SINGAPORE, FEBRUARY 22, 2010 Computerworld Singapore recently had the honour of interviewing Ray Mauritsson, CEO of Axis Communications, the world's leading provider of video surveillance solutions, which make up a sizable portion of global spending on security. His pronouncements on the current state of the physical security business and where it is headed soon and later below.
CW: How large is the IP-based network video market and how does it compare to the analog video market?
Ray Mauritsson: I'll start from the top down trying to describe the size of the market and sort of narrow it down to our area. If you start with the video surveillance market as a whole, which is the market we're addressing, that in 2008 was estimated at US$8 billion. That includes cameras, the recording devices and the interconnection and communication equipment. Out of those US$8 billion, roughly 40 per cent is the camera value. So about US$3.5 billion is the camera market.
Then if you look into how far the penetration isthat includes all cameras, old analog solutions and the digital network solutionspenetration on a worldwide basis is about 20 per cent penetration. So 20 per cent of the market has changed over to network-based solutions. So that result may be a US$700-US$800 million yearly market for network video cameras.
And that penetration is slightly different in different regions a little bit ahead in EMEA [Europe, the Middle East and Africa], the US is slightly behind but close, and Asia is where the penetration is the lowest so far. So if 20 per cent is the average: maybe 25 per cent in Europe and 20 per cent in the US and 15 per cent in Asia roughly, penetration wise.
If you look at the whole video surveillance market, that's quite evenly split: a third in the US, a third in EMEA and a third in Asia. So, because of lower relative penetration in Asia so far, the growth opportunity is even higher for us, which makes the market more interesting than the others.
On the overall scale, still, 20 per cent penetration is quite low and everybody expects 100 per cent business penetration eventually. There are different estimates out there. Generally the estimates peg maybe half of the market to be penetrated by 2014. So 20 per cent in 2008 and 50 per cent in 2014. That would translate into yearly growth rates in the 30-35 per cent range. It should be higher in Asia and lower in EMEA. That's roughly sizing the market and comparing the networked-video to analog solutions.
How do you see trends growing more immediately in the next 12 months in this space?
We're trying to wrestle with that every day. But I think one of the challenges with the financial downturn that we saw a year back is because of the downturn you have fewer investments in new buildings and in new installations. Obviously, it's easier to sell new technology into a new building than sell it into an old building, because if the old building already has some sort of inner surveillance, they have already installed the infrastructure for analog technology. The add-on sales in the existing market to a large extent would go to analog solutions.
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