The global financial crisis and ensuing recession in 2008/2009 shook the security industry and shattered the myth that the industry is immune to the ups and downs of economic cycles. The security industry used to be largely driven by infrastructural projects and government investments, and the austerity measures in the U.S. and E.U. in the aftermath meant slashed budgets or frozen/postponed projects. With matured economies at a standstill, all eyes are on emerging regions such as Latin America, Africa, the Middle East, Eastern Europe and Asia. As 2012 is almost behind us, the focus should now be on the year ahead. a&s sums up the storms in 2012 and peeks into the possible trends and prospects of clear skies in the upcoming year.
Industry Restructuring
Manufacturers and solutions providers are confronted with intense competition, which causes prices to fall and, in turn, batters the distribution channels with declining revenues and margins. No industry player is spared from the challenge of how to increase revenues while sustaining solution affordability and profits. Cost-effective solutions from internationally known brands are crushing the industry from the top, while low-price Chinese products do so from the bottom. Together, the two forces affect the entire security industry on all levels, forcing manufacturers, distributors, systems integrators and installers to regroup and evolve.
In the survival-of-the-fittest game, companies must adapt to changing technologies and market conditions, as even the traditional giants are toppling over in the battlefield, with new giants rising at the same time. As the saying goes, heroes are created in times of war.
In channel distribution, value-added is the buzzword. More are focusing on packaging and delivering complete systems or comprehensive solutions, as well as strengthening project/technical support and customer service. This, in turn, is pushing manufacturers to add previously unfamiliar product lines, either through M&A's or internal development, to diversify revenue streams.
IP on Cloud Nine
At our own Secutech show in Taipei in 2011, IP cameras from both large brands and small manufacturers were tested and compared side by side; at that time, specifications varied greatly despite ONVIF conformance claims. Fast forward to April 2012, and the second IP camera testing event saw much improved and consistent conformance in terms of image quality and connectivity. This maturation had occurred within the time span of just one year and should serve as a strong signal for the video surveillance industry: IP cameras will now be differentiated by brands, sales/marketing efforts, customer service, and in 2013, price/cost-effectiveness as well.
The maturation of IP-based applications, coupled with the maturation of cloud infrastructure, is propelling the adoption of security as a service. End users no longer need to invest large amounts in infrastructure and maintenance because they can now subscribe monthly to more reliable and consistent service packages. Service providers can now enjoy more stable revenues and reinvest in solution and business model differentiation efforts.
Access Making a Comeback
Not surprisingly, access control is riding along with the IP waves. Wireless electronic locks and NFC stand out as noteworthy trends. Wireless capability enables easy and fast installation and provides flexibility and possibility for user-adjustable site configurations. Real-time management and remote control are other frequently referenced benefits.
Biometrics is another segment witnessing new, exciting applications. High-hazard locations such as mining and construction sites can, for example, deploy portable, ruggedized units to verify training/safety certifications, on top of regular payroll and access audits. In an emergency, crew can be accurately accounted for in a matter of seconds to make rescue missions more effective.
Enterprise China
The impact of China as a manufacturing powerhouse is not to be dismissed. Take a Russian distributor for example. The company used to concentrate on selling Korean and Taiwanese products, but had to greatly increase the quantities of Chinese products in recent months, as its competitors have begun selling Chinese products. If it had not followed suit, it would have gone under due to this year's unresolved global financial and economic crises. China as an end-user market is also maturing very quickly, weeding out unfit local and international players or their underdeveloped solutions.
Residential With High Potential
The high and increasing penetration of smart mobile devices is facilitating R&D in security. Homeowners and business owners alike can now easily keep a watchful eye on their properties or operations anywhere, anytime. Traditional installers and alarm-monitoring companies are hard pressed to learn and change very quickly or disappear, as new technologies, players (telcos, ISPs, cable TV providers) and service models emerge every day.
Count Down to Clear Skies
The past year has been rough for some, but resilience and persistence in creating differentiation in solution offerings, value adds and service models will pay off. Despite economic uncertainty, security in 2013 is still worth anticipating for. Spring will come when the new industry and market order falls into place.