The most significant change the Japanese security industry saw over the last eight years was the introduction and expansion of IP camera solutions.
The most significant change the Japanese security industry saw over the last eight years was the introduction and expansion of IP camera solutions. According to Yasuo Tobinaga, President of Tenpo Planning, the year 2007 was the real turning point when the market began to move away from analog to IP.
“Analog cameras were easier to install and their costs were low,” Tobinaga said. “But on the other hand IP cameras came with the flexibility that allowed easy integration with other various security systems and this helped its gradual expansion.”
Adding to the innovations, MPEG-4 compression technology and H.264 were also released in 2008, prompting many industry players to expect a major demand for IP. Despite this, the segment’s growth in the Japanese market remained relatively slow in the initial years. Reluctance to adopt a new technology, coupled with the financial downturn that hurt business sentiments from 2008 limited IP expansion. In fact, it took another five years for the market to pick up pace and focus more on IP.
“The network camera market in Japan expanded at a relatively moderate pace until 2011, but has been began growing quickly since 2012,” said Takuro Umeda, Senior Sales Director - Japan at Axis Communications. “There were several reasons for this growth. First, several analog-based video surveillance systems were reaching the end of their use period. Second, large-scale systems were moving towards integration, and many solutions were becoming more intelligent based on IT infrastructure.”
Growth, since then, has been consistent. Over the last eight years, the market has seen a three-fold growth, according to Sumio Kanenobu, Founder and Chief Advisor of NetCam Systems.
Speaking on similar lines Tobinaga said, “If we guess the percentage of market share, analog was 90 percent and IP 10 percent in 2007, and in 2015 this changed to analog 30 percent and IP 70 percent.”
Surviving the Competition
With the market growth and move to IP, competition has also been strong, prompting several industry players to consider options that would make then stand out from the crowd.
Tobinaga said that his company keeps a close watch on the trends in the market, in order to be able to foresee customer requirements.
“At the same time, we prepare peripheral devices to enhance product compatibility,” he added. “This enables the introduction of new products to existing projects, and it has established a business environment that helps distribution partners.”
Satoshi Obata, Technical and Sales Manager at Sun System Supply, said that his company’s business strategies include holding regular seminars on relevant technological topics with a view to strengthen their presence in the market.
Speaking on similar lines, Kanenobu added that his company is also focusing educating the distributors.
Government Spending on the Rise
Anywhere in the world, an often-heard hindrance to security industry growth is concerns of privacy. But according to Umeda, increased awareness of security issues has prompted several end users to shed their privacy fears. This could suggest that there would be less public opposition to more government projects.
Tokyo plans to host the 2020 Oympic Games and this has paved way for renewed enthusiasm in the local security industry. Obata pointed out that the event demands several special installations and can significantly boost market growth. But government projects do come with a lot of conditions and technicalities that deter a lot of companies.
Other government-sponsored projects have also seen an increase. Tobinaga said his company had received enquiries for reconstruction work after the Great East Japan Earthquake of 2011, and that they have signed contracts for several of them.
The Impact of Chinese Manufacturers
The rapid expansion of Chinese companies like Hikvision and Dahua have significantly disrupted the global security market in the recent years. However, as a mature market, Japan appears to remain largely unaffected by the onrush of low-cost products in colossal quantities.
Obata believes that although Hikvision and Dahua have their distributors in the country, unlike other places, the Japanese market is more difficult for the Chinese manufacturers to penetrate. Moreover several customers are concerned about aftersales services and believe that local brands offer them better than their international counterparts.
Looking Ahead
The Japanese economy has not given much to cheer about in the recent years, but according to experts, the country may slowly be getting back on track. For the security industry, this could mean better business.
Events such as the 2020 Olympics could add the much-needed fuel to the industry, along with technological advancements that provide new solutions to consumers. People like Obata are also keen to advise that channel players should focus on providing high-quality products and not resort to lower costs. Supplying the best possible solution is the only way to push the market forward, he said.