Looking to 2016: Security Pros Predict Growth in Video Surveillance, Internet of Things
Industry members expect higher revenues, steady growth and more in the new year.
As part of SSI’s Annual Industry Forecast (featured in the January edition), some 25 industry experts and analysts (not all are featured in each post) from dealers and integrators to consultants and manufacturers were asked to predict what they expect to see take place in the new year. In a series of online exclusives, questions are featured individually to get a broad cross-section of how the respondents collectively see a give forecast topic.
What type of year in 2016 are you anticipating for security manufacturers / suppliers; dealers / integrators; and monitoring providers?
Jeff Kessler, Managing Director, Imperial Capital: For suppliers, we see highly differing growth among the manufacturers, with video slowing slightly to 13%-15%, and revenues improving slightly from 5%-8% as the initial hit of price degradation annualizes. Access control internally has several growth drivers, with wireless locks growing 10%-12%, mechanical locks remaining flat to slightly down and electronic access control equipment up 8%-10%. The latter may prove optimistic if the pent-up “discussion pipeline” in regulated organizations and education remains slowed up.
For dealers and monitoring providers, RMR-oriented companies should be able to grow subscribers at 3%-4%, with average revenue per user (ARPU) increasing about 2%-3%. Some companies may be able to drive higher ARPU depending on their capabilities to install and service more complex applications. There will be a large group of smaller companies with little or no growth at all beyond attrition, which characterizes many of the smaller, Plain Old Telephone Service (POTS) line-based legacy businesses. Cloud video monitoring and access control services should continue to grow at 15%-20% as these companies prove their value proposition to midsize companies, not just small commercial and medical offices.
For integrators, we don’t see very much growth beyond GDP in the integration industry as it generally follows the capital budgets of enterprises, government spending and multinational companies and state clients. However, this does not mean there is not a group of companies that can grow 10%-15%, taking share from the rest of the sector. These are integrators that not only have demonstrated the IT IQ but have developed customer-centric business models that promote a long menu of services that develop trusted relationships at the ‘C’ level of enterprises.
Anthony Leather, Senior Consultant, Frost & Sullivan: There will be growing investment across security sectors in line with replacements and increasing infrastructure, especially across APAC and the Middle East. There will be increased budgets in response to instability across North Africa and the Middle East, as well as increased threats to Europe mainland will see greater investment in security technology.
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Richard Brent, CEO, Louroe Electronics: As we have seen in 2015, we will continue to see the industry expand in 2016. Because of the precarious times that we live in, security is at the top of the end user’s priority list. End users will see the need to upgrade their outdated security systems and programs. They will look to their integrators to recommend the most innovative products on the market. Manufacturers will need to, now more than ever, differentiate from one another to stay competitive in the eyes of the integrators.
Tricia Parks, Principal, Parks Associates: Security manufacturers will enjoy a slight revenue growth based on lower component costs. Dealers themselves predict higher revenues for 2016. It is likely to occur from higher volumes of equipment sales and some stability in fees. Monitoring providers are coming under pressure, particularly in terms of central station monitoring fees; however, if they lower fees for that, they may hold on fees for smart home adjacencies. Overall, for the industry, we forecast a 3%-4% revenue growth.
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