Top 5 Trends Security Experts Observed in 2018
Industry leaders and analysts from PSA Security Network, IHS Markit and more examine what influenced the security marketplace in 2018.
Security Sales & Integration‘s annual Gold Book is always chocked full of industry information, and the 2019 edition is no different.
Amid the sea of security industry statistics, you’ll find insights from some of the brightest minds in the industry. Below, experts each share the top five trends they observed in 2018.
1. The integrator business model continued to transition to the managed services program [MSP] model due to demand from the end user.
2. Continued consolidation of quality security integrators and security manufacturers continued to change the dynamics of the security industry.
3. An increased focus on cybersecurity deliverables opened the door for conversations among physical security integrators, manufacturers and end users.
4. The physical security workplace is becoming more diversified. A new generation of physical security and business professionals entered the employment pool with a variety of educational backgrounds and specialties that provide dynamic collaboration and innovative systems.
5. The integration of pro-A/V, cybersecurity, IT and physical security continued to change the dynamics of the “stand alone” mentality.
1. The extremely valuable, yet slow-moving use of mass notification by consumers showed signs of greater adoption through certain consumer-based security platforms. Similar to how municipalities are realizing the value of mass notification, consumer-based products such as video doorbells are leveraging their large subscription base toward consumer-based interactive, watch programs.
2. The DIY initiative continued to grow with new player entrants and mega company acquisitions of existing players. This seems to maintain as a standard element each year.
3. There was increased adoption and focus by national retailers of electronic security, video and PERS systems and monitoring. Although certain retail pharmacies traditionally offered PERS systems in various locations, we saw big box retailers join in — both through strategic partnerships with PERS and mPERS providers and through outright acquisitions of service providers [e.g., Best Buy’s deal for Great Call].
4. Deployment of progressive video surveillance systems and monitoring by municipalities. With active surveillance, analytics and remote capabilities and dispatch, the level of some of these municipality-based systems have really stepped up and are delivering more value than systems of the past.
5. The use of interactive voice response [IVR] technology by monitoring centers — especially natural language speech recognition — as well as consumer directed companies appear to have matured. Adoption and engagement toward a more efficient delivery is growing and becoming an acceptable element of the service proposition.
1. Consumers like products and services that are simple and easy to operate, and have well-designed user interfaces that bring a more thoughtful smart home ecosystem and a brilliant customer experience. They want their homes to operate more intuitively and proactively, which gives consumers more purpose-driven functionalities other than just turning on lights or adjusting the thermostat.
2. The use cases for voice-activated technology from Amazon, Apple and Google is in its infancy. As the interaction of voice evolves into a more natural experience for humans with their computer counterparts, the adoption of smart home devices and security-related products will grow within the home, at work and on the road. In addition, voice-activated technology will augment the aging in-place channel, whether for collecting healthcare data or delivering PERS.
3. Competition is heating up among traditional players as more nontraditional players enter the marketplace. Strategic buyers are looking to takeover existing firms, including diversifying into other categories to help them avoid traditional barriers to entry. Well-funded and very strategic companies, like Amazon, are bringing new and innovative expertise to the industry, thus changing the competitive landscape for all.
4. Whether it’s Big Data or little data the industry’s use cases are powerful, accelerating in the coming years, whether for monitoring, marketing or managing the customer expectations. Moving from a generalization to a hyper-personalized consumer experience means lots of data will need to be harnessed to truly accommodate the shift. For smaller companies that utilize data effectively, it will level the playing field as they compete against larger competitors.
5. The definition of monitoring is being redefined beyond just dispatching police or fire services. As monitoring evolves with artificial intelligence [AI], machine learning and deep learning technologies, new services are being developed that provide consumers and businesses with personalized monitoring capabilities for their specific needs, like self-directed and on-demand monitoring options and concierge-type services.
1. Introduction of artificial intelligence [AI] particularly for video monitoring began to drive more technology-based solutions but not yet at a cost-effective level. With time, however, that will change.
2. Strategic technology alliances continued, particularly for the large players, which will likely result in squeezing out smaller companies in emerging markets.
3. Layering of app-based features and services continued and expected of security system providers, which will raise the monthly gross RMR numbers; however, not contribute as much to the bottom line due to throughput fees.
4. Those companies with monitoring stations continued to outsource to large and focused third-party monitoring stations as the surveillance of security systems transitions to more lifestyle services and customer choice on what should be done in the event of a signal requiring response.
5. Technology costs continued to drop as the labor component costs rise and skill sets erode.
1. Video verification continued to become a key component of the security offering and provision of monitored services to help actively improve the accuracy of reported incidents to 911 centers.
2. ASAP to PSAP, newer GPS solutions and increased capabilities within the monitoring center software systems continued to improve or help maintain monitoring center margins.
3. The cost of external capital continued to rise, but financing for “roll-in” acquisition opportunities continued to be available in the marketplace as the number of industry lenders expand.
4. Valuations of the larger security companies continued to be influenced by a company’s free cash flow metrics versus RMR and steady-state net operating cash flow. Concerns for the industry’s future growth profile in the midst of new technology entrants will also temper valuations going forward.
5. The major telephony carriers advanced the 2G/3G sunset even faster than they have represented for 2019/2020.
1. The rollout of new product lines of smart speakers designed for use in commercial contexts facilitated explosive growth for voice assistants in nonresidential buildings. This growth will be particularly dramatic in hotels and in health-care facilities, with each over 50% compound annual growth rates in these vertical markets.
2. Building management system platforms were increasingly being used to accomplish more tasks than just connecting and integrating energy and security domains in buildings.
3. The Internet of Things continued to be a topic of discussion in the fire industry as manufacturers work to make products “smarter,” with new features and sensors built into the devices. Some manufacturers are exploring the opportunity of using a fire detector as a new hub for HVAC controls within a building.
4. Video surveillance products featuring deep-learning video analytics continued to be big trend. Increasingly the technology is being developed into vertically focused solutions that are marketed for specific applications. For example, face detection for automated privacy masking in retail or vehicle identification for police.
5. Similar to smart speakers, video doorbells continued to be a product that often leads residential consumers to additional devices or recurring service charges. Although Ring has a big lead, 65% of video doorbell shipments globally in 2017, many vendors are launching new doorbells which will lead to stiffer competition for Ring in 2019.
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