By Doris Grammer
The global security market shows no signs of slowing down. (Photo by Bosch Security Systems)
MERGERS AND ACQUISITIONS
The global electronic security market -- encompassing intrusion alarm, access control, CCTV surveillance including state of the art IP-solutions, fire alarm and evacuation systems, as well as security management systems -- is worth around 13 billion euros and has an annual growth rate of around five percent. These attractive statistics are the main reason behind the many major mergers and acquisitions that have occurred in the first few years of this century amongst security vendors.
One of the first of these deals saw Tyco acquire Sensormatic, the worlds leading retail security firm, allowing Tyco Fire and Security Services to offer a complete security package to retailers around the globe. In 2001 Bosch acquired Detection Systems of Fairport, U.S.A., one of the worlds leading providers of intrusion detection systems.
In 2002, Bosch Security Systems acquired the CCTV and communication business of Philips, and two years later enhanced its CCTV product portfolio with IP video systems by integrating Nuremberg-based Video Communication Systems (VCS). VCS is one of the leaders in the field of network-based CCTV and the acquisition enhanced Boschs market and technology position in video surveillance systems.
Early in 2005, Honeywell acquired U.K.-based company Novar for its Intelligent Building Systems (IBS) division to enhance its portfolio of integrated security, fire, and building controls products and services. More recently, Siemens announced that it has signed an agreement to acquire Bewator, supplier of products and systems for access controls from the Swedish private equity group EQT.
As to why the Internet and the media are buzzing with news -- and rumours -- of acquisitions, its all down to the G-words: Global and Growth. As the market continues to evolve, acquisitions are playing an increasingly vital role in enabling the major players to grow more rapidly. By closing gaps in the product portfolio and quickly building up market access through specialized sales forces in regional markets, acquisitions support the rapid establishment of a strong market position.
The trend looks set to continue well into the future; certainly until the security market reaches maturity globally. So its very much a case of watch this space to discover who buys who next.
There is an even more important reason behind these transactions. Custome.rs are increasingly requesting integrated security solutions. They want to get everything they need regarding security from a single vendor -- the one-stop-shop approach -- and not buy different subsystems from different suppliers. This concept applies not just to products, but also to services. Any company intent on being seen as a serious vendor of security systems must ensure it has the total range of products and services in its price book.
Integration is especially relevant today in our increasingly distributed environment. Picture the following locations: a university campus; a large-scale industrial site; a multi-facility medical complex; an international exhibition and congress centre. Common denominators include words like sprawling, dispersed and vast. Then imagine the multitude of equipment in each building: temperature control, ventilation, access control, fire detection, video monitoring, intrusion alarms and so on. And dont even think for one moment that a single manufacturer has got the contract to supply everything!
For such an enterprise of many buildings in dispersed locations, controlling these assorted systems is inefficient, labour-intensive and costly. No wonder that customers are demanding an integrated solution with one user interface; that enables inclusion of third party and custom applications; and that integrates smoothly with diverse system architectures and networks. And if it has built-in modularity for the inevitable expansion, so much the better.
It sounds a tall order, but it is one that many manufacturers are responding to. For example, Bosch? Building Integration System (BIS) is designed to provide such an integrated solution, and has won a Frost & Sullivan Technology Innovation Award. BIS allows an enterprise to maximize the benefit of currently installed Bosch subsystems and integrate products smoothly from other manufacturers in a single user interface.
HITTING THE TARGET
In addition to the demand for integrated solutions, another key customer requirement is for specific solutions for specific applications. A customer in an airport is no longer willing to accept a security solution that was originally designed for a bank -- and then modified. Each application area has its own highly specific requirements. Even within the same sector, requirements can differ: a railway station is different to an airport, which is different from a ferry terminal. Customers want solutions that are tailored for specific applications. Consequently, vendors are investing more resources in knowledgeable experts with application-specific expertise.
THE RISE OF IP
Technology has always evolved at a rapid pace in our industry, and as we move into 2006 the pace shows no sign of slowing down. It doesnt seem long since Internet Protocol (IP) was a new, strange buzz word. Now its firmly entrenched in our language and presentations. IP cameras, IP networking, Voice-over-IP, Video-over-IP, transmission of intrusion and alarm signals by IP, security management systems based around IP and the customers are now equally familiar with these terms.
Designers and architects are increasingly demanding and specifying products that blend in with their attractive building designs. (Photo by Bosch Security Systems)
IP is a big technology that is influencing all areas of security -- and influencing it extremely rapidly. Its almost impossible to imagine what our industry will look like three years from now as three years is an eternity in todays progressive IP industry.
IP surveillance, for example, is already upon us. The initial migration to IP-based installations began less than ten years ago; now, every astute vendor has an IP surveillance solution in their portfolio. I read recently that more than half a million network cameras have already been installed worldwide. Running parallel are the numerous applications for IP-based systems; every week there seems to be a new and innovative one mentioned in the media. For example, take a fire crew arriving at the scene of a fire in a building using an IP-based security management system. They can now use the wireless modems on their laptops to log in to the system and view conditions inside the building. This and other applications are not just technologically interesting, they are potentially life-saving.
IP-based surveillance is rapidly replacing traditional analogue systems. Industry analyst J.P. Freeman Co. predicts that by 2008 -- only two years down the line -- more than 50 percent of installed cameras will be network cameras. Various facilities such as schools, airports, shops and hospitals are switching to IP surveillance. Given the many benefits, its no surprise.
THE KEY ADVANTAGES OF IP
One of the many advantages of IP-based surveillance is the scalability of the systems. A typical enterprise-level network video installation can run to 200 or more cameras. This number can easily rise to 1,000 or more in a large retail, educational or governmental environment. Such large systems are impractical in the analogue world.
Another key advantage of using IP as a transmission medium is that the cabling typically already exists. If it doesnt, installing Ethernet cabling is generally less expensive than installing analogue cabling. Furthermore, using computer networks allows users to employ standard PC servers for video management and storage. Such standard off-the-shelf equipment is relatively inexpensive to purchase, and is easy to service and maintain.
IP-based systems are also easier to power than their analogue counterparts, thanks to the IT standard called Power-over-Ethernet (PoE), which is rapidly gaining ground in the security industry. PoE enables power and data to be combined in a single network cable. This eliminates the need for local power at the camera level and enables a cost-effective network and power supply to be created. The key advantage is that installers dont have to bother about installing power outlets at each camera location. This not only reduces installation costs but allows the cameras to be easily repositioned or configured when necessary, further enhancing the inherent flexibility of an IP-surveillance system.
STANDARDS AND APPROVALS
In the whole IP arena, standards are going to play an increasingly important role. The OPC (Object Linking and Embedding for Process Control) specification is set to have a tremendous impact on IP communication. This is because it enables interoperability between automation and control applications, field systems and devices, and business and office applications. The new OPC DX standard will provide interoperable data exchange and server-to-server communications across Ethernet networks. This is of tremendous importance for the security industry as it will facilitate the integration of the various security components into a single security solution.
Of course, as every installer knows all too well, standards are one thing; approvals are a completely different ballgame. In the global security industry we see large differences between countries when it comes to approvals. In the area of fire alarms and intrusion, for example, we need country-specific approval for our products. This means adapting our products to country-specific requirements. Fire alarm systems give us our biggest headaches when it comes to obtaining approvals. Certain countries have regional or even local fire brigades that have specific requirements that we need to comply with before our products can be sold in those areas!
PUTTING THE PUBLIC AT EASE
Thankfully, CCTV and access control are truly global markets with few, if any, country-specific approvals. However, in these areas some security vendors come across differences in the perception and acceptance of these solutions. I think in 2006 and afterwards, security system vendors have to work at improving the publics perception of CCTV surveillance, which is not always as positive as it could be.
Many CCTV camera systems have a function that allows the operator to prevent the camera scanning certain sensitive or private areas. For example, in a government building, the area of the room that is accessible to the public can be monitored but the staff area can be excluded from the cameras gaze. Another feature ensures that online camera pictures can only be examined when two or more people are in the room. Then we have CCTV systems that are integrated with the access control system, to ensure that only those people with authorized access to the viewing room can view the images.
Yet, too frequently -- although it depends on the country -- CCTV is seen as an intrusion into peoples?privacy. We have a duty to educate the public on the real benefits of CCTV surveillance and inform them of how their privacy is still being preserved.
On the other hand, vendors should not get carried away and position CCTV as a panacea. London is the most CCTVed and videotaped city in the world, yet on 7 July 2005, four suicide bombers still managed to strike during the morning rush-hour and kill 56 people and injure 700. The alleged bombers were all caught on CCTV at Luton railway station on the morning of the attack, yet CCTV failed to stop the bombs. Despite what it says on the tin about crime prevention, CCTV is still usually used for forensic purposes; catching up with the bad guys after the event.
Obtaining this balance between what CCTV surveillance can and cant do -- and then communicating it to the general public, who after all are the people who generally end up being CCTV?d -- is I believe a major challenge for security system manufacturers in 2006.
THE IMPORTANCE OF AESTHETICS
Also in 2006 I think that the design -- the aesthetics -- of security systems will play an increasingly major role. This applies to the complete range of products, whether its cameras at a railway station, access control panels outside a corporate HQ, intrusion control panels for an apartment building, public address systems in an airport, fire detectors in a five-star hotel or whatever. Designers and architects are increasingly demanding and specifying products that blend in with their attractive building designs. They will no longer tolerate an ugly black box in the corner of the hotel lobby ceiling, but prefer a dome camera that they can integrate into the ceiling design and which can be painted in an appropriate colour. Instead of specifying the usual metal access control turnstile, they are showing greater interest in newer designs incorporating high-quality finishes in marble, granite or wood.
IMPROVING THE EAS OF INSTALLATION AND USE
Industry trend-watchers are also likely to be kept busy during 2006 observing the increasing number of security products that are designed to be easy to install and use.
For too long, manufacturers have expected installers to slog through an overly time-consuming and complicated installation process, while the end user has frequently been confronted with an instruction manual of bewildering complexity. Thankfully, all this is rapidly changing. There is an intrusion control panel in the market that is pretty easy to use. A high-contrast display uses colour symbols instead of words. Activation and de-activation is by means of an RFID token instead of troublesome PIN codes. All operations at the control center are confirmed by a voice message.
To tie in with the trend for aesthetically pleasing products that I mentioned earlier, the control centre is an unobtrusive, oval disc, rather than the conventional square keypad. Installation does not require manuals; the panel has colour-coded terminal strips with additional visualization of each connection by easily understandable symbols. Since introduction, the system has been recognized for its excellence and ease of use in the industry.
I therefore predict that products that ensure the aesthetic integrity of the project, and which lead to easier installation and use, will be big sellers in 2006.
Doris Grammer is Vice President Marketing of Bosch Security Systems (www.bosch.com).
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