The US Market Slowly. Regains Ground
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1 The US Market Slowly Regains Ground By Tracy Ting The US market survived the financial crisis, with slow recovery in some market segments. A&S takes a look at current product needs, purchasing behavior and market approaches for major security players. The US economy took a severe battering last year from the global economic downturn. It is regaining strength, as the market shows signs of growth in all segments. The overall electronic security market for North America was estimated to be worth US$7.7 billion in 2009, said Paul Everett, Research Director, Access Control, Fire and Security, IMS Research. For 2010, the market is expected to reach $7.9 billion at a 3.1-percent growth rate. The North American market recovery varies by equipment type. While the access control and video surveillance markets will recover faster in 2010, growth within the intrusion and fire markets will remain negative in 2010, with both markets forecast to return to positive growth in 2011, Everett said. The fastest growth is forecast for the Americas video surveillance market at an estimated 7 percent for 2010, with double digit growth returning in Product Needs Product demand is high for cost-effective solutions with intuitive interfaces and customizable features. "We see strong demand for high-value systems where there is a specific ROI," said Dave Tynan, VP of Global Sales and Marketing, Avigilon. Video surveillance With crime increasing due to the recession, video surveillance grew 7 percent from 2009 to 2010, Everett Pa u l Eve r e t t, R e s e a rc h Director, Access Control, Fire and Security, IMS Research Dave Tynan, VP of Global Sales and Marketing, Avigilon Joe Troiano, Senior VP of sales, Everfocus Electronics Koji Masunari, Deputy GM, Industrial Optics Business Unit and Sales Manager, Tamron Raύl Calderόn, VP of Marketing, Arecont Vision 90 JUN 2010
2 said. Other experts also predicted singledigit growth. "The US security market as a whole increased single digits in 2009", said Raúl Calderón, VP of Marketing, Arecont Vision. EverFocus Electronics recorded 15 percent growth for project-based sales, said Joe Troiano, Senior VP of Sales, EverFocus Electronics. Projects have started to move and companies are seeing stronger needs for security. Surveillance cameras N e t w o r k c a m e r a s h a v e matured, with strong demand for high-resolution cameras, storage devices and analytics. Users are asking for better picture quality, which means the quality of the lens is growing in importance, said Koji Masunari, Deputy GM of the Industrial Optics Business Unit and Sales Manager, Tamron. Megapixel, H.264, analytics and hybrid systems are highly in demand, said John Centofanti, Eastern Regional Group Sales Manager for America, Panasonic System Networks Company. Higher productivity is being asked for, as users are more concerned with the solution and the value it offers. Megapixel camera companies enjoyed double-digit growth, despite the recession. For this year, we predict growth for megapixel cameras will be 30 to 40 percent in the U.S, said Vance Kozik, Product Manager, StarDot Technologies. Government-related projects such as gaming and transportation are its major drivers. Application-specific surveillance systems are flourishing, such as more affordable thermal cameras. Portable thermal network cameras are used in border patrol installations to further enhance homeland security and also for commercial security to protect critical infrastructure, said Bill K l i n k, V P o f S e c u r i t y a n d S u r v e i l l a n c e f o r Commercial Vision Systems, FLIR Systems. We foresee a very large growth in More video equipment complies with interoperability standards, giving users more options. Apart from the growing adoption of network solutions, we see a good future for HDcctv, Troiano said. Storage High-resolution cameras require increased storage capacity, with growth coming from all sectors including transport, gaming, e d u c a t i o n, g o v e r n m e n t a n d retial. Large and scalable storage solutions with data redundancy and management functions are in demand, said Lee Caswell, founder and CMO, Pivot3. Green storage also provides a cost-effective solution for users, saving space and electricity costs. Analytics The increase in image resolution has made effective video analytics possible. Analytics are increasingly used for efficient facility management, data streaming and storage consolidation, said Marc Holtenhoff, CEO of Aimetis. Video management software (VMS) bundled with analytics has increased market acceptance. Analytics add value to the VMS, and the bundle also makes it easier for system V a n c e K o z i k, P r o d u c t Manager, StarDot Technologies Lee Caswell, founder and CMO, Pivot3 Reinier Tuinzing, Distribution Manager, Americas, Milestone Systems Bill Klink, VP of Security and Surveillance, Commercial Vision Systems, FLIR Systems Marc Holtenhoff, CEO, Aimetis E d T r o h a, M D o f G l o b a l Marketing, ObjectVideo 91
3 integrators to adapt analytics for their solutions. While the retail consumer market is still recovering, intelligent video surveillance systems with PoS can increase profit. The retail segment has stronger demand for VMS solutions due to business management, said Reinier Tuinzing, Distribution Manager for the Americas, Milestone Systems. Increased market education means more users accept analytics, said Ed Troha, MD of Global Marketing, ObjectVideo. Open, flexible, easy-to-use and cost-effective solutions are in demand. Access Control The access control market will remain flat, Everett said. However, some vendors beat the market. The market is bouncing back very nicely, and we see growth in both retail and property management well into the double digits on a percentage Steve Van Till, President and CEO, Brivo Systems Howard L. Borst, V P o f I n t e g r a t e d S u r v e i l l a n c e Products, ICx Technologies Zhara Zwerling, Regional Sales Manager for Western U.S. and Canada, Speco Technologies Tim Eckersley, President, Ingersoll Rand Security Technologies John Romanowich, CEO of Sightlogix Mark S. Wilson, VP of Marketing, Infinova The US transportation segment is growing, with increased demand for integrated solutions. basis, said Steve Van Till, President and CEO, Brivo Systems. "Softwareas-a-Service (SaaS) has become widely accepted in the physical security market." Integrated access control systems are a growing trend, along with biometrics for ports, airports and government installations. Users are looking for integrated access control and time and attendance systems with a single point of enrollment, said Gary Jones, Senior Manager, Commercial Distribution, Biometric Security, Productivity and Convenience Solutions, MorphoTrak. Ease of use is important for product selection. Our one-step, multifactor verification of fingerprint and vein recognition can successfully reduce identification time, while significantly enhancing security. T h e d e p l o y m e n t o f electronic and wireless locks increased, making solutions more flexible. Access control readers with modular designs are more scalable, said Tim Eckersley, President of Ingersoll Rand Security Technologies. RFID and Bluetooth technology can be integrated into the system. Perimeter Security and Intrusion Detection Perimeter security will grow in the manufacturing and industrial sector by 12.6 percent, while water utilities will grow 9 percent from 2009 to 2014, Everett said. The growth is driven by Chemical Facility Anti-Terrorism Standards legislation, which should come into effect by 2012 or Surveillance is paired with perimeter systems for homeland security sites and sensitive applicat i o n s. S e n s o r t e c h n o l o g y i s integrated with ruggedized camera systems to enable long-range surveillance, said Howard Borst, VP of Integrated Surveillance Products, ICx Technologies. Our systems use visible and thermal intelligent video cameras to detect, locate and track intrusions over large outdoor areas, providing reliable perimeter security at lower costs, said John Romanowich, CEO of SightLogix. Petroleum, waste water management, chemical facilities and electrical utilities have growing needs for integrated perimeter solutions. F o r i n t r u s i o n s y s t e m s, t h e emphasis will be on aesthetically pleasing products, Everett said. 92 JUN 2010
4 IP-based communications will reduce costs, as wireless products become a trend. Projects The security market was affected by the slowdown in project developments. Not all segments have bounced back, limiting the number of new projects. The new construction market is still slow, but demand for security systems increased, Eckersley said. Installations with high security needs are upgrading their solutions, such as transportation, government, education, health care, correctional facilities and gaming. Tr a n s p o r t a t i o n i s s e e i n g tremendous growth. Airports and cargo areas are deploying thermal and IR technology, Klink said. Homeland security projects still have funding, despite the downturn. Buildings and critical facilities are seeing a stronger need for security, said Zhara Zwerling, Regional Sales Manager for Western U.S. and Canada, Speco Technologies. For critical infrastructure, oil refineries require a broad and unique range of products, said Mark Wilson, VP of Marketing, Infinova. The education market is growing in the U.S. Unfortunate events, such as campus shootings, resulted in a higher sense of security for campuses, said Bruce Doneff, Public Relations, IQinVision. To improve safety, more funds are allocated for security equipment. Gaming continues to be a major segment for video surveillance systems. Indian casinos and other regional gaming industries are showing greater need for security systems, said Calderón. Banks were the hardest hit by the recession, yet still require high-end security solutions, Centofanti said. With budgets reduced, the payments may be delayed, but the needs remain. Uniqueness The US market is large and recovering gradually. New solutions are generally accepted, with a preference for easy-to-use systems. T h e U S m a r k e t h a s a h i g h acceptance rate for new technology in general, with the government playing an important role, said The US market is showing signs of recovery. Demand for security is increasing in different market segments. Fredrik Nilsson, GM for the U.S., Axis Communications. IP-based video is quickly gaining ground based on the video quality provided by HDTV-compliant cameras as well as more flexible systems with a lower TCO. The U.S. had the fastest adoption rate for megapixel technologies in 2009, Calderón said. While about 75 to 80 percent of existing video surveillance solutions are analog systems, the migration to IP is progressing steadily. However, the cost of IP-based technologies is an issue for a recovering market. Users prefer lower-cost products, Masunari said. Therefore, it might take some time before the market reaches its tipping point for IP-based technology. Standards are becoming more important during this process. Equipment should be attractive and quick to set up, said Scott Hamasaki, MD for the Americas, Visionhitech. Our new magnetic dome is easy to install and has an aesthetic design. Mergers Despite the economic downturn, market consolidation continued to reshape US security. Regardless of the companies involved, they sought to serve their customers with more comprehensive solutions and better services. DVTel acquired ioimage to offer one-stop services with advanced VMS and analytics. In the future, IP-based technology will become m a i n s t re a m, s a i d K i m b e r l y Robbins, Director of Marketing Communications, DVTel. The jointure with ioimage will allow us to serve the market better. UTC s purchase of GE Security strengthened its product portfolio. UTC Fire & Security does not have intrusion products, and GE Security's product line can further complete UTC Fire & Security s offerings, said Ken Francis, VP of Sales and Marketing, Global Security Products, UTC Fire & Security. There is tremendous value in our combined portfolio of brands, and we see terrific opportunities ahead to use our strong channel partnerships and customer relationships to offer a broader product portfolio, said Luis Orbegoso, President of Lenel Systems (a UTC Fire & Security company). 94 JUN 2010
5 Pelco kept its name after its acquisition by Schneider Electric, which brought more development resources and strengthened its markets. For products, our goal is to offer better quality and not just increase quantity, said Dean Meyer, President and CEO, Pelco (a Schneider Electric company). Within two years, we have transitioned from a company providing solely analog solutions to a company with complete product lines for IP-based technology. Another American giant is Tyco Security Products, which takes a different approach for each acquisition. Tyco Security Products and ADT are both subsidiaries of Tyco International, said Linda Mansillo Kear, Global Director of Marketing Communications, Tyco Security Products. In addition, ADT is one of Tyco Security Products' largest customers. B r u c e D o n e f f, P u b l i c Relations, IQinivison Kimberly Robbins, Director of Marketing Communications, DVTel Frank DeFina, Senior VP of Sales for North America, Samsung Techwin Fredrik Nilsson, GM for the U.S., Axis Communications Dean Meyer, President and CEO, Pelco (a Schneider Electric company) Pete Jankowski, CEO and Chairman, Next Level Security Systems As the market recovers, some companies are consolidating internally, shown by Samsung Techwin joining forces with Samsung Electronics in America. We are looking to make the most of the improving economy by establishing Samsung Techwin America as the most recognizable brand in the US security market, said Frank DeFina, Senior VP of Sales for North America, Samsung Techwin. We are also expanding our business portfolio beyond video surveillance to include total security solutions that incorporate access control, intrusion detection and fire alarms. Maintaining relationships among existing channels is even more essential after consolidation. We believe there will continue to be more consolidation over the next few years, and acquisition activity could possibly disrupt customer and integrator relationships, said DeFina. Future Outlook As the security industry consolidates, products will see more convergence. The migration to IP will drive integration among different systems. We foresee that many large projects will start in 2011 and IP-based solutions will increasingly be accepted by the market, Wilson said. N e x t L e v e l S e c u r i t y Systems made its debut this year with a system platform targeting the SMB segment. It integrates most well-known security brands, saving users time and cost if they select products from different vendors. Our strength lies in a high capability for system integration, said Pete Jankowski, CEO and Chairman, Next Level Security Systems. The platform simplifies the complicated integration process and enables easy configuration and operation. Standards will make interoperability a reality. ONVIF and the PSIA will continue to gain members, as more installations migrate to hybrid and network solutions. For the PSIA, it will set standards for video recording, storage and management. Specifications for video analytics will be released this year. For ONVIF, it has released its standards for video surveillance and access control systems. Megapixel is a definite trend, with 10-megapixel cameras available this year. HD surveillance systems h a v e s p a r k e d a n a c c e l e r a t e d transition from analog to digital. Our expectation is that megapixel camera unit volume will exceed analog cameras sold within the next two years, Tynan said. As economic conditions improve, security is expected to bounce back. We are seeing a bright future for the US market, said Michel Chalouhi, Director of Product Management, Genetec. While regions within the U.S. are experiencing different rates of growth, the need for security solutions in the mid-end market will increase. However, a brighter future does not guarantee smooth sailing. Security follows the construction business, which means it will face challenges unless construction is up, Meyer said. We think the US market will continue to be tough, but there will be pockets of growth by segments and regions. 96 JUN 2010
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