The first 2 months have borne this out; no announcements of billion dollar acquisitions, major investments or other inspiring market shaping news. Even the market research companies are toning down their forecast with few double digit growth expectations for 2012. Whilst January and February have been without dramatic news it has been pretty positive, proving yet again that this is a robust business and a safe port in the financial storm.

The best measure to assess the state of the market is to review the financial reports of the major players and in the last 2 months the public companies have been publishing their 2011 accounts and future expectations; these have been encouraging.

Axis yet again confirmed it is the doyen of the IP Video networking sector, producing sales in 2011 of SEK3,578M (2,933), corresponding to growth of 22%. Net sales increased by 33% in local currencies. Operating profit increased to SEK 633M (415), which corresponds to an operating margin of 17.7% (14.1) and profit after tax amounted to SEK 456M (300).

The end of 2011 marked Axis's slowest growth quarter in more than 2 years and whilst world trading conditions are difficult they forecast these levels of growth will continue in 2012 through increasing their market share and expansion into growth regions of the world.

Of the major traditional suppliers Tyco sales rose 4% to $4.21 billion in the last quarter of 2011. Services accounted for 45% of total revenue, whilst the biggest division, which makes and services security systems for homes and businesses, posted slightly higher sales, but earnings dipped. Interestingly the smaller fire protection and flow control businesses showed higher sales and profits. Honeywell had sales of $36.5 billion in 2011, up approximately 13% over 2010, whilst the Automation and Controls Division made a 4% growth.

Siemens, Schneider and UTC increased their revenues in 2011, but we believe that their security business would not have increased more than 4%. Much smaller companies but specialists in the business such as Mobotix, Napco and Nedap all achieved near or double digit growth in 2011.

In our end of year report http://memoori.com/physical-security-2011 we forecast a slowing down in the value of acquisitions and mergers resulting in a 2.5% reduction in 2012. In the first 2 months of this year 8 acquisitions have been announced, compared with 14 in the same period in 2010. This represents a significant fall in both value and volume. However it only requires 2 multi-billion deals for this situation to be rapidly reversed.

In our report we identified and reviewed the potential growth areas for security over the next 5 years and one of these was the increasing use of wireless communication. The good news is that in the last 2 months significantly more column inches have been devoted to the subject, a sure sign that the market is gaining traction. The market is still small probably around $125m and growing in line with IP cameras which make it easier to use and bring down total installed cost compared with wired versions.

No doubt it will have to cut its teeth on areas where wired connection is not possible or practical such as outside buildings and mobile surveillance; two good examples of where most effort is being aimed.

In January Motorola Solutions Inc attached its flag to the wireless mast with an Investment in MicroPower Technologies of $6.5 million slated for market development and innovation. MicroPower's fully integrated, IP surveillance innovations incorporate proprietary wireless technologies to enhance data transmission even in heavily congested environments. This looks a compelling product that could quickly drive the market forward.