Down Under? No, Up Above!
Hayden Hsu | Date:
While mature markets like the U.S. and Europe are bracing for a possible second dip due to long-term debt imbalances, Australia's export and economic figures are looking particularly ripe among growth markets worldwide. Security is in for a treat, as the country continues to upgrade its network infrastructure and beef up its protective mechanisms and measures.
Australia is the world's 13th largest economy, with a GDP of US$1.3 trillion. GDP grew by 2.7 percent over 2010; it is forecast to grow more than 4 percent in 2011. According to US Commercial Service, Australia's per-capita GDP of $60,000 is among the highest in the world.
Since 9/11, the Australian federal government has committed more than $4 billion to counter terrorism. Current priorities for upgrading security include border protection, airport security, port security,critical infrastructure protection, mining facilities, street safety (city surveillance), health care and educational institutes, as well as new commercial and residential establishments.
The Dollar and NBN
To thrive in the Australian security market, two things should be kept in mind: the Australian dollar and the national broadband network (NBN).
Australia has a large services sector (80 percent of GDP), but is also a significant exporter of natural resources, energy and food. Australia's abundant and diverse natural resources attract high levels of foreign investment and include extensive reserves of coal, iron ore, copper, gold, natural gas, uranium and renewable energy resources. A series of major investments, such as the $25-billion Wheatstone project and the $43-billion Gorgon project, both led by Chevron, have significantly expanded the resources sector, according to US Commercial Service.
Asian demand for minerals, metals and energy resources has been an engine for growth nationally. With many mining sites in the state of Queensland (the country's largest coal-exporting state) suffering temporary production delays due to the January floods, liquefied natural gas (LNG) projects are moving forward, such as the contract signed between Australia and China to supply China with LNG for the next 20 years.
The result is a higher-than-ever Australian dollar, pushing many local end users of high-end technology to go for only the best of breed at much more affordable price points. Physical, commercial security is no exception.
Another buzzword is the NBN. The NBN is a wholesale-only, open-access data network initiative. A trial rollout of the fiber-to-the-premises (FTTP) network began in Tasmania in July 2010. The FTTP rollout is planned to reach approximately 93 percent of the population by June 2021. Construction of a fixed wireless network is planned to begin in 2011, delivering its first services in 2012 and to be completed by 2015; two satellites will also be launched by 2015, with an interim agreement with Optus and IPStar to provide satellite services to some customers from July 2011. The network will gradually replace the copper network, owned by Telstra and currently used for most telephony and data services. As part of an agreement with the NBN company, Telstra will move its customers to the NBN and lease access to its exchange space and extensive network ducting to assist in the rollout.
This nationwide broadband initiative is very well-received by security solution providers, as most transmission and streaming headaches with IP-based systems will be alleviated. It could also help yield more business opportunities and open up possibilities for different business models
According to the Australian Security Industry Association, expenditure on security hardware and software (video surveillance, access control and intrusion alarms) in 2007 amounted to $690 million. For this year, consensus was that recovery has been rampant, but the overall projected market size is still shy of the 2007 peak, only at roughly $450 to 500 million.
Distributor Pacific Communications estimated that the Australian video surveillance market could be worth $150 to $170 million this year. “We're seeing a lot of demand from street surveillance, transportation, mining, health care and education,” said Rob Rosa, National Sales Manager. “We, therefore, need proper product coverage with a good cross-section range as the largest distributor in Australia and New Zealand.”
Bosch Security Systems' projections for video surveillance were higher at $200 to $230 million. “Leads are mostly from mining, defense, commercial and street surveillance,” said Sean Borg, National Video Systems Manager.
For Sony Corporation, more than 90 percent of new tenders opt for IP-based systems. “People's understanding is improving, from pure cost considerations to picture quality and accessibility,” said Steve Charles, Sales and Marketing Manager for Security Solutions, Australia and New Zealand. “For my region, the video surveillance market is estimated to be worth $220 million, with IP sales expected to outweigh analog by 2015. Confidence in IP has increased noticeably.”
In terms of growth , Axis Communications is seeing 40 to 70 percent, depending on market segments. “While the overall market size here in Australia is not the biggest in the region, it does generate the most revenue for us,” said Oh-Tee Lee, Regional Director of South APAC. “Five years ago, some installers and integrators wouldn't listen and were scared to change (to IP). It's not that case any more. We now focus our education efforts on the building blocks of IP-based video (beyond cameras), such as storage and capable channel partners.”
For Lan 1, key market segments include government buildings and departments, residential buildings and retail outlets. “Education is good as well, but a bit slower; you get one or two projects from universities per year, and then a few smaller but ongoing projects from K-12,” said Basil Delimitros, Project Manager of IP Video and Access Control.
In physical access control and intrusion detection, a similar transition to IP can be seen as well, thanks to the NBN. “More hybrid converters and wireless transmitters are being demanded,” said Brett Lancaster, Sales and Technical Support for Security Distributors Australia. “While average prices are coming down, support and warranties are getting more comprehensive; now, you can see products with 10-year warranties and iPhone support very easily.”