memoori physicalsecurity a4 oct17 v3€¦ · 3.13 mobile apps 3.14 video management software (vms)...

The Physical Security Business 2017 to 2022Access Control, Intruder Alarm & Video Surveillance

Published: Q4 2017

PhysicalSecurityBusiness2017to2022

Synopsis

Thisreportaimstoassistallstakeholdersandinvestorsinthephysical

securityindustryinidentifyingbusinessopportunitiesingrowthsectors

ofthemarket;andforecastsdemandto2022

©MeemooriResearchAB


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Introduction

ThisReportistheNew2017DefinitiveResourceforAccessControl,IntruderAlarms&VideoSurveillanceMarketResearch.

ThetotalvalueofPhysicalSecurityproductsatfactorygatepricesin2017was$29.2Bn,an

increaseofapproximately5%on2016.

Thisisadeclineingrowthfromitspeakin2014butanincreaseonthelast2years.Overthe

last8yearsthemarkethasgrownbyacompoundannualgrowthrateof6.41%and

Memooriforecaststhemarketwillreach$41.27Bnin2022ataCAGRof7.2%.

Ofthethree,stilllargelyindependentbusinesses,AccessControlhasmaintaineditsaverage

growthofapproximately7%overthelastthreeyears,andtakesashareof23.5%.


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Why Do You Need This Report?

2017hasdeliveredanimprovedandmorestableperformanceandnowallthemaindrivers

forgrowtharenowfirmlyreadytomatchtheperformancerealizedintheHalcyondaysof

profitablegrowthbetween2010and2014.

Howevertherearemajortechnicalandcommercialchallengesaheadthatwillstressthe

supplysideandtheshapeandstructureofthebusinesswillchangesignificantlyoverthe

next5years.Thechallengethatcurrentlypreoccupiesmostcompaniesishowtheycanoperateprofitablyduringthe“racetothebottom”andsurvive.

Thegapbetweenthemajorsuppliersandthemanyhundredsofsmallersuppliersgets

widereveryyear,whilstatthesametimeprofitmarginsarefallingincreasingtheminimum

economicsizetooperateprofitablyinthisindustry.

Inthevideosurveillancebusiness2Chinesemanufacturershaveadoptedthestrategyof

disruptingtheindustrybyundercuttingtheprofitmarginofincumbents,whilstatthesame

timeexpandingmarketsandrapidlygrowingmarketshare.Theyhavebuiltupvolumeand

thegapinsizebetweenthemtodayandthenexttierofwesterncompaniesissowidethat

itlookshighlyimprobablethatitcanbereversedandcertainlynotbywesterncompanies


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competingsolelyonprice.Thisgivesthemadominantholdtodayonthemainstream

business.

Ascommoditizationofvideosurveillanceproductscontinuestotakeholditrequiresa

strategythatbroadlyfocusesoneithergoingforvolumethroughtheSMBmarketorbrand

throughtheenterprisebusiness.Webelievethatnomorethanfivecompaniesby2022will

thrivebyoperatinginbothatthesametime.

MajorcompaniessuchasAxisCommunications,Avigilon,BoschandPanasonicareina

positiontoreducetheirmarginssufficienttohangontotheirshare.Buttocontinue

growingtheirsharetheyneedtoinvestmoreininnovativeproductsthatofferabetterTCO

metricbutwithdepletedmarginstheywouldneedtoincreasetheirfinancialresources.

Withinits301Pagesand30ChartsandTables,TheReportPresentsAlltheKeyFactsandDrawsConclusions,soyoucanunderstandwhatisShapingtheFutureofthePhysicalSecurityIndustry;

IncreasedpenetrationofIPNetworksystems,furtheradvancesintobiometricreaders,

identitymanagementandwirelesslockingsystemshaveallhelpeddelivergrowthinAccess

Control.Thisisthesecondconsecutiveyearthatithasturnedinthehighestrateofgrowth

ofthe3businesses.Howeverthereissomeevidencethatpricepressuresarestartingtobite

andthiswilleventuallyhaveanegativeeffectongrowthwhenmeasuredbyvalue.There

alsoappearstobereluctancebymanufacturerstosupportopenstandardsinorderto

protecttheirheritagebusiness.Thiscoulddamagetheirlong-termfutureandopentheway

forChinesemanufacturestotakeuptheinitiativeandmakeastrongpushintothebusiness

theyhaverecentlytargeted.

ThemarketforVideoSurveillanceproductswas$15.87billionin2017,agrowthof5.9%on2016andtakesa54.5%shareofthephysicalsecurity

business.Thislevelofgrowthlooksdisappointingcomparedwithgrowthovertheprevious5yearsthataveragedaround9.7%.Howeverthishasbeena

relieftomanysupplierswhobelievedthat2017wouldstruggletoimproveon2016ifthedrasticfallincamerapricesovertheprevioustwoyearscontinued.Ithas,andthishasputagreatdealofstressonprofitabilityparticularlyfor

manufacturersinthewesternworld.

Theintrudersystembusinesstooka22%share.Itisthe“father”ofthephysicalsecurity

industryandhaslongsincereachedmaturitybutitsincreasinguseofradarandthermal

cameras,hascontributedtogrowthedgingupto2.5%in2017.Theuseofradar,advances

insensortechnologies,wirelesstechnologyandtheintegrationwithVideoSurveillance,

Accessandoutdoorlightinghaveallcontributedtoitsgrowth.


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Table of Contents Preface

ExecutiveSummary

1.Introduction

2.Structure,Size&ShapeofthePhysicalSecurityBusiness

2.1StructureoftheBusiness

2.2TrendsinMarketSharebyGroup2012-2017

2.3SizingthePhysicalSecurityBusiness2017&Forecastto2022

2.4WorldDistributionofSecurityProductsbyMajorRegions

2.4.1TheStatusin2017

2.4.2MarketSize&TrendsbyVerticalSectors

2.4.3MarketSizebyRegion&Penetration

2.4.4China&theRestofAsiaOffertheBestProspectForGrowth

2.5Comparing&Sizing,Access-Intruder–Video2017

3.TheVideoSurveillanceMarket2017-2022

3.1MarketSize2017&Forecastto2022

3.2MarketSizeofCameras

3.3MarketSizeofVideoManagementSoftwareSystems

3.4Identifying&MeasuringthePerformanceofLeadingCameraSuppliers

3.5Identifying&MeasuringthePerformanceofLeadingVMSSuppliers

3.6ChannelsofDistribution&Trends

3.7BusinessStrategiesforEnsuringSuccessintheVideoCameraMarket

3.7.1Scale/EconomicsVsTechnology/Performance

3.7.2CommoditizationHasTakenHoldintheSMBMarket

3.8TechnologythatDrivesDemandforVideoSurveillance

3.8.1IPNetworkCameras

3.8.2Compression&VideoAnalytics

3.8.3IntegrationwithinPhysicalSecurity&OtherBASServices

3.9TheMarketforVideoSurveillanceasaService(VSaaS)2017


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3.9.1Drivers&RoadBlockstoVSaaS

3.9.2Suppliers&OperatorsofMVaaS&VSaaS

3.9.3AcquisitionsinMVaaS-VSaaS-ACaaS

3.10VideoTechnology-IPCameras–HDAnalogCCTV–ThermalCameras

3.10.1IPNetworkCameras

3.10.2TheFuture-IPNetwork-HDCCTV–Analogue

3.10.3VideoCompressionTechnologiesH264VsH265

3.10.4ThermalCameras

3.11BodyWornCameras

3.12StorageRecorders

3.13MobileApps

3.14VideoManagementSoftware(VMS)

3.15VideoSurveillanceAnalytics

3.15.1Overview

3.15.2DemandforAnalytics

3.15.3DeepLearning&MachineLearning

3.16NewApplicationsforSpecialistCameras

4.TheAccessControlMarket2017to2022


4.2IdentifyingMeasuringthePerformanceofLeadingAccessControlSuppliers

4.3ChannelsofDistributionforAccessControlSystems

4.4MajorDemandDriversforAccessControl

4.4.1IPNetworkSystems

4.4.2IntegrationwithinPhysicalSecurityandotherBASServices

4.4.3ConnectingPhysical&LogicalSecurity

4.4.4PACS–StrategicAcquisitions

4.4.5DemandforBiometricReaders

4.4.6PersonalIdentityVerificationCard(PIVCard)

4.4.7NearFieldCommunications(NFC)forAccessControl


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4.4.8SystemsIntegratorsPreferencetopushAccessControl

4.5AccessControlasaService&ManagedAccessControl

4.5.1GrowthThroughAccessControlasService&CloudBasedSystems

5.IntruderAlarms/PerimeterProtectionMarket2017to2022


5.2DemandDrivers

5.3Identifying&MeasuringthePerformanceofLeadingSuppliers

6.WirelessTechnology

6.1WirelessintheVideoSurveillanceMarket

6.2WirelessintheAccessControlMarket

6.3WirelessintheIntruderAlarmMarket

6.4WirelessWillbeDrivenbyIoT

7.Standards&CyberSecurity

7.1ONVIFforVideoSurveillance

7.2ONVIFforAccessControl

7.3PSIA

7.4CyberSecurity

7.4.1TheMostSeriousThreattoPhysicalSecurityStakeholders&Emerging

BIoT

7.4.2TheCyberRiskThreatLandscape

7.4.3ThePhysicalSecurityIndustryistheWeakestLinkintheBIoTChain

8.SoftwareMarketsinthePhysicalSecurityBusiness

8.1PhysicalSecurity&InformationManagement(PSIM)

8.2PhysicalIdentityandAccessManagement(PIAM)

8.3SituationalAwareness

9.BusinessDevelopmentOpportunitiesThroughIntegration,ITConvergence&IoTRequire

NewBusinessModels

9.1GrowthThroughIntegration&ITConvergence

9.2GrowthThroughIntegration,ITConvergencewithinBASServices

9.3GrowthThroughIoT&theBuildingInternetofThings(BIoT)


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9.3.1TheImpactofBIoTonPhysicalSecurity

9.4BusinessOpportunitiesFocusedonNewVerticals-SharedIntelligence&Systems

Integration

9.4.1NewIndustryVerticals&MarketSegments

9.4.2SharedServices,Smart/SafeCities&BIoTSystemIntegration

9.4.3SharedIntelligenceinthePrivateSector

9.4.4TotalSolutionsversusProductManufacture

9.5BusinessModelsFocusedonProductSpecialization,Brand&Commoditization

9.5.1ProductSpecialization

9.5.2Commoditization

9.5.3Brand

9.6BusinessModelsBuiltAroundSecurityasaService&VSaaS

9.7DoChineseManufacturersDominatetheVideoSurveillanceBusiness

10.M&APerformancebySector-ValuationandOutlook2000to2022

10.1M&APerformance2000–2017

10.2M&APerformancein2017

10.3M&AOutlook2017-2022

10.4M&AAnalyzedbyBusinessSegment2017

10.5M&AValuation–ExitMultipleBenchmarks

10.6M&AActivitybyCountry

10.7StrategicBuysDominateM&AActivitybutPrivateEquityAbstains

11.IdentifyingPotentialAcquisitionTargets&HighGrowthSectors

11.1PotentialAcquisitionTargets

11.2AcquisitioninPhysicalSecurityDefinedbySectorandType

11.2.1TheIPVideoSurveillanceIndustry

11.2.2SecurityManagementSoftware

11.2.3VideoSurveillanceasaService(VSaaS)

11.2.4AccessControl,Biometrics&IdentityAuthorization

12.Investment&itsImpactontheSecurityIndustry


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12.1TheStateofVentureCapitalintheUSA

12.2ImpactofVentureCapitalontheSecurityIndustry

12.3InvestorsintheSecurityIndustry&Recipients

13.StrategicAlliance-Partnerships-InvestmentsinStartups

13.1StrategicAlliances

13.2Partnerships&InvestmentsinStartupsGainMomentum

List of Figures

Fig2.1–DistributionofSalesbyMajorGroupingbyValue2017

Fig2.2–DistributionofSalesbyMajorGroupingbyNumberofCompanies2017

Fig2.3–AverageRevenueforGroupA,B,C,&DCompanies2012-2017

Fig2.4–WorldSalesofSecurityProducts2008-2022

Fig2.5–WorldDistributionofSecurityProductsbyMajorRegions2017

Fig2.6–DistributionofSecuritySystemsbyBuildingType,2006comparedwith2017

Fig2.7–ComparisonofPhysicalSecurityPenetrationbyMajorRegion2017

Fig2.8–WorldSalesofSecurityProductsbyType2017

Fig3.1–WorldSalesofVideoSurveillanceProducts2017to2022

Fig3.2–WorldSalesofVideoSurveillanceCameras2017to2022

Fig3.3–WorldVMSMarketforVideoSurveillance2016to2022

Fig3.4–PerformanceofEstablishedPlayers/NewVentures/Challengers/Leadersinthe

VideoSurveillanceCameraMarket2017


VMSMarket2017

Fig3.6–DistributionChannelsofVideoSurveillance2017

Fig4.1–WorldSalesofAccessControlProducts2013to2022


AccessControlMarket2017


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Fig4.3–ModelofRoutestoMarketforAccessControlSystems2017

Fig5.1–WorldSalesofIntruderAlarmProducts2013to2022


IntruderAlarmMarket2017

Fig7.1-TheCyberAttackLife-Cycle

Fig7.2-CyberSecurityThreatVectorsforSmartBuildings

Fig7.3-BuildingElementsPerceivedtobeatHighRisk

Fig10.1–SecurityDealsCompletedfrom2000to2017

Fig10.2–ForecastofDeals2017to2022

Fig10.3–Merger&AcquisitionbyBusinessSegment2017

Fig10.4–AcquisitionValuationBenchmarks2005to2017

Fig13.1–StrategicAlliance2008to2017

List of Tables

A1–TheWorld’sMajorPhysicalSecurityCompanies2017

A2–Acquisitions&FundingAnnouncementsin2016/2017

A3–PotentialAcquisitionTargets2016/17

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