Study: Top security companies' market share to grow

LONDON—The market share of the top 15 security equipment and services companies will continue to grow through 2020, according to latest IHS Markit Physical Security Equipment and Services Report, released this week.

The combined equipment and services market was estimated to be $123.67 billion in 2015, with the equipment market forecast to grow at a CAGR of 8.5 percent to 2020, and the services market forecast to grow at a CAGR 4.5 percent to 2020, according to Oliver Philippou, IHS Markit senior analyst.

“The market share of the top 15 security equipment and services companies accounted for 21.4 percent of the equipment and services market in 2014, growing to 23.1 percent in 2015,” Philippou told Security Systems News, a trend that he expects to continue in 2016 with all of the consolidation that is taking place.

“It is important to note that this market share estimate does not include mergers and acquisitions that have taken place in 2016, such as the merger of Tyco with Johnson Controls, the acquisition of Diebold's North American electronics security business by Securitas, the acquisition of ADT by Apollo Global Management and merger with Protection 1 and ASG Security,” he explained. “These three deals will further expand the market share of the top 15 security companies.”

IHS estimates that in 2015 Tyco International was the largest supplier to the equipment and services market, comprising 3.8 percent of the market, followed by ADT at 2.9 percent, and the biggest mover, Hikvision at 2.5 percent.

But it is not just large-scale acquisitions that are concentrating supply. “Chinese firms like Hikvision and Dahua Technology have continued to grow much faster than the market average, not only in their domestic market but internationally, too,” said Philippou. “Part of their success has been down to offering products at lower prices than their competitors.”

The report also found that integrators are increasingly leveraging single-vendor solutions to reduce installation costs and focus on the more profitable service and maintenance contracts.

“The market share data of the solutions providers has increased more than the 'best of breed' vendors—this was the initial trigger to investigate this,” noted Philippou. “When speaking with integrators we found that the mid- to low end market has seen an increase in the use of solutions providers, [which] allows integrators to get better deals on equipment that is supposed to be easier to install as integration is not as difficult.”

Editor's note: For this IHS report, the equipment market consists of video surveillance, access control, intruder alarms, entrance control, consumer video surveillance, mobile video surveillance and body-worn cameras, and enterprise storage, while the services market consists of access control as a service (ACaaS), video surveillance as a service (VSaaS), remote monitoring services, and security systems integration.