The December issue of Security Sales & Integration is distributed in tandem with the magazine’s annual 2007 Top 500 Industry Resource Guide, which features the popular “Industry Trends and Challenges” section. This industry assessment consists of “Top 5” lists provided by four experts. Consider it essential reading. The topics include the top trends of 2006, plus industry challenges and predictions for 2007. Go ahead and take a look at it on page 6 — I’ll wait.

In the spirit of looking backward (and forward), I’d like to take a crack at the same items, with a little more explanation. As an added bonus, we’ll take a look at my “Gazing Into the Security Industry Crystal Ball” column from January 2006 (available online at www.securitysales.com) and see how I did.

Top 5 Industry Trends in 2006
1. Cameras got better. There were more shapes, sizes and configurations than ever before, with better performance and lower prices. We saw remotely positionable domes with more than 30x lenses, which in the past would have been a useless feature because of vibration. With the incorporation of image stabilization, we add a feature potentially as compelling as the introduction of auto focus more than 10 years ago. Who thought a low-performance, low-cost dome would be such a hit as well? Look for this trend to continue for the next few years.

2. Digital video recording finally replaced tape 20 years after the experts predicted it would happen. And 2006 was finally the year that VCRs bit the dust. They are almost impossible to get and no one is asking for them. It’s no longer a debate: digital recording is here. The remaining tape users are saving their pennies and looking for chilled rack rooms for their inevitable transition.

3. Companies, large and small, emphasized their involvement in security, from huge defense contractors to small original equipment manufacturers (OEMs). Names that are more often associated with network equipment, airplanes, computers, elevators, sparkplugs and hand tools are all becoming major players. When someone predicts the acquisition of an existing company and is mentioning names, I find myself thinking that more often than not it will be a name that we never heard of in this industry.

4. Larger integrators continued to grow with some turning away work to avoid problem projects. This makes great business sense: pick and choose the likely winners and stay away from the projects that look risky. The only problem here is that it created the next trend …

5. Smaller integrators continue to emerge to take up the slack with varying degrees of success. Nature abhors a vacuum, and if the big guys didn’t want to do it there were plenty of people who were willing to step up to the plate. While it may not always have worked out well (there are projects that will be losers no matter who does them), to quote an old Bruce Willis album title (and even older saying), “If It Don’t Kill You, It Just Makes You Stronger.”

Top 5 Projected Industry Challenges
1. Standards for digital systems. While IP is becoming a common denominator, implementation and configuration varies widely. Some companies are getting frustrated by the distance limitations of Ethernet over Cat-5e cable, the high latency because of the nature of the packetized signal, and other performance issues and developing proprietary formats. Others are confusing IP with analog video over unshielded twisted pair (UTP). Most digital platforms utilize proprietary viewing software, locking customers into a brand choice at the onset. We’re not out of the woods yet, and the analog camera/digital recorder combination will continue to dominate until we see more interoperability.

2. Training will be a major issue. As system configuration gets more complex, integrators will need to specialize and trim the number of manufacturers they support. Newer integrators, coming predominantly from the IT world, will also need training, and they’re used to formal certification-based classes and meaningful manufacturer accreditations. Independent training facilities are few and far between, and attendees complain that they are two parts sales pitch for every one part education. There’s an opportunity here, although as long as there is free training (sales pitch or not), the opportunity may lack a profit potential, which will surely hold things back.

3. Integrators will rely more on manufacturers to commission systems as a substitute for training and direct experience. “Anyone can put a system in,” one integrator recently told me. “It’s the programming and troubleshooting that is the real challenge.”

4. There is a lot of marketplace confusion. A variety of possible configurations, including cases where higher cost equals lower performance, make purchase decisions more difficult. Today, for example, most analog/digital hybrid CCTV systems cost less and outperform pure digital systems, hands down. Yet our clients say every integrator and manufacturer tells them that any analog part of a CCTV system screams “early obsolescence.” Confusion leads to deferring purchase decisions. How many of you have bought high-definition DVD players while HD-DVD and Blu-ray fight it out?

5. Integrator competence. With smaller integrators entering the market, due diligence and reference checks become critical. Most jurisdictions don’t require licensing for low-voltage contractors, and since everyone has a good story to tell, personal experience and verifiable references are critical. We’ve all made that mistake from time to time, but try to make it at home and not at work. It’s better to get burned by the home handyman who never finishes the job than by an integrator who is in over his or her head.

Top 5 Projected Trends for 2007
1. IP cameras will continue to grow but are a long way from proliferation. Analog will hang in there. The reasons described above will surely slow the process. Remember predictions of the death of tape?

2. IP will continue to dominate in other areas. Expect to see RJ45 ports on everything except monitors. It’s a simple, flexible standard, and with the already noted exception of digital video, where latency, cost and bandwidth can occasionally be an issue, it’s perfect.

3. Infrastructure becomes more important. Projects that use analog cameras will move toward Cat-5e or Cat-6 cable to allow for future upgrades. This will be a boom for UTP balun and hub manufacturers, and more companies are getting into this market. This past year saw entries from GE and Pelco, among others, and you can expect more of the same.

4. Computer value-added resellers (VARs) will continue to move into the security space. They already have many of the skills and clients; they just need the product lines. Manufacturers, eager to expand their market penetration, will gladly accommodate them. In fact, several smaller integrators I have spoken to are focusing entirely on these VARs, seeing them as a back door into a growing market.

5. Consolidation will slow down or focus on smaller deals. Larger companies will need time to digest their previous acquisitions. This is a short-term prediction — after a nice nap the appetite will grow again late in the year or in 2008.

So how did we do with last year’s predictions? I predicted growth for the security industry — short of a boom time, but healthy for most. I predicted that 2006 would be called “the year of the IP camera,” but would fall short of achieving the predicted domination. I thought that the VCR would go away. I felt that CRT monitors would all but disappear. I saw continued consolidation. And I felt that integrators would move toward adding IT skills to their portfolio.

How did I manage to forecast so many winners? Well, I admit that I didn&rsquo
;t exactly stretch on these predictions. The trends were pretty well established, and I didn’t have to stick my neck out too far. I also admitted to using a first-rate forecasting tool, my trusty Magic-8 ball. But my real secret? I listen to my customers and take their concerns, complaints and observations seriously. If they are confused about what to buy or unsure of the marketplace, I figure a lot of other folks are as well.

My final prediction for 2007: It will be a good year for those who can solve problems, and a bad year for those who create them.

If you enjoyed this article and want to receive more valuable industry content like this, click here to sign up for our FREE digital newsletters!

Related Content