6 Predictions for 2006

I’ve finally found and polished up my crystal ball and am going to make a few industry predictions for 2006. Some of these are trends I believe will be significant, while others are more in the incubation stage.

Alarm company acquisitions focused on national accounts — A few years ago, manufacturers went on a merger-and-acquisition spree by buying their competitors left and right. Recently, however, that activity has slowed down and it seems the installation side of the business is heating up.

I believe we will witness an increased focus on acquisition action involving alarm companies directed at providing a higher level of service to businesses with a nationwide footprint. The trend here will be large regional alarm companies turning into national powerhouses.

If you think about it, there used to be many mom-and-pop drugstores, hardware stores, bakeries, grocery stores, restaurants etc. that were taken care of by locally operated alarm companies. Today, when you travel the interstate highways, you see the same franchised chain stores and eateries exit after exit. These chains like consistency. To serve these establishments, installing dealers must also supply this type of standardization.

IT/physical security convergence — Yes, we hear and talk all the time about how the IT guys are going to take over the commercial/industrial electronic security industry. Relax, it ain’t going to happen! These guys have enough on their plate with information security, firewalls, viruses, spyware, etc. The last thing they need to do is learn physical electronic security system design, programming and installation. In fact, there are many other trades trying to jump on the network bandwagon too — the telephone people, sound and communications folks, HVAC building control, etc.

Is the IT guy so smart and industrious that he will learn a sophisticated trade most of us have spent our whole lives developing and learning? No way — our jobs are just fine. However, you had better learn how to communicate and understand the issues the IT manager has to contend with when it comes to adding security to the network (and/or bring an IT expert in-house), or else there will be some friction for sure!

Wholesale distribution competition — There are some new entrants coming into play to share a finite and competitive marketplace. Are there too many? Will there be a shakeout? Will some acquisitions be made?

Whatever develops here, it bodes well for the installing companies served by these distributors. Already plagued by low margins, distributors — and the manufacturers they represent — will be forced to work harder to earn your business. That trend is already evidenced by the increase in exclusive sales arrangements being made between distributors and suppliers. Keep your eyes peeled for more changes in this sector.

Access control manufacturer consolidation — Unlike burglary, fire and CCTV, there are no dominant players in the access control arena, which means consolidation is imminent. All these companies have their own proprietary software, but most don’t communicate openly with other databases without some type of data conversion or software modules. Will the open architecture standard start coming into play in 2006? Not until manufacturers learn how to guard against losing customers to their competitors.

CCTV technology advances — Advances in CCTV will keep even the most educated gurus on their toes. The technology is seemingly outpacing installer acceptance and training will become ever more critical. Object tracking software will be in demand for large facilities that want a “smart” system to follow a person from one camera to another automatically.

DVRs will continue to move toward becoming a commodity as prices drop even further, and IP cameras will continue to make headway. However, we must remember not to take the security out of the security system by subjecting it to network vulnerabilities.

Radiation detectors — This will be a new installation segment with additional monitoring and revenue opportunities for the typical burglar and fire alarm installer. You’ll be able to install permanently fixed, 12-24VDC radiation and toxic gases detectors in the doorways and entry points of commercial buildings. These devices will be fully addressable and wired directly to a burg or fire alarm panel. Remember, you heard it here first … with more to come soon!

That’s it for now, time to take off my Swami turban! Keep reading SSI throughout 2006 to keep up with the latest on all of these exciting developments.

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