Dilip Sarangan tracks physical security companies for Frost & Sullivan. He expects the industry's "need to have" products to weather the economic storm well, with the big players (now including IBM and Cisco) looking for value-priced acquisitions.
What sectors or companies in physical security markets look particularly strong?
Definitely video surveillance looks really strong right now. A lot of people are starting to understand it's not really 'nice to have' technology any more - it's more of a 'need to have'.
There's a lot of market education on use of IP cameras and complete IP systems. People are starting to understand the value instead of analog. Now the challenge with IP is making the systems integrators understand that.
The physical security guys need to understand how IT systems work. Networks, bandwidth issues. There are a lot of vendors trying to educate those guys so they can get an additional channel for sales. But right now most of the IP sales are going through the IT integrators.
Do most traditional analog CCTV vendors now have an IP offering?
Most are starting to get there, developing their own lines of IP cameras and management software. They're still a few leagues behind, but catching up. a couple of years before they catch up to Axis or Sony or Panasonic.
Plus now, even within the IP camera market, a lot people are now interested in going with the megapixel and multimegapixel systems. The standard-resolution IP cameras are no better than the analog cameras. You need to take advantage of the digital zoom functions. Time's up for the analog zoom.
So the big opportunities there are not just the cameras, but guys that sell SAN, NAS, all the IT storage technologies. You'll the EMCs and Seagates playing a bigger role. HP, IBM, all these guys are going to start focusing more on this market.
What's strong outside of video technologies?
I think everything is moving towards IT, even access control. You've got a few companies who are focusing on putting access control systems on the network to enable convergence, integration. That's gaining a bit more traction. It's a little behind the video surveillance; more people understand the video but don't completely yet see the value in the access control part.