A survey of the 2010 security industry

Industry grew its business through alliances and acquisitions

End users are demanding full plug and play and seamless integration with other control infrastructures, including convergence with the business enterprise. So alliance needs to go one step further to extend the digital link and enable end-to-end communication so that all the information and data can be brought together. We believe this was the reason for rapid growth in alliance activity in 2009 and its continuation in 2010.

As an example: In June this year 3VR and Arecont Vision announced their alliance whereby 3VR has certified Arecont Vision's full line of megapixel cameras as part of its SmartCam program. Additionally, Arecont Vision said that 3VR had completed participatory testing in the camera maker's MegLAB program and had been certified in three areas: camera integration, feature integration and load testing. In addition to proving a degree of product differentiation, more comprehensive certification programs will be important as digital cameras and edge devices take on more features that require IT-like configuration at the time of installation or, later, when users wish to make add-ons or changes. Megapixel cameras, in particular, come with features and settings that can perform differently when used with different VMS systems.

The creation of alliances is also extending across business borders to deliver value-add solutions. A good example of this was the announcement in June of a strategic partnership between CNL and ESRI (U.K.). CNL supplies physical security information management (PSIM) software. ESRI is a software manufacturer providing the backbone for world mapping and spatial analysis. The combination of these technologies will allow ESRI customers to bring their entire security estate into one system and CNL customers to leverage greater efficiencies and significantly improve their operations.

We expect that both alliances and M&As will become one of the main conduits for delivering this de-layering process. However some companies will select to develop their own products. A good example is Axis Communications because it has chosen to develop its own "layers" -- in their case, a video management software.

Alliances for the purposes of sharing development costs or working together to explore new markets, whilst less frequent, are also increasing. Some opportunities have been taken up by suppliers of video surveillance to join with access control and intruder alarm manufacturers to combine information and data through a common software program and this again has extended the application for their products. This has been partly driven by the need to counter the consolidation process that is taking place across the horizontal layers of security systems. Three years ago manufacturers of security equipment focused on one particular discreet aspect of the business. In the case of video surveillance, the business was made up of a number of horizontal layers including IP video software platforms, video hardware and video management systems. Most of the leaders in these fields sold to other hardware suppliers that offered systems, to distributors and to system integrators. As the demand for total solutions grew, alliances rapidly developed between manufacturers in the different layers so that best-of-breed products could communicate and work together. With time this has developed into much stronger partnerships sharing development and promotional costs. This has now progressed further by companies joining together through merger or acquisition in order to produce vertically integrated companies that can deliver a full surveillance system.

More recently we have identified alliance arrangements between manufacturers and system integrators, working together to provide a solution for a particular vertical market and sharing the development and promotion costs.

IT network design and install companies are crossing the boundary between IT and physical security to offer a complete solution. However, in many cases these IT VARs are doing this through collaboration and alliance with physical security suppliers. Very noticeable of late has been the identity validation suppliers move to integrate with door access control technologies. Their preference appears to be to go the whole way and acquire an access control manufacturer.