security technology market Global physical security product sales will reach over $31Bn in 2018 Memoori has published a new report on Access Control, Intruder Alarm & Video Surveillance in 2018, forecasting to 2023; which brings together all the factors that are influencing the future of the security industry. The total value of world production of Physical Security products at factory gate prices in 2018 was approx. $31.55Bn, and the market is forecast to reach $44.25Bn in 2023 at a CAGR of 7.2% over the next 5 years.  Memoori estimates that China accounts for approx. 31% of the worlds physical security business. It is now the biggest single country market for physical security products having increased its share by almost 50% in the last 7 years. “Video surveillance equipment has been the major contributor here, with the market growing rapidly through a boom in new construction and safe city projects in the public sector,” says James McHale, CEO, at Memoori.  “However very little of this vast expanding market has been of benefit to western manufacturers as they have failed to establish a solid business base and significant market share in China. Whilst two Chinese manufacturers, Hikvision & Dahua now have sales of more than $5 billion between them and the kind of scale that allows them to reduce prices to levels most western manufacturers can’t compete against. “ 14 companies with a revenue of $1Bn or more According to Memoori, there are now 14 companies, with physical security product revenue over $1Bn (Memoori term Group A Companies) accounting for some $18bn in 2018. Hikvision, Dahua and Axis Communications have given new impetus to this group and the merger between Thales and Gemalto has produced a new mega Identity Management / Biometrics company. The net effect is that this group has significantly increased its contribution and the average sales revenue is over $1.2bn giving them 57% share of the physical security product market. Proprietary – an obstacle for growth Access control is still a much smaller business than video surveillance and today less competitive, but consolidation is creating a more competitive environment and with it comes the confidence to move forward and take up the challenge tabell1.indd of embracing new technologies that will deliver better performing products. “However if manufacturers prefer to continue to be insular and proprietary, it will not be good news for continued growth, for traditional proprietary systems mean limited options for the customer and restricted possibilities for integration and scalability”, says James McHale..  Awareness of cyber security increases 2018 is the year that all the stakeholders in the physical security industry finally got the message that the Cyber Security threat was capable of causing significant harm to their businesses. Now one of the critical buying propositions of physical security is “What have you done to make this equipment less vulnerable to cyber attack”? The owners and operators of buildings, particularly those having large building estates need to know that manufacturers and installers fully understand what needs to be done to reduce vulnerability and make sure it is applied to their equipment and systems. Acquisitions and mergers increased by 16% The report also shows that in 2018, mergers and acquisition activity in physical security totalled $7.33Bn (16% up on 2017), which looks like the start of a new A Layered Approach to Smart Buildings Cybersecurity 6. PERIMETR SECURITY Internet or corporate defences, VPN, Firewalls, DMZs 5. PHYSICAL SECURITY Guards, Locks, Access control 4. NETWORK SECURITY Network Access Control, Firewalls, DMZs, VPNs, Network Segmentation 3. DATA SECURITY Access Control, Authentication, Password Management 2. APPLICATION SECURITY BMS, Database, Web 1. DEVICE SECURITY Endpoint Security 1 2018-11-26 16:06 wave of growth. The structure of the industry is still very fragmented with hundreds of small companies finding it increasingly difficult to compete and it looks inevitable that the general trend line of value and volume of mergers and acquisitions will continue upwards over the next 5 years, but at a modest growth rate.  The average value of a deal increased from $100m in 2010 to $150 million in 2015. This year (2018), adjusting for the nonphysical security business of the Gemalto acquisition the average deal was around $160 million.   About the Report The number of deals in the range of $50m to $150m has increased and there has been more diversity across the different product types. Cross border acquisition accounted for 24% of the deals carried out this year. “For the most part over the past five year period the main driver has been the need to extend geographic coverage but this year acquisition of technology has been the main objective. Some 62% of the deals involved the acquisition of US companies with the vast majority being domestic affairs,” concludes James McHale.  At 329 pages with 43 charts & tables & ONLY $1,750 USD for a single user license, The Physical Security Business 2018 to 2023; Access Control, Intruder Alarm & Video Surveillance report filters out all the important conclusions, supported by facts, to demonstrate what is shaping the future of the security industry. The report can be directly ordered from AR Media International: https://www.armedia.se/en/products_other_physicalSecurity.asp Security News Every Day – www. securityworldmarket.com 10 • d etektor internati onal