• Value of Physical Security products at factory gate prices reached $34.3Bn in 2019

    960 640 Stuart O'Brien

    The total value of world production of Physical Security products at factory gate prices in 2019 was $34.3Bn, an increase of 8.5% on 2018 whist the compound annual growth rate (CAGR) over the last 5 years has been 7.24%.

    Over the last 10 years, the market has grown by a CAGR of 6.27%, however, different rates of growth apply in each of the 3 businesses (Access Control, Video Surveillance, Intruder Alarm / Perimeter Protection) and geographic territories.

    A new new report from ResearchAndMarkets also forecasts the market will reach $56.76Bn in 2024.

    Other key findings include:-

    • China has increased its market share this year but still has a market penetration of 50% less than North America, based on sales per capita. The Chinese market has grown rapidly through a boom in new construction and Safe City projects in the public sector. However, very little of this vast expanding market has been of benefit to overseas manufacturers. The report shows that the problem for overseas manufacturers getting a piece of the China market is not about technology or performance, at its core it is a geopolitical challenge. 
    • In 2019, AI Technology applied to Video Surveillance has convinced the market that by 2020 it will become mainstream. Significant improvements in AI Video Analytics software is making this possible and over the next 10 years it will become a standard requirement across Video Surveillance solutions. There is a critical need to make full use of the massive amounts of data being generated by video surveillance cameras and AI-based solutions are the only practical answer. Modern chip architecture with AI software can comb through vast volumes of data and boost security and safety. Granted, there is a lot of development in this field that we are yet to see, but the path towards AI seems quite clear. 
    • The supply structure and the competitive landscape will continue to change over the next few years and the main driver for this is the Internet of Things (IoT). Physical Security systems generate vast amounts of information that when analyzed together with data from other Building Automation Systems can deliver intelligence that will improve the security, safety and performance of buildings and the business enterprise within.

    In addition, ResearchAndMarkets says demand structure in the video surveillance business is unbalanced because of the Chinese market. The main reason is that the government has some control over even private video surveillance manufacturing companies. If these companies want public sector business (which today accounts for more than 50% of the Chinese’s video surveillance market) and support with long term cheap loans, then they must comply with the states requirements.

    For this the government ensures that foreign equipment will not be used on public sector projects. Not surprisingly this arrangement has distorted any possibility of open trade and further has allowed the two major Chinese manufactures to build up a market share of 40% of the world’s video camera business; in part by operating a race to the bottom by lowering prices that no other manufacturers could sustain because they don’t have the same volume of production.

    However, on the horizon are other Chinese companies that want a part of the massive investment in the public sector Safe City projects. Huawei, one of the world’s largest communication companies, have announced a major push into video cameras and an AI video analytics startup, Megvii, intends to offer complete video surveillance solutions.

    The reports says they will eventually get established in the public sector market and take share from the two present incumbents, and this could at least reduce the pressure on non-Chinese manufacturers operating in the more open world market.

    AUTHOR

    Stuart O'Brien

    All stories by: Stuart O'Brien