Reduced revenue growth of security industry

- May 12, 2018-

Reduced revenue growth


At the same time, the revenue growth of many more traditional security companies also showed a decline. For example, Bosch’s revenue growth rate decreased from 10.9% in 2014-2015 to 6.1% in 2015-2016. Other examples of the same period include ASSA ABLOY fell from 26.3% to 6.6%; Axson fell from 21.7% to 11.3%; and Tyco dropped from 2% to -1.9%. In fact, companies including IDIS, OPTEX, and Vicon Industries have also experienced negative growth in revenue.


There are many factors that contribute to this situation. OPTEX stated in its financial report: “Security company’s sales of outdoor residential intrusion detection are in a slump. In Asia and Oceania, sales of intrusion detection are weak. In the Americas and Europe, the Middle East and Africa (EMEA), the overall sales are Declined by the exchange rate."


Despite this, competition and price pressures are also one of the main factors. Memoori's report points out: “The security industry will also face huge technical and business challenges in the next five years. These challenges will bring significant changes in the supply side and business form and structure. Most companies are currently focused on intense competition. During the process, how can we operate profitably and survive?"


Especially in the field of video. According to Memoori's report, the market size of video surveillance products in 2017 was US$15.9 billion, an increase of 5.9% over 2016. The company stated that this level of growth looks quite disappointing compared with the average growth rate of 9.7% over the past five years.


IHS Markit has similar views. Josh Woodhouse, senior analyst of video monitoring at IHS Markit, predicts that “In 2017, global video surveillance market revenue growth will be less than 6%. Equipment demand is still high, but price competition is fierce, which means that revenue growth will slow down, especially in Markets outside China.” To win in this competition, security companies are focused on developing diversified products and providing end-to-end solutions in certain government-related areas. Examples include Philip's thermal imaging products, Bosch's building automation and video conferencing, and Johnson Controls' building automation solutions.


“Product diversification is another trend we observed in 2017. For example, traditional vendors that only supply cameras are expanding into the complete monitoring ecosystem, while traditional software vendors are starting to provide more hardware. The way that suppliers seek to increase their sources of income has become a symbol of the times, Woodhouse said. "As the market is becoming more competitive, integrators want to obtain optimized solutions that are certified and tested. This is one of the reasons they chose a hardware/software management platform from a single supplier."


"In order to remain competitive and successful in the market, apart from good products, good quality and trustworthy network security, we also need a pricing strategy." Hanwha Techwin provides high value at a reasonable price, customers can enjoy more Good quality of security equipment," Park said. "The Wisenet X series that has already been asked has been equipped with our self-developed SoC. This product is widely recognized around the world. We are proud of these achievements because it proves that our products are of good quality. ”


For some medium-sized companies, the cost reduction strategy is also quite effective. Mike Stilwell, chief financial officer of Synectics, said: “The tight control over costs, as well as the increase in revenue and profit margins, continued to make the Group profitable. At the same time, despite the decline in revenue from 2015 to 2016, some companies still maintained a very good net. Profit margins, including Dynacolor, Geovision, and Hitron Systems."