France, the U.K. and Algeria."
In Oceania, the current instability and power struggle in the Australian government, along with the reconstruction in the south, mean that the US$36-billion, fiber-to-the-home initiative might get scrapped, said Wayne Palmer, MD of Australian Security Supplies. Despite these, solution providers are optimistic about and eager to expand the market even further. "The market is bound with opportunities, giving us a steady two- to four-time growth each year," said Michael Mackowiak of Aucom Surveillance Systems. The country's tight regulations on installers for certificate and license renewals contribute to a highly competitive environment that upholds the "survival of the fittest" principle.
The Middle East is now busy with new projects of all scales after recovering from the recession in 2010. “This
|Natan Cuglovici, Technical Director of Vault
year, there are projects for airports and seaports, as well as industrial projects in oil and gas,” said Grahame Edwards, Technical Director in Dubai, Schneider Electric.
The market is equally promising in Turkey. "Turkey is a large country with much potential," said Rustu Arseven, GM of Tesan IletiSim. "This year, we are predicting at least 50-percent growth in our security business."
In Iran, industry players tread cautiously amidst improved market conditions in 2011. "The situation in 2011 is much, much better than 2010 due to less social and political issues," said Mohammad Zarei, Sales Director of Hedayat Security Systems. "However, the situation for 2012 remains murky in our opinion."
Opportunities also abound in Central Asia. "Kazakhstan is a very young country, meaning that there are abundant project opportunities, including major government and large-scale infrastructure projects," said Nikita Panfilov,
CCTV Product Manager, Intant.
Eastern Europeans also agree that the local markets have been recovering from the recession, and 2011 and 2012 will see visible expansions and growing numbers of projects. "In Poland, we follow the general trends in the world, but our market was not affected much," said Monika Mirczewska-Stanosz, Import Manager of Suma. "The growth since recovery has not been as huge as everyone expected, but it didn't drop. Growth in 2011 will be even more than last year."
"The Bulgarian security market has been hit quite hard," observed Georgi Kolev, Sales Manager of Avicam. "The market prefers entry-level products; although 2011 has seen a big growth in sales volume, the margin is actually smaller as cost-effective products were sourced and sold at a higher volume than before."
"In 2011, the growth in Bulgaria is not significant," added Rumen Palmov, Sales Manager of Sectron. "Project-based businesses are still down; large-scale projects were cancelled or postponed, and construction also came to a halt."
On the other hand, the market in Bulgaria is benefiting from its rising crime rate, and people want to employ security systems as they are more affordable nowadays, Kolev said. "The market situation will get better as we go into 2012, and achieve further heights," Palmov said.
In South Africa, the market witnessed a slowdown after the World Cup, said Simpson Jong, MD of KYLink Electronics. "Recently, banks have been strict on approving mortgage applications, which causes further delays
|Arnon Kulawongvanich, GM of Sales and Marketing, Chubb (a UTC Fire & Security company)
to ongoing or new projects." The market is dominated by large companies from Europe and the U.S., but Samsung and Sony enjoy sizable market shares as well.
Across the world in Latin America, Brazil, Argentina, Venezuela and Trinidad and Tobago are ready to deliver more products and handle more projects in 2011 and 2012. "The Brazilian market is growing fast and is expected to grow even faster due to upcoming world events," said Natan Cuglovici, Technical Director of Vault.
"Currently, all vertical projects in Argentina are surging, and name brands are used in project-based segments by system integrators (SIs)," observed Roberto Alvarez, President of Selnet.
"There is great demand for security and video surveillance products, as Venezuela suffers from high crime rates," said Antonio Formica, CEO of Segintdig de Venezuela. Fueled by the high demand, interest in new security technologies is much higher than expected.
"The Trinidad and Tobago security market is booming, along with the rest of the Caribbean region," said Jason Fraser, MD of BVRT. The growth has encouraged regional distributors and SIs to visit Asia in person, instead of going through Latin American distributors, in order to source suitable products for the residential market.
The Asian markets have been expanding quickly in recent years as well, due to growing awareness. "We're growing at a healthy rate every year in India," said Zaheer Ali, Director of Oriole Electronics. "The security market is
|Monika Mirczewska-Stanosz, Import Manager of Suma
growing at 20 to 30 percent on average. What is lagging behind is a more systematic approach, as many lack real capability and experience."
"The growth in India is huge, but nobody knows how to properly coordinate equipment or systems in an operational aspect," added Sam Yang, Director of Special Operation Services, Security & Personnel Services. "Technology is just a tool; we need to know what the tool does and how to properly manage it."
Equally promising markets can be found in the Philippines, Indonesia, Malaysia, Thailand and Vietnam. "There are a lot of opportunities in the Philippines, as the install base is still quite small," said Antonio Uy, Marketing Manager of DigitalCCTV. "As a result of prices coming down, the general public has become interested, from residential units to small retail shops."
Price is still the top concern in the Philippines, added Marc Yu, Manager of VM Security Technologies. "However, prevalent petty crimes and government projects are key drivers behind this growing market."
In Indonesia, the market is estimated to have a 15- to 20-percent growth rate in 2011 and 2012. This growth is partially fueled by a growing concern over possible terrorist activities, explained Andrianto Setiadi, President of Wisma Sirca. "Our company has seen a roughly 20-percent increase in sales activity in 2011," said Dadang Maulana, Director of GSB Security. "The projects we have worked on lie in the banking, government and corporate sectors."
The Malaysian security market will grow as well, but maybe moderately, said Mohamed Mohideen, International Sales and Marketing, Cmos Dotcom. In recent years, the market has started to focus more on quality products for longer life cycles, leading to smarter investment in TCO and less future maintenance.
Both the Thai and Vietnamese markets are seeing rapid growth. "The surveillance market in Thailand has expanded by 30 to 50 percent since last year," observed Arnon Kulawongvanich, GM of Sales and Marketing, Chubb (a UTC Fire & Security company). "Hot verticals include airports, private companies and residential
|Nikita Panfilov, CCTV Product Manager, Intant
homes. The surge is a result of growing needs and requirements, as well as the government's driving various projects."
"In Vietnam, the enterprise sector is doing well, such as service, manufacturing and transportation industries," said Leo Wu, Vice Director of Trung Loi Trading. "However, the tightening of government budgets has led to heavy delays in government tenders."
For the more matured markets in Hong Kong and Singapore, only limited growth is seen. "Hong Kong was affected by the recession, and our sales activity did not return to the level it had in 2008 until this year," said David Leong, VP of International Sales at STL Security.
The Singaporean market is highly competitive, as the total market size remains small, said Ang Sze Meng, PM of Golden Sprint Security System Enterprise. "This means that revenue growth and market growth are both limited as well."
[NextPage]Analog to IP
Frost & Sullivan recently modified its prediction that IP sales will top analog ones from 2013 to 2016, and several veterans offered similar estimates in respective regions. In general, analog product sales still dominate with at least 70-percent market share in all major markets. Despite this high percentage, the volume of IP products shipped is rising rapidly in all major markets, with the exception of Oceania.
More precisely, 90 percent of distribution products in the U.S. are still analog, and 80 percent of integration
|Mohamed Mohideen, International Sales & Marketing, Cmos Dotcom
projects opt for IP, said Suhaib Allababidi, VP of 2M CCTV. The market share for analog products in Australia and New Zealand remains high at 90 percent, where slow IP adoption is forecast to continue for a few more years. "Analog is still dominant, though IP will eventually become the norm because the market needs to leverage technology from other industries to achieve economy of scale," said Bud Broomhead, President of Intransa.
In Italy, most products used are still analog and not much IP, and it will likely take a couple more years before IP becomes more popular, said Alessandro Berio, MD of Eurogroup. With a market share estimated at 20 percent or less, IP products are currently used for large infrastructure projects only. "IP uptake is slow because installers are traditionally from an electrician background with little IT knowledge," said Alessandro Oliva, IT Engineer, Feniva.
For the emerging markets in the Middle East, Eastern Europe, Latin America and Africa, analog products also account for 70 to 90 percent of market share. "In many cases, if the project is managed by the CIO, IP products would be used; conversely, if it is managed by the security manager, analog products would be used," Alvarez explained.
Many contribute restricted IP expansion to frail and expensive national Internet infrastructure. "Granted, traditional
|Alessandro Oliva, IT Engineer, Feniva
installers still need a lot more education to drive IP growth, but IT-savvy distributors have got that covered," said Emre Yildirim, GM of Bilgi Technology. With new state-sponsored and large-scale projects in motion, IP products shall have no problem achieving greater traction in the few years.
In the Asian markets, sales of analog products have reportedly fallen by 60 to 90 percent, while the volume of IP products carried has increased dramatically for some. "Our revenue portion on IP has increased from 20 percent last year to 35 percent this year," said Sunny Mathew, Executive Manager of Autocop. For others, the growth in IP is hampered by a price-sensitive mindset. "Analog products such as DVRs are easy to find in Thailand, even in supermarkets, as they are cheap and easy to install in comparison," said Sakchai Somsuk, MD of TSolutions.
To encourage IP adoption, some local distributors and SIs hold seminars and invite end users to attend exhibitions to better educate the market on IP-based technologies, especially for those end users wanting higher quality and resolution products. For some, designing a pure-IP security system where different segments are interconnected by a network creates less integration problems, said Serguei Zagriatski, System Manager of Transportation Business, ST Electronics. "We use IP products for all new projects now."
HDcctv or HD-SDI technology was brought onto the table by various exhibitors at Secutech 2011, offering more
|Sunny Mathew, Executive Manager of Autocop
hybrid or tribrid possibilities. Several interviewed have already begun talks with vendors to promote products based on this new technology in the respective regions. Others, however, maintain a conservative stance as to the development, promotion and acceptance of said technology.Advantages
For some, HD-SDI products offer the convenience of utilizing existing analog infrastructure and avoiding the switch to a completely IP-based system. In addition, the HD-SDI concept is easier to grasp for traditional installers, who are used to analog systems. "Networking is sometimes too much for traditional players; therefore, HDcctv holds great potential compared to IP," said Andy Chao, President of Panorama Security.
Some are considering expanding their product lineups. "HDcctv is quite interesting and shall help us offer another choice to customers who are thinking of upgrading existing systems," Uy said.Work in Progress
As HDcctv is relatively new to the security world and needs further time to mature, concerns were voiced. "I have noticed the various HDcctv offerings at the Secutech show ground, but the pricing and maturity/reliability would mean that next year or even 2013 would be a safer bet," Arseven said.
"The price of HDcctv is a sensitive issue. If it is set between analog and IP, there may be some chance for it to grow in the market; otherwise, it would be very hard for it to become widely adopted," Cuglovici said. Current price
|Bud Broomhead, President of Intransa
tags of HDcctv products could be six times higher than analog products; therefore, many are still observing how the market will react. Some suggested that encoders minimize the appeal and chance for HDcctv products.
In terms of technology maturity, those who have sampled are concerned about their storage, transmission and DVR functionality. "HD-SDI DVRs need to expand on their capability, as they offer only four channels now; plus so far, only a few makers can offer them," Allababidi said. Also, real-life transmission distance is still limited to about 100 meters, which hampers the upgrading of current systems, Palmov said.
"HDcctv products are not as scalable as IP products, and interoperability issues remain to be addressed, as industry standards for HDcctv are still in drafts," Jong said. Additionally, HDcctv offerings are unsatisfying at the moment, as some of them still project CIF-like results, Yildirim said.
Current mixed views do not seal the fate for HDcctv products in any way — it is, after all, still a fresh idea to many in the industry. Some optimistic professionals believe that as the HDcctv technology matures and products offer better functionality and choice, these devices could have a chance to be adopted by certain high-end, analog-based, niche markets.