With its close proximity to Eastern Europe and Northern Africa, safety and security issues are not taken lightly in Italy. While the local industry (manufacturing) excels in research and development of video and intrusion detection technologies, players in the domestic market (suppliers, distributors, dealers, integrators, installers) are facing a tough battle — flat growth in the current economic climate, compounded by privacy concerns of the locals — where only the fittest will survive.
The overall European electronic security equipment market (including Eastern Europe) was estimated to be worth US$4.63 billion in 2008: video surveillance $1.95 billion, access control $1.03 billion and intrusion detection $1.65 billion, based on the research done by Archana Rao, Senior Research Analyst at Frost & Sullivan (Europe). Annual growth rates were 5 percent (30 percent for IP-based solutions), 7 percent and 3 percent, respectively. Italy's high levels of corporate and personal taxation, public-debt over-GDP ratio of more than 100 percent, and political resistance to budget cuts make the short and medium-term fiscal outlook uncertain for the Italian economy, said Matia Grossi, Industry Analyst, Electronics and Security, Frost & Sullivan (Europe).
Its GDP growth is expected to be slightly negative this year, reflecting the impact of global financial uncertainty and the impact on exports from the strong Euro. “The Italian economy is expected to start picking up again in 2010, however, at about half the level of the pan-Europe average of about 2 percent,” said Grossi.
The Italian security market is the fifth largest in Europe, offering moderate growth prospects. The share of Italy in the total European market is, however, set to fall slightly in the period between 2007 and 2013. “The market is expected to grow from just over $400 million in 2007 to about 600 million in 2013, with an average annual growth rate between 8 and 9 percent,” said Grossi, rendering the total for 2009 at roughly $470 million. Grossi's numbers were seconded by Stefano Riboli, Product Marketing Manager for Video Systems and Products at Bosch Security Systems (Italy), who predicted flat growth (0 percent) for 2009.
There are, however, other more optimistic projections, indicated Andrea Ceppi, Media Specialist of local association ANCISS, as prospects have definitely improved from the past three years. David Benhammou, President of CDVI, estimated the Italian security market to be worth between $660 million and $800 million, with electronic access control accounting for at least 20 percent of the total. Jean-Christophe Boyer, Presales Manager for Xelios Security Solutions (Italy), concurred with this estimate, pegging the access control market at $160 million. With installation and guarding thrown in, the Italian security market would be at least $1.5 billion, said Luca Cappellini, Marketing Manager for ADT Fire & Security (Italy), “but growth would only be between 0 and 3 percent in 2009,” echoing Riboli's view.
Demand for security equipment significant and remains a primary area of focus for the Italian government, said a U.S. Commercial Service representative. The 2008 national budget contained an additional $270 million for security-related expenditures, including funding to expand the police force and $135 million for modernization of vehicles, infrastructure and technology.
In an effort to reduce crime and improve the quality of life in Italy, a program was established in 2007 for the development of “security pacts” in Rome and Milan between national and local authorities. Many other pacts have been signed subsequently in other cities. In response to insufficient funding available to the
Ministry of the Interior to combat crime, the objective of these pacts is to increase funding available through the participation of regional and municipal authorities, according to U.S. Commercial Service. “Resources from the municipal authorities and additional contributions on behalf of the provinces are gathered to create a special security fund that is transferred to the Ministry of the Interior and managed by the Prefecture,” said the same representative.
Verticals and Projects of Interest
In Italy and across Europe, emphasis has been placed on homeland security, transportation and critical infrastructure protection. "Transportation and city surveillance are the only verticals that will offer double-digit growth in the medium term,” said Grossi , and Riboli added that land borders and petrochemical plants will develop nicely, despite the financial difficulties. Additional areas of interest include utilities , energy facilities , rail networks, defense installations and other high-risk facilities, according to U.S. Commercial Service. Take transportation for example. The pan-Europe high-speed rail network aims to connect 65 cities by 2010. “Italy is on Corridor No. 5, linking Portugal to Russia,” said Salvatore Pastorello, Product Manager for ELMO.
Another good example, said Grossi, is the new agreement among IBM Italia, Thales Security Systems and Italian railway company Rete Ferroviaria Italiana for the deployment of video surveillance and analysis systems at 85 locations nationwide, for an overall cost of $110 million.
Opportunities should continue to arise in the aviation, maritime, supply chain and rail sectors as a result of security measures mandated by regulatory bodies. The air and maritime transportation sector, in particular, should continue to perform upgrades in order to fulfill the ICAO mandates regarding security standards. Take the port of San Giorgio di Nogaro for example. It is situated near the city of Udine and is one of the three active ports in the region, together with Trieste and Monfalcone. It is a river port, accessible from the Adriatic Sea. The port area houses a rail junction, covered warehouses and outdoor storage areas, handling approximately 1.6 million tons of various goods per year.
With one of the biggest market shares in the country, ADT's top verticals are retail, industry, traffic (especially tunnels), city surveillance and marine protection (ports and vessels), said Cappellini. “As the economy worsens and incidents of theft and crime increase, more attention would be given to loss prevention and public monitoring.”
Cieffe's top market segments in Italy include banking, transportation, critical infrastructure, town centers (fighting crime together via wireless connections) and national monuments. “Security in residential apartments is also becoming a must as break-ins continue to increase,” said Alberto Bruschi, VP of Sales for EMEA at Cieffe (a March Networks company). The 2015 World Expo in Milan appears to be very promising as well: The organizing committee is asking for everything to be manufactured in Italy.
All these tourist attractions, including the Vatican and its museums based in Rome, require top-notch security solutions. “Our Vatican installation took place at the end of 1999 and the beginning of 2000, making it one of the most secured places on earth,” said Antonella Sciortino, CCTV Product Manager for Panasonic Italia. Following the success of this installation was a second project: an analog video surveillance system
for the Vatican's museums. Both installations have the same products and technology, making the overall system compatible and easy-to-use. The continued improvement work done by Panasonic System Solutions has brought about 500 dome cameras in total, with 30X zoom.
While the retail and banking sectors are bearing the brunt of the current economic slowdown, Davide Monterisi, Business Development Manager for GE Security (Italy), believed that there will still be substantial growth “as more than 50 percent of all armed robberies in Europe take place in Italy.” Other verticals mentioned include logistics, stadiums and hotels/villas/resorts. Homeland security, schools and public offices are also high on the list, said Flavio Venz, MD of Nexxt. "Commercial buildings, however, are being postponed due to the credit crunch.”
Where Technology Meets Law
Solving privacy issues is the No. 1 priority for all solution providers. “Between France and Italy, we probably have the most strict privacy laws in Europe — if not the world — and are actively and routinely enforcing them,” said Boyer. This has, in turn, influenced the way in which products are developed and marketed. National certifications like the IMQ, on the other hand, do not seem to play that important a role as in countries like Germany.
There is a special commission in Italy that oversees privacy issues and laws, said Cappellini. “DVRs, for example, are only allowed to record for 24 to 36 hours in most cases; banks are allowed one week, maximum.” Such strict privacy laws govern how security systems are used and what features can be made available. “The authorities could switch off your surveillance equipment and keep it off indefinitely if you don't have clear warning signs or comply with recording restrictions,” cautioned Bruschi.
This is viewed positively by some, though. “Regulations help us grow and make us stronger,” said Monterisi.
In terms of technology uptake, adoption of IP-based solutions is on the rise. "Currently, the ratio between analog and IP installations is about 75:25, but by 2012, it could become 50:50,” said Bruschi. The latest figures from IMS Research show that 85 percent of the Italian integrators polled have more interest in IP than analog, compared to 54 percent in 2006. “This global transition actually enables better and easier long-distance, remote surveillance,” said Alessandro Berio, Sales Director for Pinkerton.
Competition appears to be fiercer than ever, with new companies entering the market on a regular basis. “The future sees a shift toward megapixel resolution and video analytics,” said Sciortino.
Access Control and Anti-Intrusion
Privacy concerns also affect the development of access control technology. Employee tracking is prohibited by law, said Cappellini, “and as such, time/attendance is not even a market in Italy.”
Highly sophisticated, accurate, dual-tech biometric authentication is thus called for, allowing cardholders to carry their access records and biometric templates at all times, explained Benhammou. Compounded by the pressure to comply with the amended Disability Discrimination Act, suppliers are pushed to devise creative solutions, such as user-friendly tags and automatic door openers.
"User perception also needs to be changed,” said Boyer, “as fingerprint registration and authentication used to have high false rates.” Now, 70 percent of the fingerprint biometric sensors used in Europe are from Sagem Sécurité, ensuring precise processing.
Although the negative impact from the global recession can already be felt in Italy, with many projects being put on hold, Boyer believed that projects with real access control needs — such as large corporations, industrial sites and air/seaports — will continue as planned. This was seconded by Pastorello, who is seeing growing needs for building management software.
As for anti-intrusion and perimeter, Gioacchino Tommaselli, Director of Sales and Marketing for GPS Standard, estimated the market to be worth $270 million. “With
ever-increasing unemployment rates and numbers of illegal immigrants, such solutions are in high demand in Italy and in neighboring countries.”
Playbook and Outlook
Thanks to its old banking structure, Italy is relatively cushioned in the current financial crisis, said Mario Dotti, Export Manager for HR Europe. “We don't have that many financial ‘tools,' and people are simply postponing projects to wait and see — the money is still there.” To Benhammou, 2009 is just a year for “self-cleaning,” which will ultimately leave the industry with only the strongest.
Due to slower adoption of IP at the distribution level, the market is still dominated by box movers with very little value-added services offered to end users at the moment, observed Grossi. Dominant regional players in the distribution channel are HESA, Sicurit Alarmitalia, Nexxt, Bettini Video and Videoline. “There are, however, many other tier-two players such as Sidin, Tech Data and Allnet, also playing a significant role and getting increasing importance in the market, thanks to their introduction of IP-based products.”
Few pan -European system integrators exist in Italy, apart from Niscayah (with the acquisition of CIS) and Siemens. “The largest participant in Italy is Finmeccanica,
which owns quite a few mediumsized system integrators specializing in specific vertical markets, with Elsag being an extremely important player in the Italian market,” said Grossi. “ADT, Gunnebo and Gruppo DAB are some other mid-sized
players on the system integration front.”
The Italian market is relatively underdeveloped when compared to the rest of Europe, continued Grossi. Transportation is the only vertical which is expected to experience high growth, both in terms of quantity and complexity/functionality of the systems deployed. Banking is another vertical usually keen on deploying advanced systems, but the global financial turmoil is hindering security installations. Other verticals represent limited potential, and the overall economic situation is expected to further hinder the uptake of electronic security systems.
"We are experiencing what's known as the domino effect — it's really not as bad as what the media paints it out to be,” said Tommaselli. “Government projects such as utilities, airports and borders will go on as usual, and by the end of 2009, money for upgrades at banks and villas will return.”
Regardless of the strict privacy regulations, surveillance in public places continues to rise. “The federal, regional and municipal governments are also putting resources into enhancing public security, including increasing various police forces, in order to combat immigrant associated problems,” said Dotti. Due to Italy's conservative culture, awareness is still relatively low, observed Cappellini. “Most users would go to traditional electricians when thinking of security systems.” And one can find bad installations at many high-end places, said Berio, highlighting needs for continuous education and training.