Security Industry Disruptors – Two Dynamics to Watch

The physical security industry has exploded over the past decade. Acceptance of traditional IT industry conventions in the early 2000s brought more rapid product development than we had ever seen before; development that has empowered us to realize unprecedented reach from the technology and processes we’re implementing today. Surrounded by an ever-changing threat landscape, it’s necessary that the industry constantly evolves. In the midst of this evolution, we’re seeing two significant dynamics disrupting the security industry status quo.

The first dynamic relates to the unprecedented number of significant mergers and acquisitions we’ve seen over the past several years. High profile security technology mergers, such as Canon’s acquisition of Milestone Systems, Motorola Systems’ acquisition of Avigilon, and United Technologies’ acquisition of S2 Security, have all strengthened the acquirer’s respective market share nearly overnight. Bringing new companies into their existing portfolio, these industry leaders are oftentimes enhancing their offerings by benefiting from the development and change efforts of the more adaptable organizations they’re joining. Furthermore, new distribution channels are suddenly available to the smaller organizations, extending to them opportunities to deliver their solutions in regions not previously possible. These things, in addition to the myriad of other benefits that the merging organizations realize, place increased pressure on smaller competitors endeavoring to grow organically overtime.

Likewise, on the integration side, Convergint Technologies continues to lead the industry by huge margins, in part by acquiring integrators to increase their territory. Though the true impact of the Johnson Controls-Tyco merger remains to be seen, lateral shifts of any kind from this industry stabilizer will undoubtedly be felt throughout North America (and beyond). Were these corporations commit to a single platform or integration partner, massive ripple-effects would be felt; this trend toward consolidation will almost certainly drive change in the global security marketplace.
The second noteworthy dynamic is the impact we’re seeing regarding security products imported from China. Chinese security manufacturers continue to flood the North American marketplace with products available for a fraction of comparable products delivered by their competition. As well, these manufacturers and distribution partners appear to spawn overnight with revolutionary, “market-ready” products long-before their less agile competitors. This influx of Chinese manufactured goods has created a divide in the industry as security integrators face a difficult decision: do we win more deals delivering less secure, less reliable products at a low price point, or do we work harder to deliver more robust, time proven, solutions?

On one hand, we see organizations rejecting these less expensive products. We typically see this from those who highly value cyber security and seek to deliver a “hardened” solution to their customers. These organizations know that the adage is true when it comes to security products—“you get what you pay for.” Additionally, they observe the regularly released reports detailing newly discovered product exploits and compromised end users who, oftentimes, have subscribed to the less thoroughly vetted products.

On the other hand, these systems are still being delivered rapidly through organizations who value the bottom line above all else. The North American marketplace is still demanding these solutions after all, and many integrators large and small are excited to deliver them. No solution is bulletproof, and in many instances these lower-cost solutions are performing admirably. However, from their architecture, to the regulatory listings they maintain (or lack thereof), these solutions prioritize convenience and cost over security or reliability.

Industry-leading manufacturers joining forces with other already-established manufacturers, and leading integration organizations expanding their territory, has resulted in sizeable industry consolidation over the past couple of years. Those of us active in this industry find ourselves watching at an exciting time where change is coming (and, as always, coming rapidly). We are seeing a call from North American end users, integrators, and manufacturers to emphasize the delivery of vetted products while simultaneously lowering the cost of both products and services; this is only going to spur more change. As an industry enthusiast, I am excited to see how today’s security leaders shape the physical security industry moving forward.


Jake Kuncaitis, CPP

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