EMEA market: Caution amid optimism

Overall, EMEA is a growth market as the region slowly walks out of the shadows of the recession that dominated from the late 2000s to the early 2010s. Europe and Africa are expected to see flat to significant growth, while the Middle East is faring worse due to a continuing oil price slump and other factors. Altogether, security players expect double-digit growth for EMEA, albeit such optimism is accompanied by a sense of caution due to various geopolitical uncertainties.

By region, continental Europe is expected to see somewhat flat growth amid strong competition. “We are very strong in Western Europe, and Eastern Europe is a little bit more difficult because we have more price pressure from Chinese manufacturers,” said Baudouin Genouville, Business Development Director for EMEA at Suprema. “End users don't always want to spend money for expensive devices.”
 
“Europe is somehow flat. The unit price itself is going down,” said Gerard Figols, Manager for Product Marketing at Panasonic Europe. “From our side, we see there are some customer looking for high-end products, adding value to their business environments. That’s why we are focusing on those vertical markets where we can deliver products that are needed, technologies that can help customers gain value. These include finance, retail and city surveillance.”

Compared to Europe, Africa is a growth market where more projects are being rolled out. “We have a nice business in South Africa, although it can be better,” said Genouville. “We are very strong in North Africa – Morocco, Algeria, Tunisia – we have good business there, and we have very good partners as well. We have started two airports in Morocco.”
 
“Africa is catching up very quickly, and there is a lot of projects and investment in Africa, especially in security,” said Yury Akhmetov, Business Development Director at AxxonSoft. “There's a lot of investment in Eastern Africa and Southern Africa, and North Africa is recovering from all the wars.”

The Middle East, on the other hand, is beset by regional instability as well as a price dip in oil. “If we look at the Middle East, we have some challenges with the oil. That is an industry challenge – when the Middle East doesn’t get more money from their oil, they have less money to play with, and that of course has an effect on us,” said Raziel Bareket, Director for North and South Europe at Milestone Systems.
 
“Due to all the wars the Middle East is very slow now. There are three big wars in the Middle East now, and there's a lot of conflicts between Arabic countries as well,” said Akhmetov. “Oil price is very low, so the Middle East doesn’t have much money, and they don’t have much budget for security. They approach the manufacturers and installers asking for security solutions, but finally they can't pay. They try to cut prices, but you can't cut prices for hardware and storage.”
 
Overall, most security players are still optimistic about EMEA, saying double-digit growth is expected. “Overall in the region, I think in 2017 and 2018 there will be probably 25 to 30 percent growth, which is a little bit down from 2015 and 2016,” Akhmetov said.
 
“We estimate growth to be 30 percent next year in the (EMEA) countries where we have a branch,” said Genouville.
 
That sense of optimism, however, is accompanied by a sense of caution as the market can still be affected by uncertainties. “The EMEA market is full of opportunity, but that opportunity is tempered by the idea that there is a lot of geopolitical uncertainty, the idea that many elections have just occurred, that you move from a conservative government to a more liberal government and vice versa, and with that the priority for spending may change. The biggest uncertainty is going to be in large public works projects and large government-funded projects, as different candidates have different priorities on national security spending,” said Peter Kim, Senior Director at IDIS.
 
According to Kim, this tests a solution provider’s ability to be flexible and agile. “This is where IDIS really leads. We provide flexible solutions that are adaptable to any need or any size.  When large projects contract or grow uncertain, it’s important to not be so tailored to one set of requirements that you don't have the ability and agility to adapt, both within a project or a marketplace,” he said. “When you offer products that work, for any need, of any size, in any vertical, you are in a much better position to respond to changes, because when new priorities emerge, you are already ready to meet them."