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2018 lays the foundation for future security market growth
Jan 28, 2019

 In the past 10 years, the security industry has grown at a compound annual growth rate of 5.92%. Memoori predicts that the market will reach US$44.25 billion in 2023, with a compound annual growth rate of 7%.   In the three major security applications in 2018, the market size of video surveillance products was 17.57 billion US dollars , accounting for 55.6%, the market size of access control products was 7.45 billion US dollars , accounting for 23.6%, and the market size of burglar alarm system was 6.72 billion US dollars. , accounting for 21%.   Among them, the growth rate of video surveillance is up to 9.9%, which is 4.4% higher than that of 2017, but this is not a particularly good year for non-Chinese manufacturers, mainly because of the fierce competition in the market, which makes it return to The average growth rate over the past five years has been consistent.   We expect the market to grow at a compound annual growth rate of 13.2% over the next five years, most of which is due to the rapid growth of artificial intelligence and video analytics. If the technology maturity is as stated by the manufacturers, this part of the business is expected to reach 2023. 2.3 billion US dollars. Other growth, excluding video analytics, will be around 8.5%, but as component prices fall and Chinese manufacturers' pricing is no longer aggressive, they need substantial growth to achieve a compound annual growth rate of more than 10%.   In the continuous penetration of IP network services, biometrics, identity management, wireless locking systems and ACaaS, the access control market maintained an 8% growth rate, the highest growth rate in the past three years. But there is also some information indicating that the price war in the access control industry has begun. At the same time, manufacturers seem to be less willing to support open standard protocols in order to protect their traditional business, which will inevitably reduce their competitiveness in the future, and also open up opportunities for Chinese manufacturers.   As a pioneer of physical security, the anti-theft alarm system business is very mature. In 2018, with the increasing number of applications such as thermal imaging , multi-sensor cameras, and wireless detectors, the alarm industry growth rate reached 4.5%.   The widespread use of wireless sensors, advances in sensor technology, the development of wireless technologies, and the integration of video surveillance, access control, and outdoor lighting have all contributed to growth in this area.   Business strategy needs to make some fundamental changes   There are many factors that affect our industry, and the following five factors will fundamentally change the business strategy.   1. The gap between major suppliers in the industry and hundreds of small suppliers is expanding every year, while profit margins are also falling, and the smallest economy in this industry is also growing. This situation is particularly prominent in the field of video surveillance. In the next five years, perhaps no more than five companies can continue to develop.   In the video surveillance business, two Chinese manufacturers have formed a certain amount of volume. At the beginning, their gap with European and American manufacturers was so obvious, and now they have established a very high level of production and scale with foreign companies. The big gap, it seems unlikely that it will be reversed, and it is difficult for foreign companies to compete with prices. This has given Chinese manufacturers a dominant position in the security industry.   Some foreign companies are improving their business operations by continuing to invest and producing products with better performance and better safety while reducing profits. Cybersecurity incidents have given foreign companies a chance to develop, but this is not enough to change the landscape.   Mergers and acquisitions between foreign-invested manufacturers are seen as a more likely way to break through, but this may only slow the pace of further widening the gap. It may be helpful to form strategic alliances between vendors to share development resources and maintain new product costs.   2. The fastest growing regional market with the largest market share is Asia and China. According to sales/per capita ownership, the penetration rate of physical security equipment in the region is the lowest. Currently, the region accounts for more than 28% of the global market. However, in the video surveillance business accounted for more than 40%, if companies want to rank among the top 20 global suppliers in 2023, then it must be a large share in this regional market.   3. Ironically, although physical security has contributed to the protection of personnel and property in public places, it is considered to be a breakthrough in cybersecurity crimes, especially video surveillance, which is regarded as the weakest link in the security industry. Therefore, the protection capability of network security has become the basic requirement of users, and the market share of manufacturers lacking this capability will inevitably decline, and even die in the industry.   4. Software services have become the fastest-growing segment of the physical security business. In the past five years, it has almost doubled the growth of hardware sales, but it only accounts for 12% of the total business. In the future, this area will increase its share rapidly. Benefit from the value of the data is valued by users. Artificial Memoori recently released Intelligent Video Analysis report pointed out that the existing equipment in AI video analysis of the market potential of $ 65 billion.   In 2017, the global video surveillance product market was $15.87 billion, and AI video a nalytics is expected to have revenues of $115 million. This means that artificial intelligence video analysis is only a small part of the video surveillance market. Without being bound by technical factors, we estimate that its share of the overall market will increase to around 13% by 2022.   5. Integration and IT have profoundly affected the industry in the last ten years. With the in-depth development, the industry has entered the IoT phase, and a more open and comprehensive overall solution will become a trend. Many vendors' solutions have seen big data as a key technology for improving and accelerating business processes.        (This article was compiled from the International Edition of Security Automation, original author Allan McHale ) 

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