Memoori Business Intelligence’s latest report on the physical security industry in 2012, gave an overview of main technology and market trends in the sector. The shift from analog to IP has accelerated through the recession, as both manufacturers and consumers focus their spending on technology that can be scalable and deliver IT convergence to meet existing and future requirements. Game changing technologies which are expanding future business opportunities include; Wireless, VSaaS and Managed Video as a Service, situational awareness technology including analytics, PSIM and Physical Identity and Access Management. There is an enormous latent demand for physical security products waiting to be exploited in the emerging markets of the world. China for example currently has a penetration of one sixth of the US but this stood at one tenth in 2011, so the Chinese market is growing rapidly by using up this latent potential.
Memoori Business Intelligence's latest report on the physical security industry in 2012, gave an overview of main technology and market trends in the sector. The shift from analog to IP has accelerated through the recession, as both manufacturers and consumers focus their spending on technology that can be scalable and deliver IT convergence to meet existing and future requirements. Game changing technologies which are expanding future business opportunities include; Wireless, VSaaS and Managed Video as a Service, situational awareness technology including analytics, PSIM and Physical Identity and Access Management. There is an enormous latent demand for physical security products waiting to be exploited in the emerging markets of the world. China for example currently has a penetration of one sixth of the US but this stood at one tenth in 2011, so the Chinese market is growing rapidly by using up this latent potential.
Highlights of the report included:
- The total value of the world's security equipment market at factory gate prices in 2012 was $20.57 billion. Of this video surveillance products at $10 billion took a share of 49 percent. The developed markets of North America and Europe are losing market share to Asia and particularly China which will be the largest single market before the end of this decade.
- The physical security industry in the first half of 2012 has well outperformed what most stakeholders had forecast despite setbacks in economic fortunes. We expect this to continue for the rest of the year. The continuation of the growth in 2011 has been driven by a combination of factors including strong growth in IP video networking products, buoyant markets in Asia and higher levels of penetration in vertical markets such as transport, retail and health and education.
- Whilst technology has been the enabler of change, the driver and motivator is now clearly to deliver products and services that increase productivity and provide a better ROI and reduce the total cost of ownership. This has helped to convert physical security from a cost center to a profit center.
- Strategic buys within the industry have been the main driver for consolidation in 2012 but its impact is down on 2011 and this trend may well continue as companies from the ICT and Defense business and Private Equity Companies make further forays into the Security Industry.
- The value of merger and acquisition deals in 2011 was $9.847 billion a rise of 23 percent over the previous year, but in 2012 it declined to $7.168 billion a fall of 27 percent. Poor economic trading conditions reduced the confidence of major suppliers to go for growth through merger and acquisition. However Memoori does not expect this to continue and forecast a steady annual growth rate in M&A deals of 6.5 percent over the next 5 years to 2017.
- For the period from September 2011 to August 2012 Memoori identified 18 arrangements by venture capitalists (VCs) in the physical security industry having a total investment of $267 million. This is almost double the investment made in 2010 and 2011. Clearly VCs are much more confident of investing in the physical security industry. The majority of these involved investment in US based companies by US based VCs.