Meeting customer needs to drive growth for security manufacturers in 2014

Research firm examines the business models of three companies expected to see continued success this year


This is, to say at the very least, a remarkable performance. Currently they operate at the other end of the size spectrum to Axis with some 95 percent of customers being in the small-to-medium-size category with only five percent enterprise class clients. They do not sell direct and have a very strong relationship with dealers and system integrators. Their phenomenal growth has to be more than a good product and marketing. It is most likely to be a combination of faster growth in the mid market and building up loyalty through their distribution channels by not selling direct. They have forecast revenue of $500 million by 2016.

In 2013, they acquired two companies. In May, they acquired privately held RedCloud Security, Inc., an innovative provider of web-based, physical and virtual access control systems. Through the acquisition, Avigilon adds a complementary product line to its end-to-end high-definition surveillance solution and provides the company with access to a growing segment of the global security market. Despite it being a different product, it fits in neatly with their existing distribution network.

In December, Avigilon announced a definitive agreement to acquire the video analytics company VideoIQ, Inc. for cash consideration of $32 million. Founded in 2006, VideoIQ has grown to become a leader in real-time intelligent video analytics solutions for security and business intelligence applications. VideoIQ has a developed portfolio of video analytics intellectual property, with 23 patents granted or pending, trade secrets and know-how.

This fits in directly with their existing business. Both of these acquisitions should deliver much more revenue than both companies achieved in 2013 and, at the same time, will provide their system integrators with a more comprehensive solution.

Our third “winner” for 2014 is HID Global, a major subsidiary of Assa Abloy, which is a global leader in door opening solutions. Founded in 1994, Assa Abloy has grown from a regional company to an international company with annual sales of $7.2 billion (2012) a 12 percent growth on the previous year, mainly achieved through an astute acquisition program involving 150 acquisitions.  HID Global sales in 2012 are estimated at £3.3 billion having increased their contribution.

Assa Abloy acquired HID (Hughes Identification Devices) in 2000 and over the last 13 years has incorporated some 15 companies into the HID organization. Starting with access control products through Motorola Indala they have progressed to identification technologies with Active Identity being a major acquisition in 2010.

Since then, major acquisitions have included LaserCard, IdenTrust, Lumidigm and Codebench. The combination of the companies’ has made HID Global a worldwide leader in secure identity solutions that use multispectral imaging technology, software, and biometric fingerprint sensors to authenticate identities with a high degree of certainty.

HID Global has delivered growth over 12 percent in the last two years despite difficult trading conditions and now have a strong cash flow and good financial stability to continue growth through organic means and acquisition.

For more information about our research, visit http://www.memoori.com/portfolio/thephysicalsecuritybusinessin2013/.