Security Growth Conference March 8th and 9th - Santa Monica, California
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Trends in the industry that we believe will shape the overall security landscape in 2006

  • By the end of 2005, the Security Industry will eclipse the $150 billion mark and will be one of the strongest long-term growth industries in the global market.


  • Experts believe that the industry will continue 8 – 9% annual growth through 2010. Using the broadest definition (including mechanical products, electronic products, integrated facilities solutions, software, services and monitoring) the global security industry continues to grow at a record pace.


  • The “Trickle-Down Security” effect from large federal governments’ security concerns is the foundational driver for the public, commercial and private security industries. As the US government and other large federal governments continue to expand their security infrastructures and mature their security strategies, the commercial and private security industries will follow suit.


  • Convergence of IT with physical security is being driven by digital technology advances, particularly in access control, biometrics, RFID, smart cards, ID Management, and video surveillance.


  • Homeland Security funds are finally making a substantial impact. Previously hampered by departmental bureaucracy and organizational complexity, we are beginning to see more of the Department of Homeland Security’s (DHS) $41 billion budget in the hands of state and local governments. We estimate that more than 30% of that budget will be appropriated to security products and services.


  • “Interoperability” is more than a buzzword. Interoperability, information sharing, and integration will be dominating factors for the Homeland Security and Public Safety industries. Conditioning of Homeland Security funds with interoperability directives and large projects like the FBI’s recent interoperability initiative (Sentinel) suggest that the quest for interoperability is at the top of the DHS’s priority list.


  • Interoperability initiatives are shaping the entire security industry. The US government is driving a fundamental change in the way the security industry currently thinks. Several homeland security presidential directives and federal government mandates are demanding that access control, biometric and video surveillance technologies have open standards. Older, proprietary technologies will be displaced with compatible and interoperable solutions.


  • Digital technology in the access control, fire detection, intrusion detection, alarm systems, and alarm monitoring segments is revolutionizing the market. Our security industry survey suggests that more than 40% of all businesses will “strongly consider” some form of security integration this next year. We believe that companies will treat the convergence of physical security with disparate functions as more than just a “good idea”.


  • Video surveillance is undergoing a dramatic shift, as CCTV moves to digital. We believe this next year will continue to witness a dramatic shift in the video surveillance market. This technological disruption coupled with extremely high levels of fragmentation (over 100 manufacturers) will drive consolidation in this industry.


  • Video analytics software will continue to gain traction. The move from standalone analog to networked digital cameras will open the video analytics software market. We believe that analytics software will shift from a “cool technology” to an essential component of surveillance solutions.


  • Access control, biometrics, and video surveillance are in high growth mode. Industry experts believe that these industry segments along with automated explosive detectors will be the highest growth segments within the security industry. We expect these particular markets to grow at a collective 12% rate through 2008.


  • Overarching security concerns and new technologies continue to fuel the $37 billion private security market. Safety concerns and converging technologies are not only influencing the enterprise. Digitalization is reshaping the private security market as security systems central processors become the framework for home automation.


  • Major identity breaches (ChoicePoint) and confidential data loss (CitiGroup) continue to fuel the need for identity management and data protection solutions. Enterprises are more aware of the vulnerability of their data. We believe that larger security players will seek to round out their technological portfolios as organizations demand holistic solutions to protect critical information.


  • The overall security industry is extremely competitive and highly fragmented, with over 130 large, public players and thousands of emerging private companies in the industry. In addition, smaller private companies are emerging with innovative technologies, using technological advantages, and pricing to compete with larger, public players.


  • High growth + High fragmentation = Consolidation. Industry experts believe that the consolidation period for the security industry has just begun. Larger public companies will have multiple layers to their acquisition strategies (geographical, complementing products with services, etc.); however, we believe the theme of 2006 will be larger companies buying smaller, technologically driven companies to expand their product portfolios.
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