a&s International Nov. 2012 (Trial Version)

Nov 2012

Vertical Market

30 Bank on It:

Counter Measures Against Fraudsters Banks are responsible for the security of countless personal, corporate and national assets, making them obvious targets. Conditions in today's economy demand the most up-to-date security products and services available for the banking and financial services industry.

36 Trends that You Can Bank On

Special Feature

Industry Report

Product Trends for 2013

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Security 50: Differentiate to Win

44 NOW: A Do-or-Die Moment 48 Manufacturing Excellence in Times of

Uncertainty 58 S ecurity 50 Ranking 62 Security 50 Showcase 81 Tracking Security Industry Leaders for 10 Years ~ The 10th Anniversary of Security 50

Product Exploration

Smart Home Technology Makes Life Simple 92

104 Networking Technologies Connect Home

Automation/Media

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14 Contents 18 Editor’s Note 20 Corporate News 20 Market Observer 108 Show Calendar 115 New Products 118 Companies in This Issue

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Special Feature

Product Trends for 2013 a&s examines the latest video surveillance and access control solutions in 2012, which hold great potential in 2013.

BY JILL LAI

Video Surveillance Multi-megapixel

2012 was a fruitful year for multimegapixel technology providers. In 2013, the market for high-resolution image quality keeps getting stronger.

With the market becoming more saturated, there will be a price competition in the 1- to 3-megapixel camera segment. One such vendor is Arecont Vision, which launched an affordable 1.3-megapixel camera for value-conscious buyers. “Certain buyers have certain financial requirements. So we provide them this cost-effective solution, but which still is a megapixel camera. We are expanding our product portfolios in megapixel solutions,” said Becky Zhou, VP of Sales at Arecont Vision, APAC. Other providers, such as Mobotix, are focused on developing cameras with megapixel counts above 3 megapixels to differentiate their product offerings.

Some early adopters of multimegapixel technology are confident of its potential for casinos, retails, schools 26 22

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and commercial buildings in the U.S. “These industries are adopting more high-definition cameras because image detail is critical to their business operations. For casinos being able to read cards and chips gives them the ability to find card cheats or dishonest dealers,” said Keith Marett, VP of Marketing and Communications at Avigilon. “Retail stores can’t depend on low-resolution cameras pointed at a fixed cash register to capture the transaction any longer, as mobile point of sales terminals are becoming more popular.”

“The education market was one of the first to realize the advantages of megapixel technologies as the security and safety of schools for both secondary and higher education is a priority,” said Steve Gorski, GM, Americas, Mobotix. “IP-based surveillance systems offer far more benefits than proprietary systems, such as remote access, video analytics, higher image quality and easily scalable systems, for example and the overall return-on-investment is much

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greater.”

I Q i n Vi s i o n p ro d u c e s u n i q u e varifocal lens for a mini dome camera with up to 2-megapixel resolution, which is targeted for health care, government and education sector.

IQinVision provides a five-year warranty on all its entire line of dome cameras, which remains a rarity in the security industry.

High-resolution technology is a natural fit for LPR/ANPR applications due to the sufficient amount of pixel density for better analytics.

However, the 20- to 400-megapixel or gigapixel cameras are mostly used for niche and high-end applications.

They are combined with panoramic viewing, for wide-area monitoring in border control or seaports.

Smart Appliances

All-in-one appliances make networking third-party products much easier. The highly fragmented nature of security products makes configuration and integration the biggest headache for system

integrators as they are dealing with thermal camera HR.image Theseprocessing solutions different hardware and software. have expanded a rtheir e l itraditional k e l y t o role be Jeff Whitney, VP of Marketing and as night vision f ocameras r h i g h to s eprovide curity Business, Intransa, said, “Intransa’s 24-hour outdoor security,” said John applications, such as clients just need to determine their Romanowich,critical President and CEO, infrastructure configuration needs online or with SightLogix. protection or safe city a phone call. Then, Intransa will An important development for programs. configure the NVR/server according thermal cameras T hise thermal l a s t t i WDR, er is ▲ Adlan Hussain, Marketing Manager, ▲ Larry Lien, VP of Product Management, toCNL our clients’ cameras and VMS. which produces clear video despite specialist vertical PSIM Software Proximex Then, when the appliance goes to our challenging imaging suppliersconditions, who have clients, it is ready to use right away.” such as whenbuilt the camera is aimed up a template “Our NVR will send notification toward the rising p r or o dsetting u c t asun. i m eOther d at of hard-drive failure to customers,” imaging challenges arevertical when markets. very hot certain Whitney said. “System integrators objects enter the scene such as atofire, These are likely be usually won’t check their systems or very hot exhaust fromwhere a vehicle in verticals the regularly. As soon as the system has engine. Foreground andchallengs background security are problems, they won’t take the action image detailfairly remain with fixed,clear for example immediately.

Soofwe leverage our FLIRManager, WDR thermal cameras, where which retail security, ▲ B rian Lane, Director Product ▲ Lindsay Hiebert, Senior Marketing, 3VR Solutions Marketing of Emerging technologies to ensure the health of improve the probability of intrusion there is requirement for Technologies, Cisco Systems the entire video surveillance system.” detection, andintegration enhances the of perforCCTV, Product Management for Proximex.

Smart appliances provide the ease mance of video analytics.

PoS data, RFID tagging and video “Standards-based enable of use necessary for interfaces SMB applications.

Thermal cameras combined with analytics." information to IP be video more and easily shared Access control, intrusion video analytics enhance situational AcceSS control while PSIM systems enable the detection are combined in compact awareness, for wide-range detection WIreleSS relevant information to be and scalable solutions tocombined simplify applications, such as ports and Physical applications. access control is dominated and streamline correlated for organizations to security procedures. maritime “SightLogix by traditional mechanical locks and make informed security and A Tycomore solution supports remote systems can detect intruders despite online management systems. The business decisions.” monitoring, management and control background water movement or latter requires a high Next year, devices, we can also seeisthree over mobile which idealtiers for reflections, making theminvestment. a uniquely Access control products migrating of PSIM systems evolving, which can SMB owners. capable solution forare waterside from mechanical to online solutions be divided by their complexity. Adlan environments,” Romanowich said. therMal caMeraSManager with Video with wireless technology, which Hussain, Marketing at CNL Thermal cameras are deployed analyticS complements existing mechanical Software shared some of his findings for critical infrastructure.

In the U.S., Thermal enableasconstant and electronic access control systems. toward thesecameras PSIM systems follows: government projects are coming s u"At r v ethe i l l low a n c eend , mthere a k i nare g t smaller hem a It provides a simple, intelligent way back online, albeit fewer than in long-term staple for critical for environof upgrading themrapidly to high-level easier to install systems SME previous years. “One growing ments but now also are for commercial security and creates applications.

These most likely vertical market in many Northinnovative America applications. advances in opportunities many access control to be provided“Recent as a software service is the electricforpower distribution vendors. Assa Abloy released its new and deployed by traditional security wireless solution to meet this need. installers. These may be described as In the U.S., more than 40 million PSIM Lite and may well be adaptions phones are expected to be near field of ASC or VMS systems. communication (NFC)-enabled by the The next tier is high end PSIM end of 2012, according to a report by solutions that deliver real business Market Research. Nearly half of all advantage by integrating to operation mobile phones will be NFC-enabled activities and adding value through by 2016. Assa Abloy introduced its increased use of security systems by ▲ Becky Zhou, VP of Sales, Arecont Vision, ▲ Keith Marett, VP of Marketing and ▲ Jeff Whitney, VP of Marketing and commercial ecosystem other or Avigilon APAC departments, be it facilities Communications, Business, Intransa for issuing, 22

NOV 2012

delivering revoking digital sector,” said and Bill Klink, VP, Security keys Surveillance on mobile phones with NFC and of Commercial technology.

With this “The ecosystem, Systems for Flir Systems.

Electric mobile phones replace mechanical Power Grid iscan considered critical keys and access cards and openmany doors infrastructure.

Therefore, to homes, hotels, offices, hospitals, power companies are using thermal universities, and industrial cameras for intrusion detectionand on commercial buildings.

Rand the perimeters of their Ingersoll electric power Security Technologies successsubstations and poweralso distribution fully rolledGovernment out NFC-enabled campus facilities. and industry credentials are at the University of San regulations fueling the growth of Francisco’s this verticalcampuses. market.”

Klink said commercial market cloud-bASed AcceSS control segments are also going to deploy Cloud-based control manages more thermalaccess cameras in the near hundreds or the even thousands of future.

“Over past three years, doors and end users with many newprovides commercial market the freedom to remotely control segments have adopted the use andthermal manage security doors from anywhere. of cameras for Hosted access control solutions are perimeter intrusion detection, being adopted largeand commercial including data by centers municiapplications, residential buildings palities for citywide surveillance,” he and shopping malls. Brivo’s solutions said. can be tailored to the unique security new FaceS oFend VMSusers. Property needs of the VMS has become much more management and multiple-purpose standardized — “openness” is a buildings are new, growing markets standard feature foraccess manycontrol, VMS suited for cloud-based products. innovation for wrote Brivo Future in a prepared statement.

VMS will be in mobility, simple and MultIfActor AuthentIcAtIon Intuitive user interface, and PSIM-like For higher-level security clearance features to enhance situational in corporatefound or government buildings, awareness, IHS (formerly IMS multifactor is a Research) in itsauthentication 2012 “World Market trend.

Moreand access control vendors for CCTV Video Surveillance p ro v i d e mreport. o re t h a n o n e s i n g l e Equipment” authentication technology better Milestone maintained its for presence authentication. i n t h e u p p e rInnometriks m a r k e t t iprovides er and acontinues completetoturnkey that expandsolution to the SMB implements multifactor technologies sector. “Milestone launched three user on next-generation “smart” interfaces for the Web, PC andcredenmobile tials.

Strong authentication devices — foridentity advanced-to-simplified verifies an individual’s identity using surveillance needs,” said Lawrence biometrics, keyofinfrastructure de Guzman,public Director Global Sales and digital at signatures, Operations Milestoneproviding Systems. greater protectionVMS of critical assetsup and “Our entry-level manages to sensitive information.

26 surveillance cameras, and supports a new add-on feature, video push. It

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Special Feature

allows one to extend mobile capabilities and use a mobile device as a video evidence collector. This feature enables one to push live video from a device's camera directly into the system giving immediate awareness of incidents no matter where they occur.”

Avigilon’s latest VMS offering united ideas from IT, Web design and video gaming. Meanwhile, taking inspiration from companies with server farms like Amazon, Google and Facebook, its VMS provides crash-proof enterprise server management. This enables all servers to operate as one unit, so there is no single point of failure.

“Two key markets for 3VR in North America are retail and banking.

These verticals tend to want a 'black box' solution with the software pre-configured on the hardware, such as a VMS integrated into an NVR or HVR,” said Brian Lane, Director of Product Marketing at 3VR. "But, as we expand into other markets, customers tend to want more control over their hardware and the ability to expand the system and grow as needed.

Therefore, we are releasing our VMS on COTS hardware beginning in early 2013 to allow more options for our customers. Whether a customer purchases a 3VR VMS with a 3VR NVR or to be installed on their own hardware, we offer analytics such as Facial Surveillance, LPR/ANPR, and

▲ Steve Gorski, GM, Mobotix, Americas

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Demographics. The latter provides age and gender information of customers and can be integrated with PoS systems to provide valuable business intelligence."

Analysts estimate that by 2013, more than 50 percent of all video surveillance deployments will be managed by the IT department on the IP network to support the deluge of bandwidth-heavy video data. Cisco introduced its latest IP video surveillance solution to help IT and security teams to implement large-scale video deployments. “As IT departments are tasked with dealing with increasingly large amounts of data — particularly video — the ease of migration of video surveillance to IP continues to accelerate,” said Lindsay Hiebert, Senior Manager, Solutions Marketing of Emerging Technologies at Cisco Systems. “Leveraging Cisco’s strong network base and know-how, this platform can easily manage more than 10,000 cameras with video recording by using Cisco's end-to-end network video surveillance technologies, to manage and optimize bandwidth across network switches, routers, applications and endpoints.”

Genetec, one of the leading VMS providers, has the latest advances in its unified security platform, which blends LPR/ANPR, video surveillance and access control into one platform. Genetec's LPR/ANPR offering is a complete solution with

▲ Bill Klink, VP, Security and Surveillance of Commercial Systems , Flir Systems

▲ Lawrence de Guzman, Director of Global Sales Operations, Milestone Systems www.asmag.com

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hardware and software for the police sector and parking enforcement.

“We have many clients in the police sector. They require more technology for further law enforcement and investigation. With this solution, police can easily recognize the license plates of criminals and illegally parked vehicles. With the back-office management capabilities of the system, in-vehicle users are able to download all the latest hotlists and updates, providing the forensic information and evidence for later investigation to find the suspects,” said Chris Yigit, Product Manager at Genetec.

Honeywell’s latest enterpriselevel VMS incorporates new features, such as support for wireless readers, new compliance reporting functions, and Web-based alarm and event management capabilities.

“Optimizing business by using integrated systems is the new reality for most enterprise-level organizations,” said Vince Lupe, Honeywell’s Enterprise Segment marketing leader.

PSIM

With the standardization of security and the growing need for multinational management, PSIM has good penetration for high-end projects incorporating IT network systems.

Proximex is now the first PSIM vendor to support and adhere to the new Area Control Management standards specification, created by the Physical Security Interoperability Alliance (PSIA) for companies to effectively integrate multiple physical security systems. “Supporting these new specifications will allow Proximex to quickly and easily integrate with other access control, intrusion and video system vendors that also support these specifications,” said Larry Lien, VP of

HR. These solutions are likely to be for high security applications, such as critical infrastructure protection or safe city programs.

The last tier is ▲ Adlan Hussain, Marketing Manager, ▲ Larry Lien, VP of Product Management, specialist vertical PSIM CNL Software Proximex suppliers who have built up a template product aimed at certain vertical markets.

These are likely to be in verticals where the security challengs are fairly fixed, for example retail security, where ▲ B rian Lane, Director of Product ▲ Lindsay Hiebert, Senior Manager, Marketing, 3VR Solutions Marketing of Emerging there is requirement for Technologies, Cisco Systems integration of CCTV, Product Management for Proximex.

PoS data, RFID tagging and video “Standards-based interfaces enable analytics." information to be more easily shared Access Control while PSIM systems enable the Wireless relevant information to be combined Physical access control is dominated and correlated for organizations to by traditional mechanical locks and make more informed security and online management systems. The business decisions.” latter requires a high investment.

Next year, we can also see three tiers Access control products are migrating of PSIM systems evolving, which can from mechanical to online solutions be divided by their complexity. Adlan with wireless technology, which Hussain, Marketing Manager at CNL complements existing mechanical Software shared some of his findings and electronic access control systems. toward these PSIM systems as follows: It provides a simple, intelligent way "At the low end there are smaller of upgrading them to high-level easier to install systems for SME security and creates many innovative applications. These are most likely opportunities for many access control to be provided as a software service vendors. Assa Abloy released its new and deployed by traditional security wireless solution to meet this need. installers. These may be described as In the U.S., more than 40 million PSIM Lite and may well be adaptions phones are expected to be near field of ASC or VMS systems. communication (NFC)-enabled by the The next tier is high end PSIM end of 2012, according to a report by solutions that deliver real business Market Research. Nearly half of all advantage by integrating to operation mobile phones will be NFC-enabled activities and adding value through by 2016. Assa Abloy introduced its increased use of security systems by commercial ecosystem for issuing, other departments, be it facilities or 22

NOV 2012

delivering and revoking digital keys on mobile phones with NFC technology. With this ecosystem, mobile phones can replace mechanical keys and access cards and open doors to homes, hotels, offices, hospitals, universities, and industrial and commercial buildings. Ingersoll Rand Security Technologies also successfully rolled out NFC-enabled campus credentials at the University of San Francisco’s campuses.

Cloud-based Access Control

Cloud-based access control manages hundreds or even thousands of doors and provides end users with the freedom to remotely control and manage doors from anywhere.

Hosted access control solutions are being adopted by large commercial applications, residential buildings and shopping malls. Brivo’s solutions can be tailored to the unique security needs of the end users. Property management and multiple-purpose buildings are new, growing markets suited for cloud-based access control, wrote Brivo in a prepared statement.

Multifactor Authentication

For higher-level security clearance in corporate or government buildings, multifactor authentication is a trend. More access control vendors p ro v i d e m o re t h a n o n e s i n g l e authentication technology for better authentication. Innometriks provides a complete turnkey solution that implements multifactor technologies on next-generation “smart” credentials. Strong identity authentication verifies an individual’s identity using biometrics, public key infrastructure and digital signatures, providing greater protection of critical assets and sensitive information.

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INDUSTRY REPORT

Differentiate to Win 42 22

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2012 security 50

With Security 50 companies eking out an average profit growth of 9.8 percent, the disappointing statistics reflect a simple yet grim truth — supply outstripped demand. While weaker players were eliminated, prevailing companies prospered by demonstrating efficiency, productivity and innovation. Many corporations also leveraged their resources to acquire other companies, quickly gaining expertise and boosting their international presence. Despite the economic slowdown, a few companies experienced double-digit growth. Overall, 2011 was an eventful year, as companies sought to grow organically or through M&A.

Eligibility

• Electronic security equipment and system providers, including video surveillance, access control, intrusion detection and multiple product segments • S ecurity companies or pure manufacturers with their own products, brands or solutions • Publicly listed and privately owned security companies • Ability to provide FY 2010 and FY 2011 financial statements, audited/endorsed by a certified accountant or accounting firm • Distributors, system integrators, resellers, dealers, installers, guard service providers, information security and fire safety companies or related revenues were excluded Note: a&s bears no responsibility for the financial information provided by any individual company. For fair comparisions, non-US currencies were converted using midmarket exchange rate from XE.com on July 22nd, 2012. This is an unbiased list based on the willingness of participants to share their sales performance.

Acknowledgements

T

he Security 50 ranking represents the leaders of security, who demonstrated perseverance despite challenging economic situations. We salute these outstanding professionals for sharing their financial data, time and experience. This knowledge provides useful insights and observations, shedding light on how to succeed. These experts not only set higher expectations for themselves in the upcoming year, but for the security industry as a whole as well.

For a fair comparison, we rank global manufacturers solely by product sales. Participants range from exclusive manufacturers to end-to-end solution providers, thus making it difficult to compare them side by side. We urge readers not to focus on the ranking of the participants, but to further explore the underlying causes for their success.

For the 2012 Security 50 ranking, we welcomed six fresh faces — Arecont Vision, Optex, Safran, Tiandy, TKH and Tyco. By introducing new products, technologies or strategically acquiring other companies, these newcomers made an impression on the industry.

To qualify for Security 50, all companies were required to provide financial reports. This is not an advertiser index — ranking is based on objective data, as we strive to present impartial analysis to our readers. All non-US figures were converted according to a specific date’s exchange rate.

We break down the ranking into two stories. The first article analyzes the financial figures of the Security 50 in 2011 and what they imply for the industry’s future.

The second article focuses on the companies’ strategic plans and how they led the market despite difficult circumstances.

Now, we proudly present the 2012 Security 50 Companies.

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INDUSTRY REPORT

NOW: A Do-or-Die Moment The cream of the crop ― based on the best financial performance ― the 50 international companies who made the cut for the annual Security 50 ranking for 2011. In this article, a&s examined those who survived or thrived in 2011 to highlight changes in the global security manufacturing industry and their potential influence in the near future.

By Tevin Wang & Judy Wang

E

ven amid sales drops and stunted growth, some of the top 50 companies have gained momentum from the economic crisis, while others continue their struggle to find the best approach to defying declining revenues. Now, it is a do-or-die moment for many security companies.

Strong EU Companies

For European companies, the average revenue growth in 2011 was around 17.4 percent, which is five percent higher than the year before. And despite major economic problems in southern European countries and the U.S., some Security 50 players such as, Assa Abloy, Axis Communications, Geutebruck, Mobotix, Milestone Systems, Nedap,

Security 50 by Product Group Intrusion Detection 4%

Access Control 12%

Video Surveillance

Multiple 24%

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60%

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Top 12 Companies for Profit Growth from Security 50 Number 1 2 3 4 5 6 7 8 9

10 11 12

'12 Ranking 32 38 25 5 10 24 29 30 49 33 36 43

Company

Product Group

AVIGILON HDPRO TIANDY DIGITAL TECHNOLOGY HIKVISION DIGITAL TECHNOLOGY DAHUA TECHNOLOGY MOBOTIX NAPCO SECURITY SYSTEMS KOCOM WIN4NET SYNECTICS GEOVISION MILESTONE SYSTEMS

Safran, SimonsVoss Technologies, Synectics and TKH Group still exhibited remarkable, double digit revenue growth in 2011 ― averaging a 22.3 percent growth rate.

It is worth mentioning that three German-based companies, SimonsVoss Technologies, Mobotix and Geutebruck enjoyed consistent, uninterrupted growth thanks to strong market share in their domestic market ― averaging a 23.7 percent growth rate.

APAC Companies Encounter Roadblocks

The average revenue from APAC companies, on the other hand, had lost momentum, dropping from

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Video Surveillance Video Surveillance Video Surveillance Video Surveillance Video Surveillance Video Surveillance Multiple Multiple Video Surveillance

Video Surveillance Video Surveillance Video Surveillance Average

Profit Growth 2010-2011 89.7% 76.8% 60.6% 51.1% 43.4% 38.9% 38.4% 32.5% 28.6% 22.6% 19.9% 17.3% 43.3%

US$153.3 million to $138.8 million.

Over the past three years, Korean and Taiwanese companies, who used to be the security industry’s go-to-factories, have been facing stiff challenges brought on by the economic crisis and the rise of Chinese manufacturers.

Hikvision Digital Technology and Dahua Technology, apparent locomotives of Chinese manufacturers, have directly influenced their geographically adjacent opponents. Over the past three years, the ten Korean companies were able to hold on and remain in the Security 50 ranking, while two of the nine Taiwanese companies dropped out of the ranking this year.

Interestingly, with a 17.5 percent

2012 security 50 Average Revenue Growth by Product Group 19.5%

the international market.

Video Surveillance Continues to Prosper

Abloy’s financial report, demand for radio frequency identification (RFID) rose sharply in 2011. Assa Abloy upgraded their customers’ previously installed locks, which used a magnetic stripe card locking system, to more secure, flexible and user-friendly locks that employ RFID. SimonsVoss also performed well, growing 18.4 percent in 2011. Korean manufacturer Suprema attained considerable revenue growth, up 21.9 percent from 2010.

Video surveillance compared to other product groups had a ce on l fairly strong revenue growth cti lan e ro l t t i e n ve o D r with an average of 19.5 percent.

C n e Su sio ipl 0.5%cess o t l u e r Avigilon, who continues to be one d Mu Ac Int Vi of the top financial performers, -2.3% saw their revenue grow to $59.1 million, up 86 percent from 2010. increase, Korean manufacturers Asian manufacturers HDPRO and outperformed the average revenue VIVOTEK have also scaled the growth of the Security 50 list (14 ranking ladder. As a matter of fact, percent). ITX Security, with an 11.7 nine of the top 10 companies for Average Profit percent drop, is the only Korean revenue growth on the list cater Growth by Product company with a weakened revenue to the video surveillance market.

Group growth. On the other hand, HDPRO Chinese manufacturer, Tiandy Digital 17.8% had an exceptional 83.7 percent Technology, made their debut in growth. this year’s ranking; this company is ce l Taiwanese players, in contrast, did coming on strong with a 50.1 percent lan ro l i nt 13% ve o r not enjoy a fruitful 2011, the average and 35.2 percent growth in revenue C le Su ss ltip ce eo revenue growth was a mere 8.8 and profit, respectively. u c d i M A V percent, and three out of the seven Eight of the top 10 financial leaders Taiwanese companies faced revenue for profit growth, including IP video losses. DynaColor, Yoko Technology providers Avigilon, Synectics and and EverFocus reported 16.4 percent, Mobotix. Asia maintains strong, with -23.3% 16 percent and 12.3 percent revenue HDPRO, Tiandy Digital Technology, losses, respectively. VIVOTEK and Hikvision Digital Technology, Dahua Geovision, on the contrary, represent Technology, KOCOM and Win4Net. Average Gross a s m a l l n u m b e r o f Ta i w a n e s e Margin by Product Access Control companies who did well in 2011, with Group Average revenue growth for access revenue growths of 62.1 percent and 41.5% control manufacturers on the Security 27 percent, respectively.

34.5% 50 ranking was a mere 0.5 percent.

Despite the success of Hikvision Access control giant Assa Abloy Digital Technology and Dahua 27.3% (The Global Technologies division) Technology, another prominent e nc l clinches the spot as top player again Chinese company, RCG, encountered tro illa n e o rv le sC with $826 million in revenue, up 14.8 severe revenue decline, 54.2 percent.

Su es o ltip c e u c d i M A percent from 2010. According to Assa The average Chinese company’s V grow rate also turned lukewarm in Average Average Average 2011. This may be an implication that Product Group Average Revenue Revenue Growth Profit Growth Gross Margin the domestic market simply cannot 10% 17.8% 27.3% Multiple $584.1 Million support the vast number of manufac19.5% 13% 34.5% Video Surveillance $136 Million turers. Therefore, in the years to come, 0.5% -23.3% 41.5% Access Control $244.3 Million Chinese manufacturers will need to -2.3% * * Intrusion Detection $66.7 Million figure out how to make their mark in 10%

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INDUSTRY REPORT Low Profit Low Margin

While no Security 50 manufacturer lowered their profit goals, the average profit growth was a stingy 9.8 percent in 2011; the average profit growth in 2010 was 12 percent. This implies the world security industry meets

the challenges of low profit for more supplies than actual demands in the market. How to achieve high profit margins will become a key tactic in the near future.

In spite of low profits and margins, 2011 was a prosperous year for

M o b o t i x , w h o s e g ro s s m a rg i n increased to 76.8 percent to lead the Top 10 Companies in terms of gross margin. For Milestone Systems, their gross margin fell slightly to 76.8 percent for 2011, they rank second behind Mobotix.

New Faces in Security 50 2012

Among the many changes that happened during the course of the year, 2011’s Security 50 ranking welcomes several new faces — Arecont Vision, Optex, Safran, Tiandy, TKH Group and Tyco. Either by strategic acquisition of other companies or exercising their technological expertise, these companies made it to Security 50 to represent the industry’s leaders. a&s briefly explores some of the major strategies these companies have e m p l o y e d t o i n c r e a s e t h e i r 2 0 11 revenue growth.

In the beginning of 2011, TKH Group acquired Optelecom-NKF, a global supplier of advanced video surveillance solutions and now operating under the name Siqura. TKH Group can now set themselves apart in the field of video analysis, detection systems and integrated security solutions.

This business transaction helped the company secure larger, international contracts. As a result of broadened business opportunities, this newly acquired business unit contributed much of TKH’s 2011 revenue growth.

L i k e w i s e , i n J u l y o f 2 0 11 , S a f r a n finalized the acquisition of L-1, a leading identity management provider in the United States. L-1 brought extensive knowledge in biometrics and enterprise access solutions, secure credentialing solutions and enrollment services to Safran’s security sector. Renamed M o r p h o Tr u s t , t h i s b u s i n e s s u n i t significantly enhanced Safran’s identity management capabilities, generating a huge portion of Safran’s 2011 revenue.

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Amid various events within Tyco’s business in 2011, Tyco bought Visonic, a leader in developing advanced wireless technology. Visonic strongly improved Tyco’s presence in Europe, the Middle East and Africa and broadened Tyco’s wireless intrusion products sales.

Even though the ADT North America residential security business generated a lot of growth for Tyco, ADT will operate as an independent, publicly-traded company beginning at the end of 2012.

Tyco's remaining commercial security business will be combined with the current fire protection segment to form a separate commercial fire and security company.

In late 2010, Optex acquired Fiber SenSys, who has major operations in North America, Asia, Europe and the Middle East, to facilitate Optex’s growth as an international brand. Fiber SenSys specializes in fiber optics intrusion detection sensors, and have assisted Optex in reaching global markets. At the same time, Fiber SenSys was able to accelerate its innovative applications by leveraging Optex’s financial resources. To further expand their business, they acquired Raytec, a manufacturer and supplier of LED illumination for high security system cameras, in the beginning of 2012. By acquiring this company, Optex strengthened its presence in Europe and diversified its product lines.

Arecont Vision achieved recognition by its continued focus on developing megapixel imaging solutions. Their products are being used in every major

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vertical market, and they keenly promote their products all over the world, including regions such as the Americas, Europe, the Middle East, Africa and Asia Pacific.

Last but not least, Tiandy Digital Technology, the only newcomer from China who made it to Security 50 this year. With their expertise, they have become a prominent video surveillance manufacturer. Tiandy Digital Technology offers a broad range of innovative CCTV products to enhance the effectiveness of video surveillance applications. With China’s manufacturing market on the rise, Tiandy Digital Technology takes this opportunity to seek out international opportunities to expand their brand as well as their product offerings.

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Manufacturing Excellence in Times of Uncertainty In this time of uncertainty, Security 50 provides a role model for strengthening competitiveness.

Efficiency, innovation and global presence are three cornerstones for growth. Swiftly identifying customer needs and delivering the right solution to the market determines whether a company will succeed or fail. This year, a&s talked to Security 50 leaders to find out how they retooled their businesses to lead in the market through tough times.

By Jill Lai & Alyssa Fann

T

he global security industry has weathered the past five years of economic re c e s s i o n . M a j o r g o v e r n m e n t projects remain delayed until now.

The same message was highlighted in Flir Systems’s financial report, indicating a decline in its surveillance backlog due to the reduction of US government procurement in 2011.

The global market forecast is still full of uncertainty, especially in the U.S. and Europe. In these trying times, despite fierce competition in the global market and currency devaluation from foreign exchange rates, some companies stand out from the crowd.

Efficiency and Productivity

According to our findings on the top 50 companies over the years, 2011 was a significant year, as average profit growth dropped to around 9 percent. It indicates that the age of low profits has crept in for the entire security industry. Manufacturers should continue to source commod-

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ities, manufacture products in places countries — primarily China. In with competitive labor costs and keep 2012, Assa Abloy is working to investing in R&D for new technolstreamline production and product ogies and products. development at its new production To increase business efficiency, plant in Shanghai, China. As a major Tyco International officially split multinational corporation, Assa Abloy into three independent companies achieved double-digital growth in this year. “The development of 2011 and ranked No. 3 in Security 50.

Tyco's business is now more stream“The security industry remains lined operationally between our unique with low quantities but a commercial businesses to gain high degree of customization. With additional business efficiency,” said the focus on different application Ranae Leary, Senior Director, Global demands, we are expected to have a Accounts, Tyco International. “The higher degree of customization in our fire and security businesses, for products. However, it has a negative example, were siloed previously. impact on us, since the Now, with the divisions under small volume of one roof, we are able to integrate different products processes, technologies and does not operations to better serve our help Wireless customer base.” locking and access Assa Abloy relocated control systems are still production to in the early introduction stage low-cost countries of their product life cycle. In by outsourcing view of this, we are expecting continued excellent growth component production potential of our products. to high-quality local Hans-Gernot Illig, President and CEO of suppliers. It successfully SimonsVoss Technologies transferred all production and purchasing to low-cost

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2012 security 50 expand market share. Meanwhile, it is hard to reduce our manufacturing costs either. That is why we adopted the product strategy of ‘high-level modularization’ to all of our product lines. We hope to find a balance of customization and market expansion.

We diversify our products by consolidating the variety of our modules.

Then, we can develop different products more efficiently at lower cost, which is the strength of our company,” said William Ku, Director of Branding Business of VIVOTEK.

Proprietary Technologies

For a technology company, it is important to hold core proprietary technology to maintain a competitive edge. Gert van Iperen, President of Bosch Security Systems, said at a press conference this year, “What will the significant growth factors be in the coming years? I think we can say that our innovations, product portfolio and strategic partnerships will be the major factors. With a high level of expenditure in R&D, Bosch invested around 10 percent of sales to bring new innovative

products and solutions.”

Innovation also applies to Axis Communications. “We invested US$70 million in R&D last year and we will add up to $85 million this year, which is 13 to 15 percent of our total revenue. We have a strong team in R&D, providing 500 references of products in our categories — from entry-level to high-end and low temperature to high temperature, such as 75 degree Celsius, the extreme temperature technology,” said Bodil Sonesson Gallon, VP of Global Sales, Axis Communications. “When you start to enter a mature market situation, it is important to be big to have the muscle to invest in R&D. We have our own chipset technology and ASIC technology. Both are quite beneficial in providing our cameras more space for advanced performance. We can use these spaces to add video intelligence to our cameras.”

From the specific technologies point of view, Nice Systems has developed analytics that enable organizations to correlate and analyze large amounts of data generated by multiple sensors and channels. It remains a leading IP surveillance solution provider.

Mobotix leverages its own software capability to design a de-centralized product platform — a high-speed computer with a built-in storage.

Milestone tunes in to customers’ real needs.

They asked for video on smartphones, we delivered video on smartphones. That’s why we lead the industry.

Lars Thinggaard, CEO and President of Milestone Systems

Without using other expensive VMS, all the Mobotix cameras are integrated with a large amount of processing power and professional control center software, as used in soccer stadiums, for example.

SimonsVoss Technologies has used digital technology to revolutionize classic mechanical locking systems and integrate access control functions. By introducing professional wireless and keyless technology to physical access control, SimonsVoss has achieved high growth over the years. "Wireless locking and access control systems are still in the early introduction stage of their product life cycle. In view of this, we are expecting continued excellent growth potential of our products," said Hans-Gernot Illig, President and CEO of SimonsVoss Technologies.

A n o t h e r G e r m a n c o m p a n y, Geutebruck, emphasized its strength in developing its own technology.

“We are a solution provider and system designer rather than a products supplier,” said Carmen Lahr, Communications Director, Geutebruck. “Our philosophy is to offer perfectly matched hardware and software with a very deep level of integration w h i c h enables

This year, Hikvision has been recognized as the world’s No.1 video surveillance equipment provider as per IMS Research 2012 report, which is an affirmation of our ongoing business model. Looking forward, we will continue to produce innovative surveillance products and solutions in order to bring greater value and versatility to our customers.

Keen Yao, Product Marketing Management Director, International Business Center, Hikvision

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INDUSTRY REPORT our customers to achieve optimum system performance. We cover the full range of video system products, both hardware and software and all our products are developed by us for full integration into our system world.

Bought-in products nearly always come with integration limitations and that’s what we’re determined to avoid.”

SMB/Affordable Solutions products and to get the knowledge The Security 50 companies are of the products. To compete in the providing more affordable solutions. market, we need to be independent These companies are no longer and do something on our own,” focusing only on high-end sectors.

“The strategy for all of Tyco’s SMB solutions hold high potential brands is integration,” said Eli during these volatile years. “Some Wi l l i a ms , S a l e s D i re ct o r We st markets have grown in size and Europe of Tyco Security Products, breadth as prices have declined, EMEA. “Manufacturers realize the volumes have increased and new importance of integration and work applications have emerged,” Flir together to build standards to ease Customer-value said in a prepared statement. “While integration. Because there are usually Propositions these markets are broad and growing many manufacturers wanting to Learning from IT rapidly, many of these markets exhibit integrate with each other, there has Some of the thoughts from the low penetration rates for infrared been a focus on standards such as Security 50 companies actually technology. Our strategies in this ONVIF. However, unification of trickled down from trends in the IT business are to continue to develop multiple technologies is unique and industry. Several companies talked products for high-end applications is another step. We are integrating about the “platform” concept in while introducing new products at different technologies to create different ways, which interestingly lower price points, and to capitalize a single unified platform which fit well for security industry and on highly price-elastic demand in is designed from the bottom up. made high margins. “We create a numerous emerging markets.”

A single system is no longer just product platform. System integrators “The majority of network cameras performing access control but also can use the same products for nowadays are still adopted in video recording, integrated search different verticals," said Magnus high-end projects where the system functions, and functional integration Ekerot, CEO of Mobotix. "Other supports more than 16 cameras,” with intrusion, fire detection, asset vendors probably provide different Gallon said. “Now, it is good timing tracking and personal safety devices.” products for different verticals. But to penetrate markets for small “Axis also works at the platform here comes another problem — so systems in SMB projects, supporting standpoint,” Gallon said. “That many product models are produced. one to 16 cameras. This market brings means we will have more possibilities Think about how many products big potential. Axis just launched and new applications in our products. distributors should put a video surveillance But we won’t develop any applicain stock. Even for solution for small systems, tions by ourselves but work with our the resellers, with supporting up to 16 ADP partners. It is like the iPhone, this strategy, it is cameras, this April which carries different apps on it. In easy to learn the 2012. the future, each edge device will bring different values and functions Dahua and eventually, it will VIVOTEK’s never stops thinking become more dedication to and about how to improve persistence on developing scalable ourselves and explore new solutions that best fulfill technologies. With our strong and more user requirements are clearly R&D capacity and professional powerful.”

palpated by our partners and clients worldwide, and the resulting growth in market share as of late has been phenomenal.

teams, we are super confident to keep this strong momentum and go beyond.

Liquan Fu, President of Dahua Technology

Owen Chen, Chairman of VIVOTEK

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INDUSTRY REPORT The security industry remains unique with low quantities but a high degree of customization. With the focus on different application demands, we are expected to have a higher degree of customization.

We diversify our products by consolidating the variety of our modules to stay competitive.

Each network camera has local (edge) storage. It is a self-contained system.

VMS can also be downloaded for free. It targets retail stores, offices and hotels and started to roll out in some mature markets first, such as the U.S. and Europe, along with Japan and Korea in Asia. Being the global leader in network cameras, Axis always see our roles in driving the convergence [of security and IP]. Axis makes a significant move in driving the convergence down to the small system market.”

Two other giants — Bosch and Honeywell — have also developed specific solutions for SMB applications by launching their respective “Advantage Line” and “BLACK” brands.

tional corporations. “IndigoVision’s distributed architecture protects customers from the greatest danger of centralized server systems — the single point of failure,” said Marcus Keen, CEO of IndigoVision.

“Central servers are perhaps the most vulnerable component and biggest risk to any security system. It amazes me that other network video developers have inherited the same architecture as analog CCTV using a centralized server, when this single point of failure is widely known as a major problem and limits scalability.”

To keep innovating, Milestone Systems accelerated its development by creating a new business unit.

“The Incubation and Ventures business unit will work with groundbreaking innovations that can extend Milestone’s leadership in the industry and accelerate our growth,” said Lars Thinggaard, CEO and President of Milestone Systems. “The team will work with a portfolio process that covers new business areas where we see high potential and integrate these into our main business as they mature. This requires taking a broad view across new technologies and business segments that will continue to build the Milestone vision to enable business optimization through open platform IP video surveillance.”

security makers learn from other industries, such as video games. Some gaming features can be observed in Aviligon and TKH management software, such as using motioncapture of gestures like the Microsoft Kinect gaming console.

Another example is Nedap, which used to emphasize software-based access control; now, it has become an integrated system provider for the top segments in banking and airports. “In a traditional security system there are different controllers for each functionality, such as video management, access control, intercom and fire alarm,” said Erica Mejier, at Marketing Dept. of Nedap Security Management. “We integrate these functionalities all together by combining them on one single Innovation security controller. The functionality When it comes to the latest of the controller is determined by innovation, it is software. That is why the system is interesting to highly scalable and companies can see some always configure the system to their needs. When a company We gets bigger, they can made big progress easily extend and this year by growing scale up functions on 50 percent compared to the controller. We 2011, but it is still not enough.

Next, we will focus more on build the software how to increase the customers’ ourselves, Dali demands and speed up our which is our is devoted to service. developing thermal strength.”

Lin Dai, CEO, Tiandy imaging sensors IndigoVision and producing related re l e a s e d a products for security segmented database applications. structure for multinaHuimin Pang, CEO, Dali Technologies

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INDUSTRY REPORT Utilizing Worldwide Resources

For several multinational companies, it is important for them to leverage their global presence to acquire assets around the world and compensate for declining markets. “In 2011, growth in the world market for security technology amounted to a little more three percent,” said van Iperen.

“China, the ASEAN states, Russia and Latin American in particular, made outstanding contributions towards this trend. In Europe however, the financial crisis prevented several countries from achieving higher levels of growth.”

"In southern Europe, it indeed grew a little slower and yes, our business has been affected,” Illig said. “However, our healthy growth in DACH markets — Germany, Austria and Switzerland — Middle East and Asia compensated for the average growth rate for these two years. We also moved to Scandinavian regions, where we experienced good demand for our products and solutions.”

“We are very strong in our domestic market in Germany,” Lahr said.

“Germany is a very good mature market, very well structured in terms of sales and partner networks. It is

our role model. We are trying to roll this out to other countries where we already have a presence and hope to get more market share. Our strategy is to strengthen companies in countries where we already have an existing presence rather than going in search of new markets. This means focusing on the E.U., Russia, South Africa, the U.S. and APAC.” Finally, Axis is growing its corporate resources all over the world. “We will put more resources in Asia in a long run,” Gallon said. “Axis has about 88 percent sales revenue outside of Asia. Asia is taking up more market

Fast Growing Companies Last year was quite significant for Avigilon, Arecont Vision and Mobotix.

Avigilon achieved 86 percent growth, the highest growth in the Security 50 ranking. Mobotix grew 35.9 percent and Arecont Vision rose 25 percent. All these three are pioneers in multimegapixel network cameras and are starting to enjoy the growth phase of megapixel cameras, due to increasing demand for high-resolution video quality.

Avigilon

“In November, we went public on the Toronto Stock Exchange,” said Keith Marett, VP of Marketing and Communications at Avigilon. “In less than a year we doubled our initial public offering price. In this day and age that’s a significant achievement to be able to deliver those kinds of results to shareholders. In 2011, Avigilon was named the fastest growing software company in North America by Deloitte’s Fast 500 ranking. This year, the BC Technology Industry Association named Avigilon the Company of the Year.”

Arecont Vision

“When it comes to surveillance, pixels (resolution) are all that matters,” said Becky Zhou, VP of Sales at

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Arecont Vision, APAC. ”Think about how much area can be covered by a camera. For a VGA resolution camera, you get about 1500 pixels per dollar. For a 10-megapixel camera, it is about 1800 pixels per dollar. So, literally, it is more cost-efficient solution to buy a higher-resolution camera than a low-resolution one. That is why the market is growing. This is more cost-effective and the return on investment (ROI) is better. The megapixel camera is right in the initial high-growth phase of its product life cycle. We are expecting more growth in the near future.”

Mobotix

“Mobotix is like Apple,” Magnus Ekerot, CEO of Mobotix said. ”Being like Apple let us have full control of what we want to be. Putting the standards aside, we should think about the end users.

With the products, they should have the freedom with installations and no extra fees for buying managing software.

Why we do something different is for the sake of the end users. We think about a system that they can really depend on and the amount of money they do save and how we can help system integrators and distributors make the money and keep the margin they should have.”

Top 12 Companies for Revenue Growth from Security 50 No. 1 2 3 4 5 6 7 8 9 10 11 12

Company

AVIGILON HDPRO VIVOTEK TIANDY DIGITAL TECHNOLOGY DAHUA TECHNOLOGY HIKVISION DIGITAL TECHNOLOGY MOBOTIX WIN4NET TKH GROUP (SECURITY SYSTEMS ONLY) GEOVISION SAFRAN (SECURITY PRODUCTS ONLY) ARECONT VISION

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Product Group

Video Surveillance Video Surveillance Video Surveillance Video Surveillance Video Surveillance Video Surveillance Video Surveillance Video Surveillance Multiple Video Surveillance Multiple Video Surveillance Average

Revenue Growth 2010 - 2011 86.0% 83.7% 62.1% 50.1% 45.4% 45.1% 35.9% 34.3% 30.6% 27.0% 26.3% 25.5% 46%

INDUSTRY REPORT share … We will keep investing more in Asia relatively, compared to other markets.”

Flir stated its international business w a s a l re a d y s u c c e s s f u l i n t h e Middle East and intend to expand in countries such as India and China.

Key Verticals

Security 50 companies are focusing on specific vertical markets for IP technologies.

Gaming

Aviligon sees high-growth potential in gaming.“To improve security and reduce security-related costs, the gaming market has begun a rapid transition to high-definition surveillance solutions — a transition that is

forecasted to accelerate over the next two years,” the company said in a prepared statement. Aviligon also appointed a security gaming expert to its staff.

Education and Health Care

"Education and health care market sectors are the most tangible to SimonsVoss. These two markets are driven by higher-level security demands and the need for an increased flexibility for their organization management of the access control system,” Illig said.

Assa Abloy has expanded its customer base beyond hotels and cruises. It has tapped into other segments, such as retirement and student accommodation.

Other Verticals

“We have two approaches [to different vertical markets] ,“ Gallon said. “Centrally, we have resources for five market segments — banking, retail, transportation, city surveillance and critical infrastructure.

They are specialized in what they are doing, which makes them capable of building specialized knowledge easily. Also, we locate them to different regions in the globe. So, in Asia, they can get global support and resources quite easily.”

I n d i g o Vi s i o n f o c u s e s o n t h e high-end industry verticals including cities, police and prisons, casinos, airports, rail, oil and gas, retail and education.

A “User-Centric” Mindset

Security industry players have traditionally focused on the technological aspect of their products. In the process of producing innovative products with reliable performance and quality, however, they have neglected end users. A new concept is now emerging in the industry, and that is to start putting end users first. Top Security 50 players share the concept behind this “user-centric” mindset.

No longer is the focus of security product designs centered on the developer’s concept. Instead, product designs start with the concept of knowing what the end users need before they do. Technology, performance and reliability are at the heart of all security products and solutions. They are also a prerequisite for their success in the security market. However, in the market today, possessing the above qualities no longer guarantees success.

Companies must be closer to end users, which is exactly what top Security 50 companies are starting to do. For example, Tyco has established a global service platform ― Global Center of

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Excellence ― to support and fulfill their promises to global customers. On a similar note, Honeywell has set up Honeywell Integrated Security (HIS) End Users Committee, a peer-to-peer group, to allow end users to share experiences and for the company to gather input for its product roadmap.

A crucial driver behind reaching out globally to end users is to ensure that the companies meet the vertical and regional specific requirements of end users. “The Global Center of Excellence is led by a talented team of highly trained engineers and program management experts who speak 14 languages. Each member of the team is trained in the legal, business and cultural standards required to effectively conduct business in a variety of countries. This expertise is critical as many times the global strategy has to be modified to adhere to local laws and regulations, compliance standards and the cultural landscape,” said Ranae Leary, Senior Director of Global Accounts, Tyco International. www.asmag.com

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Listening to end users will also ensure that the company is heading in the right direction. “The HIS End Users Committee plays a crucial role in advancing our technology. The Committee consists of a group directors and chief security officers who provide input that influences the direction of the company’s product roadmap,” said Tony Foglia, Director of Global Accounts, Honeywell.

INDUSTRY REPORT

Best-Selling Products The array of security products displayed here are the most in-demand products from some of the Security 50 companies. Read on to find out what keeps their customers coming back for more.

Milestone XProtect Corporate 5 Enhance the manageability of large, multi-site installations with XProtect Corporate, a powerful IP video management software designed for large-scale, high risk security deployments. With support for an unlimited number of cameras, users and sites, XProtect Corporate is a flexible software with virtually no limits. For systems demanding complete situational awareness and immediate response, this VMS offers interactive, multilayered maps linked to alarms. The XProtect VMS also encompasses built-in support for video wall functionality.

The XProtect Smart Wall, which gives a comprehensive overview of installations and seamless command center control.

XProtect Corporate provides the ultimate peace of mind for high security installations. Its edge storage option combined with failover recording servers and redundant management servers ensure video recordings are never interrupted and access to the system is always maintained. XProtect Corporate also features Milestone Federated Architecture, a solution that interconnects multiple independent sites.

MFA turns a large-scale surveillance system into manageable parts. Users can have individual local site administration or manage all of the sites as one large system. With support for thirdparty integrations, Milestone’s premium VMS XProtect Corporate rises to meet the needs of any surveillance challenge.

With sophisticated features, XProtect Corporate is the preferred IP surveillance solution for large, high-risk installations and for deployments that require effective live monitoring.

Milestone Systems/Denmark Email: info@milestonesys.com

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SimonsVoss Digital Locking Cylinder 3061 The digital locking cylinder 3061 is an easy retrofit to replace mechanical cylinders with a battery powered electronic l o c k i n g c y l i n d e r, which also incorporates access control functions. The latest version offers a stand-by time of up to seven years or up to 150,000 activations with one battery set. First introduced in 1998, there are now more than one million digital cylinders in installations all over the world. They are the standards for almost all popular cylinders available to date. Another of its key feature is the easy upgradeability to its wireless online versions.

SimonsVoss/Germany Email: vertrieb@simons-voss.de

Dali S660N Series Thermal Imaging Camera Newly released by Dali, S660N series is a network thermal imaging camera that uses 384x288 un-cooled infrared detectors. It can be used for security surveillance in a variety of adverse weather conditions and complex environments to assist users to detect safety problems and avoid accidents. It also provides day and night real-time online monitoring.

Dali Technology/China Email: sales@dali-tech.com www.asmag.com

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2012 security 50 VIVOTEK IP8362 Full HD Outdoor Bullet Network Camera

Tiandy TC-D3600-EWI Speed Dome Camera

VIVOTEK IP8362 is a best-in-class 1,080p outdoor bullet network camera designed for diverse outdoor applications. With full HD resolution in 16:9 aspect ratio and WDR enhancement, users can identify image details in extremely bright as well as dark environments.

The IP8362 supports high-performance H.264/MPEG-4/MJPEG compression technology and offers extra smooth video quality with up to 30 fps at 1,080p full HD. Furthermore, the IP8362 boasts a number of innovative technologies, including video cropping and activity adaptive streaming, to give users utmost efficiency in bandwidth and storage.

In order to adapt to constantly changing lighting conditions, the IP8362 comes with a removable IR-cut filter and built-in IR illuminators for both day and night applications. Its IP67-rated housing protects the camera against rain and dust, and ensures consistent operation under extreme weather conditions. For complete installation and prevention of tampering and vandalism, the IP8362 is also packaged with a mounting bracket that conceals all cabling.

With other advanced features such as tamper detection, 802.3af compliant PoE, MicroSD/SDHC card slot for on-board storage and full HD video quality, the IP8362 is the best choice for even the most demanding outdoor surveillance applications such as parking lots, entrances, communities and much more.

T h e Ti a n d y T C - D 3 6 0 0 - E W I is the company’s best selling product for a reason. The high speed dome camera is easily installed into infrastructures via an user-friendly design.

The camera possesses a high resolution of 650 TV lines for color images and up to 700 TV lines for black and white images. The camera is able to pan at 600 degrees-per-second, with 360 degree continuous pan rotation and auto-flip to ensure there are no blind spots.

This user-friendly camera also allows up to 220 presets, eight auto-scans, eight tours and four patterns.

It is IP66-rated, ensuring its durability in all types of environments. The camera is thunder-proof to withstand up to 4,000 volts and has an anti-fog function for clear images during bad weather.

The camera is also able to capture clear images in the night time or dark areas, with minimal illumination for both color and black and white images.

VIVOTEK/Taiwan Email: info@vivotek.com

Tiandy Digital Technology/China Email: sales@tiandy.com

Iconic Products This section showcases a few of the most impressive products seen in the industry from some of the Security 50 companies.

SimonsVoss Transponder 3064 The SimonsVoss Transponder 3064 is used as the means of identification for the System 3060, in order to activate digital cylinders and smart relays. The smoothly rounded transponder 3064 will open the doors, cupboards, gates and barriers of all kinds from both inside and outside. If a transponder is lost, it can be blocked immediately.

Changes in access authorization can be done quickly since the program is extremely flexible. It requires practically no servicing or maintenance: the high-performance battery lasts between eight to 10 years, or around a million operations, before it needs to be replaced.

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INDUSTRY REPORT Milestone XProtect Go 2.1 XProtect Go is a free version of Milestone's market-leading video management software designed for small business installations and video surveillance in private residences. It is an easy-to-use software that supports up to eight cameras and one user. It also retains video for up to five days.

XProtect Go is compatible with more than 1,000 cameras, including most USB and web cameras.

XProtect Go lets users experience the true benefits of IP video with Milestone's open platform for free. It features XProtect Smart Client, the same intuitive user interface embedded in all XProtect VMS products. Seamless upgrade options make XProtect Go a risk-free entry into a reliable and secure IP video surveillance solution.

XProtect Go can be downloaded for free from the Milestone website.

To ensure optimal, continuous system functionality, user registration is required after 30 days and re-registration is required on a yearly basis.

Milestone Systems/Denmark Email: info@milestonesys.com

Tiandy TC-D3600-IR PTZ Camera T h e Ti a n d y I R c a m e r a h a s powerful day/night capabilities and a high resolution of up to 650 TV lines in color and 700 TV lines in black and white mode. Its powerful zooming capability helps users zoom in on any suspicious activities they may notice. The IR rays can cover a distance of 80 to 100 meters, allowing a wider range of protection. The camera allows up to eight privacy masking areas, so end-users will have more control over what they want and don’t want to be seen in certain areas.

The camera has WDR functions and allows users to configure up to 220 presets, eight auto scans, eight tours and four patterns. The camera is IP-66 rated to withstand and endure harsh outdoor environments, whether rain or shine.

Tiandy Digital Technology/China Email: sales@tiandy.com

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VIVOTEK FD8134 Compact Fixed Dome Network Camera VIVOTEK FD8134 is an easy-to-use fixed dome network camera specifically designed for indoor security applications with a compact, stylish exterior.

The camera has a 1-megapixel sensor to enable a viewing resolution of 1,280x800 at 30 fps. Users need to look no further for an all-in-one camera capable of capturing high quality, high resolution video.

This camera is aimed at providing 24-hour surveillance for indoor applications, and features true day and night functionality with a removable IR-cut filter and built-in IR illuminators. Also included are a number of advanced features, which are a standard for VIVOTEK cameras, including tamper detection, MicroSD/SDHC card slot, 802.3af compliant PoE and VIVOTEK's 32-channel recording software. With all of these capabilities, the FD8134 provides the best value in IP surveillance for indoor applications such as offices, banks, ATMs and retail stores.

VIVOTEK lent a hand to dramatic rescue of miners in Chile in 2010. The FD8134 was chosen as the "eye" for the Phoenix rescue capsules not only due to its admirable video performance in monitoring the miners’ living environment, but also because the extremely compact camera met the capsule’s necessarily strict bulk and weight constraints.

VIVOTEK/Taiwan Email: info@vivotek.com

Dali DLS-S040-Y25X-PM2 Thermal Imaging System The thermal imaging system from Dali consists of a thermal imager and a visual camera. It is able to perform continuous 24-hour, real-time monitoring. The system also has several different user-defined configuration modes. With its digital image enhancement function, users will have an easier time trying to make out blurry objects displayed on the monitor. Not only that, the system has a scalable network transmission and intelligent alarm function, so users are instantly alerted if something out of the ordinary occurs.

Dali Technology/China Email: sales@dali-tech.com www.asmag.com

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security 50 INDUSTRY2012 REPORT

Tracking Security Industry Leaders for 10 Years ~ The 10th Anniversary of Security 50

Technology is changing rapidly. Over the past 10 years, the security industry went through a phase of digitalization and migration to IP. The world has changed drastically as well. In the past five years, North America and Southern Europe suffered the brunt of the economic crisis and the security industry was far from immunisation. a&s faithfully and honorably recorded these changes over the decade.

By the Editorial Team

From Analog to Digital: 2003 When a&s launched our very first Security 50 ranking in 2003, we witnessed the digitalization phase of security with the introduction of DVRs. It was a new era, with DVRs linking all analog inputs, re c o rd i n g t h e m d i g i t a l l y a n d rendering videotape obsolete. Hitron, which ranked No. 12 in 2003, took

DVRs outstripped VCRs

2003

2004 The introduction of DVRs

2005

advantage of the DVR’s potential, bringing in 30 percent of its revenue during 2002 to 2003 from DVRs. The number of DVR manufacturers in the Security 50 ranking increased from 12 to 18 companies from 2002 to 2003. DynaColor, which achieved the highest profit growth in our 2003 ranking, increased 623.6 percent and attributed its robust performance

In face of the global belt-tightening, how do you stand out?

■ The global financial crisis ■ International events in China presented new opportunities in China

Introduction of network cameras

2006

to DVRs. EverFocus, who focused two-thirds of its R&D resource on software development, got its reward with 19.2 percent of revenue growth in 2003.

Next, 2003 to 2004 was when DVRs outstripped VCRs and DVRs were becoming “standard” in video systems. Interestingly enough, when the analog market was maturing

2007

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■ In 2007, 31 of Security 50 companies were dedicated to IP surveillance

2009

Rise and boom of network cameras

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Less construction and tighter security budgets than before

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INDUSTRY REPORT with increasing digitalization, the competition among DVR players heated up. Korean companies such as Wooju were in the 2002 ranking, but wernt out of business in 2003.

The competition grew even more intense in 2005. The number o f D V R m a n u f a c t u re r s i n o u r ranking increased to 22 companies.

While DVR sales ensured a few good years of remarkable growth, they did not guarantee longevity.

Some companies did not develop a technical edge and were soon forced out of the market. A price war emerged, shaking up the industry.

The price of DVRs dropped an average of 50 percent.

Network Cameras Bring Revolutionary Changes: 2004-2005

Only 10 percent of participating companies in the first Security 50 ranking in 2003 focused on IP technology. That year, Axis Communications ranked No. 44 with a 27.4 revenue loss, as video products were not its major sales generator.

The total number of IP surveillance companies remained the same in 2004, with slightly higher average revenue growth rate of 26.2 percent compared to analog companies at 16.5 percent.

Axis Communications’s revenue growth reached 33.1 percent in 2004 and rose to 54.5 percent in 2005.

That year was even more exciting for players in IP surveillance. Half of the participating companies were undergoing a transformation to become more network-oriented.

Making its first appearance in our 2006 Security 50 ranking, VIVOTEK made a star debut, growing 79 percent in revenue and 83.5 percent in profit as well.

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Clear product differentiation separates the leaders from the followers.

Boom of Network Cameras: 2007

to 2009

Discussions surrounding convergence and IP were hot topics from 2005 to 2006. As pioneers in IP surveillance, Axis Communications, Nice Security, Verint Systems and VIVOTEK enjoyed double-digit growth. Axis Communications averaged 44.5 percent growth from 2004 to 2007.

The prosperous potential of IP surveillance attracted a great deal of attention. In our 2007 ranking, 31 of our participating companies were video surveillance manufacturers. Of those 31 companies, most were dedicated to IP surveillance, reflecting the boom in network camera demand worldwide. This demand reached its climax in 2009.

Promising Future?

However, from 2009 to 2011, we found the growth rate for major IP video companies started to slow down compared to the past five years. The economic climate is a factor, but the fierce competition between a vast number of IP video providers and a shrinking market further compounded the problem.

With supply higher than actual demand, it caused a slump in profits, m a rg i n s a n d re v e n u e g ro w t h .

On the product life cycle curve of “standard” network cameras and VMS, both are approaching the final maturation phase of the growth. As the early adopters of IP video, the next technology breakthrough in the coming three to five years are crucial for them to survive.

Clear product differentiation

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separates the leaders from the followers. Some companies, such as Mobotix, entered the market with a proprietary codec and the concept of a “complete camera system.”

Avigilon and Arecont Vision latched onto multimegapixel cameras. In access control, SimonsVoss used digital technology to revolutionize mechanical locks and integrated access control functions. Their distinct approach has paid off, as they experienced high growth from IP solutions.

ONVIF and PSIA Standards: 2007 to Present

Around 2007, IP standardization was first introduced and showed the security industry had come a long way. Though most discussions speculate whether ONVIF or PSIA will “win,” the two standards are quite different. So far, ONVIF only focuses on physical IP-based security products. On the other hand, PSIA takes on an overall system approach to interoperability, supporting specifications for video, access, intrusion, VMS, storage and more. The comparison between ONVIF and PSIA is hardly applesto-apples, meaning there is really not an ultimate standard in security.

Users should carefully differentiate the specifications of both standards and decide which best services their needs.

Early in 2012, ONVIF introduced profiles, which allow end users to easily identify interoperable solutions. In other words, the profile

INDUSTRY REPORT

▲In 2008, nearly half of our Security 50 companies' revenue declined.

concept enables users to determine features that are supported by a profile without extensive technical knowledge of the specific version of the ONVIF specification. For instance, users will no longer need to specify devices running ONVIF version 2.0 versus products that conform to ONVIF version 1.0.

Users can opt for the appropriate profile that offers interoperability at a specific functional level between units and software that fits their needs. With this new concept, users and system integrators will simply determine the compatibility between conformant products or feature sets when building IP-based security systems.

In September, PSIA introduced area control version 1.0, providing a comprehensive way to harmonize and share data between access control, intrusion and other systems.

This holistic interoperability is a significant breakthrough, allowing traditionally disparate systems to integrate and share data across platforms easily. The “plug and 84 22

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play” feature allows for flexibility, integrating technologies across d i ff e re n t m a n u f a c t u re r s . T h e freedom to choose among sourcing options will ultimately drive greater price competition in the market.

All players in the security industry can take advantage of open systems.

End users will need to evaluate their needs and applications, and then decide which standard best fits their needs. Regardless of the standard adopted, end users enjoy the benefits of future-proof security products and systems.

Hopefully in the near future, security products can conform to just one specification. End users will be able to buy any security product and expect seamless integration with their existing system. However, the two standards are still far from this ideal. Both standards are still on a learning curve to better service all players within the industry. In this regard, ONVIF and PSIA will continue working toward new interoperability specifications.

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Turbulent Times: 2008 to 2009

The tsunami of global financial crisis peaked in 2008 and 2009. In 2008, nearly half of our participants’ revenues declined. Companies such as Hunt Electronic, Yoko Technology and Aiphone suffered respective losses of 20.5 percent, 18.4 percent and 14.4 percent in revenue. Projects and installations were slowed or stalled in North America.

It was under such circumstances that companies moved out of their comfort zones. Bosch Security Systems and Axis Communications started to establish themselves in new geographical markets such as Russia, South America, Eastern Europe and parts of Asia. Emerging markets were penetrated with redoubled efforts.

2009 saw even softer markets, less construction and tighter security b u d g e t s t h a n b e f o re . Av e r a g e revenue growth for the Security 50 cohort was negative 1.9 percent, with the average profit growth falling 4.2 percent. North America-based

INDUSTRY REPORT companies suffered a 4.3 percent loss in average revenue growth. APAC companies were influenced as well, with an average revenue loss of 3 percent. Hitron Systems, Tamron and Geovision fell 21.9 percent, 20.2 percent and 18.6 percent loss.

The Eurozone debt crisis further weighed on security. Many countries in southern Europe suffered severe financial problems. In 2010, Italian Promelit fell 11.2 percent in revenue and dropped 20.5 percent in profit.

Other European companies faced challenges, but maintained slow and steady growth.

Flat Growth of IP

The economic crisis directly affected IP solution providers.

Revenue growth rates for companies with high-end customers nearly plateaued, as profits grew no more than 5 percent. As many projects w e re d e l a y e d i n t h e U . S . a n d European countries, it left little opportunity for business growth.

Europe’s 2011 economic slowdown shrank security business, which ultimately affected Magal’s operation and performance in the region.

Responding to this economic turmoil and budget deficit, many of Magal’s customers cut back or delayed their purchasing activities. As a result, Magal’s sales in Europe suffered during this financial instability during 2011.

However, despite all obstacles, some companies stood out with exceptional revenue performance.

Nice’s expertise and foresight in IP solutions contributed to doubledigital revenue growth in 2011. “The market is increasingly seeing the value of integrated solutions that are meaningful to security, safety and operational domains,” said Karen Krivaa, Director of Global 86 22

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▲While the largest security markets faced economic crisis, emerging countries became storm shelters.

Marketing, Surveillance Division, Security Group of NICE Systems.

“Additionally, we see increased demand for applications and analytics that enable organizations to correlate and analyze big data generated by multiple sensors and channels.”

Made in and for China: 2007 to Present

While the largest security markets faced economic instability, emerging countries became storm shelters. The BRIC nations offered unprecedented support and energy. International events in China, such as the 2008 Summer Olympics in Beijing and the World Expo 2010 in Shanghai, presented new opportunities in China. Two local brands — Hikvision Digital Technology and Dahua Technology — rose to the surface and made an international impact as well.

Since the debut of Hikvision in the 2007 Security 50 ranking and Dahua in 2008, along with other Chinese manufacturers such as RCG, CSST and Dali Technology, they have seen good results. The average revenue www.asmag.com

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growth for these Chinese companies over the years was 37.5 percent, as they are seemingly immune to the global economic crisis.

Hikvision

Founded in 2001, Hikvision developed its first codec card in 2002 for security. Debuting in our Security 50 2007, the Chinese brand hit record growth over the years, averaging 50.7 percent revenue growth since 2006.

Over the decade, Hikvision has grown from a company with 28 people into a global enterprise with more than 8,000 employees. It has regional branch offices in the U.S., the Netherlands, Italy and Dubai, along with joint ventures in India and Russia and a maintenance center in Hong Kong. It was ranked No. 1 for DVR market share, according t o I M S R e s e a rc h ( n o w a n I H S company).

Renowned for its DVRs, Hikvision has put extra effort into cameras and VCA to ease its reliance on back-end products. While Asian companies often depended on OEM or ODM contracts, Hikvision will focus more

INDUSTRY REPORT on branding. In order to ride with the IP migration wind, Hikvision will also focus on NVR ranging from entry-level to enterprise-level product line.

The industry is heading from SD to HD. Image demands have changed from mere pictures to crystal-clear images. Along with expanding their product portfolio, Hikvision will offer system solutions as well to be flexible and customer-driven.

Way Forward

As 2012 draws to a close, security companies are preparing for the year ahead. The past decade has seen several changes in the security industry, such as the shift from analog to digital DVRs, the introduction of network cameras, the global economic recession and the rise of Chinese manufacturing. Some companies

have benefited from the changes, while others have not been so lucky. Ultimately, it is the security companies that are able to successfully adapt to these changes with continued innovation that will survive.

At the same time, taking into account security trends, it is clear that it will not be a one-approach-fitsall scenario, as companies differ in size and market positioning. Hence, some companies have launched affordable solutions in face of the global belt-tightening, while others have launched their own brands or diversified product lines.

First, for large multinational companies such as Honeywell, Bosch, Tyco and Assa Abloy, the challenge is how to effectively utilize their global resources, take advantage of emerging markets and introduce new products in

▲ In this competitive market, the key to survival is differentiation through innovation.

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response to market demands in order to maintain stable growth. On the other hand, for companies manufacturing a single line of products, the challenge is to stay ahead of technological change so that they can continue to experience high growth.

Secondly, Asia has well established itself as the global manufacturing hub, particularly China. This is hardly surprising as China boasts lower production costs with reasonable product quality, thereby lowering expenses. Not only does China produce the majority of the world’s security products, but Chinese companies continue to surprise the world with their innovative ability.

Overall, China has proven itself to be a reliable manufacturer for the security industry and the rise of Chinese manufacturing is definitely a force to be reckoned with.

Ultimately, it is the market strategy of a company that will determine its fate in the security industry. The current transition from analog to IP is taking place in a market where supply exceeds demand and price competition has greatly lowered p ro f i t s . O p e n s t a n d a rd s h a v e also removed barriers to entry, thereby saturating the market with manufacturers. In this competitive market, the key to survival is differentiation.

In other words, companies that are able to successfully establish themselves as different or unique — whether through innovative products, superior customer service or close customization for the markets they serve — will be able to survive in the security world. With this in mind, industry players can face the year ahead prepared and ready to win.

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