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Michael Diamond

May 30, 2017

I Wouldn’t Do That if I Were You – The Surveillance Market

Michael Diamond , Director, Industry Analysis ;

B2B Technology


Physical security and cybersecurity go hand-in-hand with protecting corporate assets; and while news of cybercrime has recently dominated the headlines, issues regarding security as a whole have become top-of-mind for firms of all sizes, regardless of the vertical market. We believe the opportunity for technology sales in the physical security space center on a few key areas.

The business-to-business security and monitoring market saw six percent unit growth in 2016 compared to 2015, and a 13 percent compound annual growth rate from 2013 to 2016, making it one of the fastest growth areas in the B2B IT market. Looking at features and functionality, outdoor cameras grew 32 percent year over year in the B2B Indirect Channel as businesses increasingly employ them in areas such as parking lots, loading docks, gas stations, and more.

From FY 2011 to FY 2017, the Department of Homeland Security’s IT budget has increased from $5.6 billion to $6.5 billion, with projects spanning from remote video surveillance systems to air cargo security. As federal and local governments increase efforts to protect critical infrastructure (e.g., airports, power plants, railways), the need for surveillance products with more sophisticated functionality is critical. In 2016 vs. 2015, cameras with color and infrared capabilities grew 65 percent, while cameras equipped with motion sensors grew 14 percent during the same time period in the B2B Indirect channel. We believe segments with more sophisticated functionality will continue to grow, as key areas of critical infrastructure need to be monitored.

In the private sector, firms are strengthening surveillance strategies to help thwart privacy and security issues and lower shrinkage. In the quick service restaurant segment, businesses often stay open 24 hours, which can boost sales, but can also increase the risk of crime during late night hours. In the healthcare segment, hospital emergency rooms, with large patient volumes and extended wait times, can pose a risk for front-line staff, especially when patients are intoxicated or have psychological issues. Thus, we expect these segments will remain strong for surveillance equipment. 

Finally, the onslaught of economic espionage and the loss of trade secrets to criminals or foreign governments is important to many corporations. While we often picture a hacker behind a computer in a dark room poaching secrets, that’s often not the case. In fact, a lot of theft stems from employees mishandling or taking confidential information from corporate offices, factories and homes. In an effort to protect company secrets, firms must have a solid physical security strategy coupled with a cybersecurity strategy in the data center.

Given the many needs for physical security, we believe the market will continue to grow above traditional IT growth rates. Security cameras are the most common product firms use to solve these security challenges; but, these challenges also provide an opportunity for companies in this market to educate businesses regarding current and emerging threats, as well as which solutions can be used to neutralize them.

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