Report: Physical Security Market Projected to Be Worth $42B By 2020
Memoori’s latest research shows that even after years of global economic turbulence the physical security industry continues on an upward trajectory.
LONDON – Despite persistent economic turmoil over the last eight years, the global physical security market has grown at a compound annual growth rate (CAGR) of 7.82% since 2010, according to a new report by research firm Memoori.
Memoori’s estimated total value of world production of physical security products at factory gate prices in 2015 was $27.2 billion. The firm forecasts that growth in total security equipment sales will edge up by 8% in 2016, and over the next five years to 2020 will reach almost $42 billion.
Despite sustained high rates of growth in video surveillance in China, Memoori estimates world growth at 8.9% marginally lower than 2014. This decline in growth coincides with a significant number of suppliers from developed regions of the world having their profitability and share of the market decline.
An analysis of the structure of the business shows that there are too many companies of insufficient size to invest in this fast moving innovative sector of the business. Even some of the leaders in the video surveillance sector are finding it much harder to meet head on the threat of imported Chinese products that have now established themselves in the United States and more recently in Europe.
While the West leads on IP technology, Chinese imported products selling at half the price are making a serious challenge, despite their lack of robustness and weakness to cybersecurity attacks, according to Memoori. In the next five years this problem is likely to become more acute given the emergence of Hikvision, in particular, on the global state. Memoori estimates that Hikvision, the leading global provider of video surveillance products, is about 3.5 times larger than the next largest western manufacturer and currently growing more than 3.5 times faster.
This difference in scale gives Hikvision the option to reduce prices and remain profitable because they have the largest and one of the fastest home markets which overseas manufacturers are finding very difficult to penetrate, according to Memoori.
In a press release, Memoori writes: “We expect Hikvision to make major acquisitions of Western video or access control manufacturers in the next year, assuming that they believe this the best way to operate within western markets.”
Chinese manufacturers “do not hold all the cards,” the research firm suggests. Western manufactures lead in IP technology which is vital for moving into the Building Internet of Things (BIoT) and this could not only help them defend their home markets but open up China which needs this leading edge technology for its Safe & Smart City projects.
Toward the end of the decade, the research firm projects the BIoT to generate further growth. The physical security market is at the interim stage today with integration across all three sectors of the industry delivering a much more cost-effective proposition but certainly not the ideal solution, Memoori says.
BIoT should enable convergence with the business enterprise and full integration with other Building Automation Services (BAS) delivering fully automated Smart Buildings. A much brighter and benign future awaits access control manufacturers with steady growth going forward and little competition from Chinese products on the horizon, according to the research firm.
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