The past two years were quite challenging for most of the security manufacturers around the world. The main problem is not about a change in global demand for security products or weaker economic development in some countries. Instead, across all the geographic regions, manufacturers are now faced with the same problem – “price competition,” which becomes more and more furious year by year.
In the a&s security 50 ranking this year, the average growth rate for these top 50 companies is higher than last year – 5.1 percent; however, the company, that was ranked the 50th, only made US$4.9 million in 2015, in contrast to the $19.4 million it reported for 2014. The baseline for the publicly-listed global security companies in the a&s top 50 ranking became lower in terms of their annual product sales revenue.
a&s Security 50, from 2005 to 2015
The a&s Security 50’s annual revenue, from 2005 to 2015, shows how the global economy and terrorist threats drove and also impacted the security industry over the past 11 years. Now, the universal issue of “price reduction” is testing the flexibility of all the security companies, according to the following chart.
Security industry analysts also confirmed a significant drop in global video surveillance equipment market growth in 2015. According to Memoori’s 2016 annual report, the physical security equipment market grew 4.5 percent in 2015, a significant fall compared to the 8.2 percent annual growth in the past five years. IHS, then, provided an even more disappointing figure and their analyst said, “The world market for professional video surveillance equipment grew by just 1.9 percent in revenues in 2015.” This is in stark contrast to the 14.2 percent reported in 2014 and 6.8 percent in 2013.
Jon Cropley, Principal Analyst for Video Surveillance at IHS Markit Technology, further summarized in the report that “The price of equipment has fallen quickly in recent years. One example of this is the average global price of a network video surveillance camera which fell from almost US$500 in 2010 to less than $130 in 2015. Chinese vendors have often been offering products at lower prices than their Western counterparts and have gained market share as a result.”
Top 10 reflects industry consolidation
The industry consolidation also comes after the price competition. The total revenues of the top 10 winner is about $14 billion, which accounts for 80 percent of all the 50 companies. The result further explains their influence and outstanding market share in the global market.
IHS also pointed out that in the video surveillance market alone, “The top fifteen vendors accounted for 55 percent of professional video surveillance equipment revenues in 2015.”
The a&s Security 50 ranking shows that the physical security suppliers have been consolidating a lot in the past five years. The global market still maintained its high investment toward security projects; however, price competition have accelerated the consolidation of the industry.
The full report of Security 50, 2016 will be released on November 30.