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Physical security $120B and growing
17% of all revenue spent on
physical security equip-
ment & services in China
during 2013 was on video
surveillance equipment
often coming through large,
government-funded schemes
or projects.
According to Aaron Dale, analyst
for IHS Inc, large Ethernet
switch manufacturers have tra-
ditionally tailored their products
to cater for general information
technology (IT) needs. How-
Growth expected for Ethernet switch market
The latest data from IHS Inc. shows that 606,000
ethernet switches were sold for use in video surveil-
lance deployments in 2013. This represents a small
proportion of the overall ethernet switch market
right now. However, some 1.6 million switches
are forecast to be sold into the video surveillance
market in 2018, representing a far more significant
proportion of the total market.
ever, this could change as new,
fast-growing markets provide
Ethernet switch manufacturers
the opportunity to diversify.
The findings are presented
in a report that analyses the
opportunities for infrastructure
and Ethernet switch providers in
video surveillance.
Within the report IHS estimates
that 24 port switches are the most
widely used in video surveillance
applications and that the market
for Ethernet switches used in video
surveillance is also being bolstered
by the increasing complexity and
scale of video surveillance networks.
This is leading end-users to invest
in higher specification equipment.
The report also concludes that
the total market size for Ethernet
switches used in video surveil-
lance in terms of product revenue
was estimated at $188.2 million
in 2013.
A number of Ethernet switch
manufacturers have been quick
to capitalise on the growth in this
market and have started produc-
ing solutions tailored specifically
for video surveillance. Two such
notable moves were the launch of
Avaya's Fabric Connect solution
and the strategic partnership
between Extreme Networks and
Milestone Systems. IHS expects
that in the coming years more
Ethernet switch manufacturers will
compete to claim their stake in an
increasingly attractive market.
This market reached $120 billion
in revenue during 2013, a 10.8%
increase in market size compared
to 2012, and according to senior
analyst at IHS, David Green,
the report has produced some
particularly interesting key facts.
For example, the USA remains
the largest country with over
$6.5bn spent just on equipment,
but China is getting closer to the
number one ranking each year.
In addition one in every $5 spent
on physical security equipment in
Asia is for a government build-
ing, not including other state-led
facilities and installations such
as airports or infrastructure. The
report also finds that no single
company holds a market share
greater than 5% for the physical
security equipment and services
market globally.
As global economic conditions
continue to improve and budgets
slowly increase, the physical
security industry continues to
perform strongly across the world.
Growth in the number of projects
employing different types of
physical security equipment as a
single solution is also increasing,
often managed through the same
platform.
Regional Variation
Service-based offerings are proving
popular in the Americas market
as manufacturers and service
providers look to bridge the gap
between consumer-style business
models and professional standard
services. Markets such as Video
Surveillance as a Service (VSaaS)
or Access Control as a Service
(ACaaS) only account for a small
proportion of total revenue right
now, but are expected to see some
of the highest growth rates over
the next five years. IHS already
sees this convergence in the supply
market too with telecommunica-
tions companies taking a greater
interest in the security market.
The eMeA Market
The EMEA market is much more
evenly spread across all equipment
and service types although it
shares more similarities with the
American market than with Asia.
Equipment spending is particularly
spread across different technology
types, for example Entrance Control
accounts for almost a quarter of all
physical security equipment rev-
enue, higher than any other region.
The Asian Market
Asia remains the fastest grow-
ing market in the world and has
very different end-user patterns
and requirements. The equip-
ment market in particular has a
strong focus on video surveillance,
where 17% of all revenue spent
on physical security equipment &
services in China during 2013 was
on video surveillance equipment
often coming through large,
government-funded schemes or
projects.
Competitive environment
Whilst global revenues for
physical security equipment and
services continue to increase, any
expectations that the security in-
dustry supply market would start
to consolidate appear premature.
The top 15 manufacturers and
service providers accounted for
only 22% of the global market in
2013 a decrease of 3% on just
12 months earlier. Furthermore,
no single company can boast a
market share above 5%, proving
the fragmented nature of this
growing industry and the high
levels of competition.
One developing trend in this
competitive environment is the
rise of Asian-based manufacturers
gaining market share outside their
domestic markets. In 2013, 4 of
the top 10 equipment manufac-
turers globally were based in Asia.
Companies that have performed
strongly in their domestic market
and have improved product qual-
ity are now starting to expand to
new markets. This is a trend that
IHS expects to continue, driving
increased price pressure in the
American and EMEA markets
over the next few years.
Strong growth will continue
However, any price pressures are
not currently strong enough to
outweigh the increases in general
market demand, meaning that the
overall market for physical security
equipment and services is expected
to continue with strong growth for
the foreseeable future.
The IHS report "Physical
Security Equipment & Services
2014" combines annual product
revenues for the following equip-
ment types: Video Surveillance,
Access Control, Intruder Alarms,
Perimeter Security, Entrance
Control (Pedestrian & Vehicle),
Consumer Video Surveillance,
Thermal Cameras and Wireless In-
frastructure; and service revenues
assigned to: Video Surveillance as
a Service (VSaaS), Access Control
as a Service (ACaaS), Remote
Monitoring Services and Security
Systems Integration.
Strong market demand
in an increasingly com-
petitive physical security
equipment and services
industry is still driving
overall revenue growth
in all global regions,
according to the latest
report from IHS Inc.