Despite the obvious advantages that came with IP technology that was introduced in 1996, the Turkish market refrained from shifting its focus from the analog systems until recently.
About 20 to 30 major distributors were controlling the entire Turkish security market when we first began to work in the industry in 2000. These companies were mainly distributors for products from European countries. Since they were few, they were able to manage and direct the market as they liked. This was the case not only in Turkey but across the globe.
Since 2000 the market has seen several ups and downs, mainly from the global financial downturns and the growth of low-cost products. Sometimes the market rose and fell even to minor disruptions.
After the initial period, several large distributors began to dominate the local market. As opposed to the earlier distributors, these companies imported and distributed products mainly from Asian manufacturers.
The arrival of such large distributors prompted some dramatic changes to the industry. The market developed and expanded as security products had become more accessible and affordable to more people. The customers had also become more knowledgeable and selective as to what they were buying, and demands began to differ accordingly.
The renewed demand helped the market grow further and this encouraged more companies to enter the industry. The number of major companies, which was about 100 in 2007, has now gone up to several hundreds. The turnover of the electronic security industry, which stood at about US$100 million then, is now about $600 million.
However, the growth of the industry did not occur just in terms of financial volumes of businesses. Significant improvement was observed in the quality of the work that these companies provided. The number of product exports also increased.
IP Growth Strong but Slow Adoption in SMB
Despite the obvious advantages that came with IP technology that was introduced in 1996, the Turkish market refrained from shifting its focus from the analog systems until recently. According to Rustu Arseven, GM at Tesan Iletisim, the technology began to make inroads into the market only by the end of the last decade.
“As the technology sank in, IP cameras have found quite large coverage in enterprise market, especially after 2007,” Arseven said. “While government grew both economically and technologically, penetration of IP cameras increased year by year, even in the Small and Medium Businesses (SMB) market. However, it has taken some time for the IP trend to be adopted in Turkey.”
After 2010 the IP saw wider adoption across the market with improvement of Internet infrastructure. Several verticals saw significant growth, from educational and governmental institutions to the enterprise market. But SMBs remain the slowest to move to IP.
“The SMB market is another story,” Arseven said. “They still need to invest in internet infrastructure, get educated on complex technical details, hire qualified people, etc. Due to initial costs, penetration of IP systems is still not at a level it should be. For instance in 2015 penetration of IP systems in SMB market is 25 percent, whereas it is around 70 percent in the enterprise market and rising in Turkey.”
Economic Uncertainties
The Turkish economy has remained bleak lately, growing 2.9 percent last year, lower than the government’s target of 3.3 percent and well below the 4.2 percent recorded in 2013. Ongoing concerns had recently prompted the World Bank to lower its 2016 and 2017 growth estimates for the country.
The financial crisis that began in the last decade had hurt markets across the region, but the Turkish security industry appears to have managed to post better growth figures over the years. Significantly, growth has not just been in financial volume, but also in the number of companies and their quality.