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This is the first of a two part article that analyses what the customer of physical security equipment wants today and what they needs in the future. We have in the Part 1 set out the 2 major stages in the development of the business over the last 20 years and reviewed what customers will gain from this and in Part 2 the need to meet the challenge of the third stage of development which the industry is now entering.
Innovation in applying new technologies in the physical security industry has driven the growth in this market way above the average for similar industrial products. Since 2008 and despite the worlds’ financial meltdown, the business has grown at CAGR of 5.24% to 2016 but it has slowed down in the last two years as it has become more mature and competitive.
Emerging technologies have created two main stages of progressive development in the Physical Security Industry over the last 20 years and we are now about to enter a third stage which we shall discuss in Article 2 (published next week) and this will drive up demand again.
Stage 1 – The Digitization of the Physical Security Industry. The first stage in 1996 was the birth of the first network camera invented by Axis Communications. This revolutionized the industry transforming video surveillance from analogue into digital. The following 6 years of innovation by Axis brought the world’s first video encoder to market which allowed users to integrate their existing analogue CCTV systems and by 2004 they introduced the first network camera equipped with Power over Ethernet (PoE) and MPEG-4 compression.
Stage 2 – IP networking – “Open Standard” – IT Convergence. The second stage of development started around 2008 when Axis introduced their AXIS 1755 Network Camera that delivered video in HDTV format. The network and the camera set the standard for the new resolution. This cemented Axis’ leading position and established HDTV as the new standard in video surveillance. These progressive developments have allowed network cameras to take an active role in IT Convergence connecting with the business enterprise in the building and delivering many value add services that have radically improved the critical metric of Total Cost of Ownership (TCO).
Around this time the Access control business embraced IP networking technology improving its performance and now making it much more practical to integrate with video surveillance and Intruder alarms and converge with the business enterprise.
ONVIF is now the recognized “open standard” for video surveillance and this is driving the development of open global standards for effective interoperability of all IP-based physical security products. It is now well established in the video surveillance business but is still work in progress in the Access Control market which will hold back growth if the manufacturers do not fully embrace it. Our annual report on the physical security industry does indicate a lack of enthusiasm to go for “openness” at this time.
Against this background when we carried out research for this report we sounded out the customers’ views and opinions about the technologies that they are currently investing in. The sample was based on a random selection of “informed opinions” biased towards the enterprise and large users sector. It is not large or detailed enough to be sure it accurately represent the total population but the consistency throughout would suggest that buyers are now seriously investing in 3 technologies that are most important to them.
The three most important concerns for these customers were VSaaS & ACaaS cloud deployments, Analytics and Higher levels of Interoperability.
There is a growing and strong interest in cloud security deployments by building owners and operators, particularly as physical security systems become more complex and requires expensive staff to operate and maintain 24/7. They are gradually moving to the position that buying in this expertise rather than building up their own systems would be a better long term solution.
Customers are focusing in on suppliers that can offer robust cloud services having a high degree of analytic capability and service quality. Most of the potential buyers in the sample were already operating their own system and those that had systems that were installed more than 5 years ago are the ones most likely to take a cloud service. Provided that customers can find suppliers that can deliver against their needs demand will grow rapidly. Linking VSaaS and ACaaS is appealing to many potential buyers that are looking to upgrade both their video surveillance and access control systems. So this is a real challenge for the manufacturers of video surveillance hardware and analytic software to work on.
Many of the major western manufacturers are now offering VSaaS and have the necessary hardware and software technology. This could alleviate some of the problems that their Chinese competitors are causing them through squeezing hardware margins.
Interoperability between different manufactures equipment has always been a concern to buyers but in the Video Surveillance business they have not been locked in and more recently the emergence of ONVIF has further satisfied buyers requirements here. This is not the case in Access Control. However the need to integrate across these two services and Perimeter Protection does concern customers both for technical and commercial reasons.
Software platforms from third parties can alleviate some of the problems but these are for the most part proprietary and therefore can create commercial and technical problems at a later date when the system needs to be extended. This problem becomes more acute as customers buy into further integration with other BAS Services such as environmental control and lighting.
Manufacturers that can bridge the gap between Access control and Video Surveillance hold a strong position on the System Integrator’s bid list and further strengthen their case if they can deliver an integrated and ‘open system”. IoT technology has been operational in buildings for at least 5 years in particular vertical markets where the manufacturer has been prepared to offer equipment that can operate on a common communication standard joining other technical services in the building such as environmental control, lighting, access control and intruder alarms operating on one software platform and this has delivered a much valued service to the customer.
This article was taken from our 8th edition of our Annual Report “The Physical Security Business 2016 to 2021”. Which is available to purchase for $1,500 USD.