A Conversation with Alastair Hayfield

As editors in the security industry publication trade, we often get updates from several research companies that make it a practice to report on industry conditions and analyses for the future. IMS Research is a supplier of market research in a wide range of global electronics markets, including the security industry. IMS regularly publishes detailed research on electronic physical security products such as CCTV and video surveillance, access control, intruder alarms and fire detection and suppression equipment. We sat down with Alastair Hayfield, research manager of video surveillance and VCA group, to ask a few questions.

Q. What was the top market driver for the purchase of security products and services in the United States in 2010?

A. This is a difficult question to answer because arguably there are several drivers that could be considered equally important for the video surveillance market in the United States.

If we take the retail industry as an example, it is one of the largest consumers of video surveillance equipment, and the driving force is generally loss prevention -- either by reducing theft or reducing staff fraud. However, the retail industry was struck hard by the recession, particularly with regard to new store expansions.

Investment in video surveillance equipment for infrastructure protection -- transport systems, government facilities, critical infrastructure -- remains strong. With government stimulus money finally starting to trickle down, it is foreseeable that these verticals will drive the market for some time.

The education vertical also is a very strong sector for video surveillance and access control solutions in the United States. Active shooter scenarios are prompting many school boards to install security equipment to help prevent and deter such events. Security equipment is also seen as a way of reducing gun and knife possession and antisocial behavior within schools.

Q. What were the top five end user purchasing preferences for 2010?

A. Typically, large scale enterprise security projects are now using either full IP systems or some element of hybridization. The benefits of using IP on projects of this scale are well understood by the larger end-users and systems integrators. In terms of technology, HD resolution cameras and H.264 encoding technology are gaining traction and IMS Research forecasts significant growth in this particular product area.

The VCA market is still recovering from the recession and the over-expectations (hype) of a few years ago. That said, IMS Research tracks project tenders. We are observing that more large-scale projects have VCA specified from the project start. There also seems to be a better sense of realism within the industry and an understanding that getting the right support from systems integrators -- in terms of setting up the analytics on site -- is key to a successful deployment.

DVRs and analog cameras are still popular with small-scale customers and many deployments in the mid-tier of the market. Although the low-end of the market is commoditised, within the mid-tier market consumers are less concerned with price -- although it’s still important -- than they are with product reliability, image quality and storage volume.

The DVR/analog camera combination is still more cost-effective for consumers with a low camera count than a full IP system. That said, falling IP camera prices (typically driven from the far East) might help to drive the increased adoption of IP in this particular segment of the market.

Q. Where are some of the growth sectors of the security industry? Any sectors declining/holding steady?

A. Government, transportation and education continue to perform above the market average. In the short term, commercial, banking and retail applications have struggled through the recession. However, in the longer term -- 3-plus years -- we expect to see growth recover in these sectors to prerecession levels.

Q. What are the trends in the IP video surveillance market? When will IP finally overtake analog surveillance?

A. Globally, sales of network video surveillance equipment -- IP cameras, NVRs, s/w, encoders -- will be about comparable to sales of analog video surveillance equipment -- analog cameras, DVRs, matrix switches -- in 2014. However, it is worth noting that shipments of analog cameras will still outstrip shipments of network cameras in 2014 by a considerable margin.

Q.In what regions of the world is the security industry growing the fastest? What about the European/North American markets?

A. The emerging markets of Brazil, China, India and Russia are all forecast to grow quickly. Europe, and Western Europe in particular, is forecast to grow comparatively slowly. Western Europe is more mature, closer to market saturation and, as continues to be observed, still struggling through economic recovery. North America is performing better than Western Europe -- the U.S. economy is buffered slightly by being a single, unified block in comparison to the individual, smaller economies of Western Europe. The United States also has a slightly stronger focus on funding for Department of Homeland Security projects.

Q. Will we continue to see both ONVIF and PSIA battle in 2011? What is the market share of companies adopting each group’s standards?

A. In July 2009, IMS Research conducted market share analysis for the two major proponents of open standards for network video surveillance equipment. This analysis revealed that the member companies of the ONVIF standard commanded a significantly larger share of the total video surveillance equipment market than the member companies of the PSIA standard.

Since then, there has been rapid progression of both standards, with both bodies announcing a raft of new member companies.

To reflect the rapid development of both network video surveillance standards, IMS Research has re-analyzed the relative market share positions of the two network video surveillance standards bodies.

This new market share analysis revealed that, despite both standards bodies having gained market share since the last analysis, the member companies of ONVIF still command a greater market share than the member companies of the PSIA. When considering the total video surveillance market, the member companies of ONVIF represent 61.1 percent of the market compared with the 31.5 percent of the PSIA member companies. Again, as in July 2009, the difference continues to be more pronounced when considering the network video surveillance equipment market. The member companies of ONVIF hold 72.1 percent of the market, compared to the 29.3 percent of the PSIA member companies.

“There is a strong and accelerating movement toward open standards for network video surveillance within the industry -- currently 35.1 percent of the market is neither a member of ONVIF or the PSIA,” said Gary Wong, a video surveillance research analyst at IMS Research. “Whilst there has been some trepidation that the introduction of open standards may increase competitiveness in an already highly competitive environment, there is now strong belief that standards will be a key driver in significantly expanding the network video surveillance marketplace.”

At the recent ISC West show, ONVIF announced that they would be expanding the original scope of their organization.

“Having established strong momentum in creating an open standard for video products, ONVIF has decided to expand its scope to also include access control,” said Uwe Thym, vice president of marketing for Bosch Security Systems. “We (Bosch) believe that a common standard across these segments will have significant advantages for a large number of applications, where effortless integration of access and video products is of great benefit.”

“With a high level of support from network video surveillance manufacturers and a high volume of ONVIF-compliant products scheduled for release later this year, it is not surprising that ONVIF is now focusing on establishing another standard that offers synergic benefits for its membership,” Wong said.

This article originally appeared in the December 2010 issue of Security Today.

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