Editorial Director John Shi examines security trends, finding out what's hot at the biennial Essen 2010 exhibition.
Security has taken a new direction, after being buffeted by the financial crisis. IP emerged as a winner, highlighting the importance of convergence and integrated solutions.
The epitome of integration was Siemens, which offers a single interface for video surveillance, access control and intrusion alarms. “We are an IT player in the security market,” said Frank Pedersen, CEO of Security Solutions, Siemens Switzerland. “This is where the future is.”
Software is the heart and soul of integration, helping users solve problems. The Siemens platform integrates with information security systems, providing users with useful information to make timely decisions. This can be considered corporate or high-level integration.
On a smaller scale of integration, we see security management of single systems — surveillance, access control or intrusion alarms. This gives the user tight control over one system, managing each device. A number of German companies are in this niche, including Ela-Soft and Advancis Software & Services. Two traditional access control makers have branched into software — Primion has now expanded into access control software, while Dutch Nedap launched its controller-based VMS this year. This solution elevates products and service to all physical security systems.
From a management standpoint, this expansion makes good business sense. Adding software extends the product line and increases the market scope for the company. My first impressions of European makers were their deep knowledge of integration and applications, to serve clients who cared about having their problems taken care of. At Essen this year, this continues to hold true.
Solutions Key to Success
Geutebruck provides a contrast to Siemens. A private company with a 40-year history, it remains focused on video surveillance and delivering effective solutions, said Katharina Geutebrück, MD of Geutebruck.
While the 2008 financial downturn affected premium providers, Geutebruck maintained its quality and German production to offer value. The company further emphasized the importance of truly solving customer needs, rather than hyping technical fads or slick demos. A cheap product that does not serve a purpose does not offer real value.
Dallmeier expounded further on price versus value for discerning buyers. In terms of expense, a good product working reliably outweighs a product that has a lower price but poor performance, said Georg Martin, Marketing Director for Dallmeier electronic.
Calling for Budget Solutions The economic slowdown heralded greater acceptance for budget solutions in a conservative market. German security products have traditionally required a minimum of a two-year warranty, with most makers and distributors covering products for three years. The warranties for peripherals are even longer, with 10 years being standard.
The lean times have made price the priority. Satisfying basic needs takes precedence over the product's lifespan. The consumer mindset has also taken hold: If the product breaks, it can easily be replaced later. Coupled with the deluge of Chinese offerings, the German market has been shaken up, becoming more open to budget products.
The slow economy has accelerated the polarization between high end and low end, a view echoed by most security experts. While analog still has the dominant market share, it yields limited returns. There is no middle ground in the playing field, which requires makers to cater to the high-end needs of power users or meet basic needs for cutthroat prices.
Breaking into the high-end market revolved around understanding customers and solving problems in their vertical segment. By accurately honing on in marketable solutions, effective integration and exotic technologies unfamiliar to most, high-end providers can meet client needs. This makes them competitive and increases the bottom line.
Bosch Security Systems made an interesting statement at the show, with a delivery truck parked prominently at its booth. It appeared to be a prop, until on-site staff explained that Bosch not only developed cutting-edge solutions, but also delivered cost-effective products that were available right away. In the face of polarization, it is admirable to see a company take such a bold two-pronged strategy.
Price wars have increased the pressure on distributors and resellers. More products need to be sold in order to be as profitable as before, yet it is difficult to increase volume in a competitive market. In light of this dilemma, more distributors are offering solutions under their own brands. This increases their profile, improves their sales and boosts profits.
Distributor ABUS Security-Center started out making mechanical locks, then grew its portfolio through acquisitions. Today, it positions itself as a security manufacturer, emphasizing German design and a complete portfolio in video surveillance and intrusion detection. It understands market needs and can serve homes as well as large corporations. With technical know-how and production facilities, ABUS Security-Center is confident about future growth.
Service was also an emphasis for distributor Monacor. With catalogs in German, English, French, Spanish and Italian, its market reach extends throughout the European Union. It promotes a branded Monacor line as well.
German surveillance distributor Videor will raise the profile of its IP portfolio. As its British sales have slowed and clients remain cautious about security investments, network video offers better ROI for customers who can afford it. The alternative is basic packages with bargain prices, with middle-of-the-road products essentially disappearing.
Videor considers traditional security installers to remain its main channel. As fire and alarm equipment is highly regulated in Germany, related electronic security integrators can also include video surveillance. The company has no plans to move into access control or intrusion detection, maintaining its focus on surveillance and strengthening its Eneo product line.
Santec has 36 years of history, producing its own product line for the past 25 years. Apart from analog sales, the company is developing megapixel cameras, panoramic cameras and HDcctv cameras. It even offers VMS for the mid- to high-end market, while keeping prices affordable. Santec feels confident its portfolio will remain competitive outside of German-speaking regions, such as the Middle East and Eastern Europe.
Speaking of brands, it is interesting to note the reemergence of Grundig. The former audiovisual maker, which also had security offerings, is drawing from its consumer experience to offer competitive solutions. It will be managed by Aaset, which has a good track record in the French and German markets.
Long Road to IP
IP had a notable effect on the Chinese security market, as traditional installers have had trouble picking up the necessary skills for planning, installation and maintenance. It was surprise to learn that IP-savvy Germany, which is leaps and bounds ahead of China, is facing the same problem with its installer knowledge base. The advent of IP is a major wakeup call for traditional security manufacturers.
IP providers cannot become complacent. Education for installers and system integrators will be necessary, to ensure a painless migration to networking. Tips on product setup, maintenance and operation will be essential to win the hearts and minds of integrators.
German VMS provider SeeTec was ranked No. 2 in EMEA by IMS Research for 2010, making it a successful software company. Putting technical specs aside, it emphasizes major verticals such as transportation and retail, then incorporates each market's minute needs into its finished solution. Along with market customization, SeeTec also integrates video content analysis in its VMS. This level of commitment has paid off despite slow market conditions.
Another VMS standout is Russian Axxon, named by IMS as the market leader in EMEA. It also focuses on market customization, accounting for unique needs. Axxon has considerable experience at home, with deployments in city surveillance, energy, and oil and gas. Tailoring a solution to its application is something Axxon does well.
The security industry has undergone a transformation, accelerated by the credit crunch and the migration to IP. Among the many changes are falling prices and a trend to maintain profitability. This underscores how the customer is king, with customization being essential. As networking is inevitable, integration will be a central part of value. Finally, branding is an unchanging principle for staying ahead and winning market share.