Analysts See Growing Pains, Gains Ahead
For starters, marketplace expansion is expected to be stunted as it emerges from the recession. Still, IP video, systems integration and home controls are among industry growth areas. SSI speaks with half-a-dozen analysts to get their take on what’s in store for the electronic security industry in 2011.
Despite the uneven economic recovery, electronic security industry analysts see the North American marketplace to be on stronger footing compared to the previous two years, but with only a slight uptick in overall performance forecast in 2011.
Among the industry bright spots, networked equipment, in particular IP cameras, is expected to experience robust growth driven by product improvements and the further shift away from analog systems. Increased systems integration and the ability to offer end users newfound business efficiencies beyond physical security will also pace growth in IP- and Internet (or cloud)-based solutions.
SECURITY SALES & INTEGRATION interviewed half-a-dozen leading analysts who track various aspects of the electronic security industry in order to bring you our 2011 forecast report.
In a nutshell, as the industry emerges from the recession, manufacturers and installing security contractors alike will have to continue forging an upstream thrust as budget-strapped end users from a cross-section of vertical markets remain sidelined or in search of funding for their security purchases.
Access Control on the Network
Now that the integration of logical and physical access control has come to fruition, network-based access control systems are being looked to as a significant driver in a variety of market niches.
According to IMS Research, the end-user size of the electronic access control market in the Americas will be about $620 million. That’s a significant improvement compared to 2009 and 2010 as the Americas market is estimated to have declined by more than 17 percent during that span.
“The biggest growth areas for access control in 2011 are going to be those impacted by government spending,” says Blake Kozak, an Austin, Texas-based market analyst for IMS Research. “The money will be targeted for airports and utilities where it is going to filter through in terms of upgrading systems and HSPD-12 compliance.”
Health-care facilities, driven by regulations to protect patient information, will continue to fuel the access control market in the coming year as well. Also colleges and universities can be expected to remain a growth area.
While the retail industry continues to struggle due to economic pressures, the banking and financial services sector is primed to return as a growth area for access control after its recent turmoil, Kozak says.
“It will come back quickly when it does rebound,” he says.
In 2011, access control systems will increasingly reside on an IT network to allow for integration with other IP-based systems, as well as to advance scalability and provide new business efficiencies for end users.
The most prominent trends gaining traction include Software as a Service (SaaS), remote managed Web-based systems and electronic cylinders, all of which utilize IP infrastructure.
SaaS and Web-based access control technologies have made systems far more accessible for smaller markets, and opportunities are now available for systems integrators to sell a solution that offers the customer an attractive return on investment (ROI).
“We are looking at sales to increase as the prices of the systems become increasingly competitive,” says Jennifer Mapes, a senior industry analyst with The Freedonia Group, a Cleveland-based research firm.
More and more small building operators, who previously maintained mechanical locks, are recognizing the value proposition available with electronic access control. “And buildings that previously had access control are looking to trade up to more sophisticated versions as they become easier to integrate and are increasingly price competitive,” Mapes says.
Sandy Jones, president of Chardon, Ohio-based Sandra Jones and Co., says Internet-based services in particular, have allowed systems integrators to change their business models necessarily in the wake of recession’s carnage.
“Their business model was a contractor’s model and not until 2008 did they feel the real pain from that. They realized how they had to change their business,” she says.
Systems integrators will increasingly look for logical ways to build recurring monthly revenue (RMR) by offering customers value-add services, so products and services that allow them to do that — including SaaS and cloud computing — are expected to see strong growth.
“If you look at some of the things we believe will sell — hosted access control, video monitoring, video verification — the Internet is such a pivotal piece because it allows for operational improvements,” says Jones. “I think the Internet will do for integrators what the digital dialer did for alarm dealers.”
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