This report reviews business models that could help to alleviate the problem of commoditisation in video surveillance. In the short term, we believe that the only solution is merger and acquisition between western-based companies to create sufficient scale to reduce manufacturing cost and thwart the policy of fighting on price alone.
The developed markets of North America and Europe have continued to lose market share to Asia and particularly China and this is set to continue to the end of the decade.
We forecast a CAGR of 5.65% over the 5 year period from 2016 to 2021. Not particularly optimistic considering that the market managed to grow by a CAGR of 7.83% during an unstable period from the end of 2010 to today. But whilst growth in volume terms will be well over 10% there is little chance of sales revenues achieving much more than half of this whilst the major Chinese companies continue reducing their prices in order to boost volume.
In 2015 M&A spend raised to $5.7 billion but this was still less than the $6.2 billion realized ten years previous. Nevertheless this was an important year for M&A because the world's number 1 manufacturer of IP Network cameras, Axis Communications was acquired for $2.8 billion by Canon and the merger of Kaba Holdings and Dorma Holdings took place. These two mega deals accounted for more than 80% of the total value of acquisitions that year.
In September this year Johnson Control and Tyco International merged and created a $30 billion revenue company. Technically it is a merger with the new stock being proportionally based on the market valuation of each company at the time of the announcement. However in practice it is an acquisition with Johnson Controls taking over Tyco, a registered company in Ireland in what is called an inversion deal. Tyco is one of the world's leading suppliers of Physical Security and Fire Safety equipment and its market valuation at the time of the announcement was $16.5 billion.
This is the biggest ever deal recorded since our records began in 2000; this has of course distorted the whole picture of M&A in 2016. The total value of deals in 2016 was $19.73 billion making it almost three and a half times larger than 2015. However the number of deals in 2016 was 27 compared with 38 in 2015.
Key Topics Covered:
2. Structure, Size & Shape of the Physical Security Business
3. The Video Surveillance Market 2016 - 2021
4. The Access Control Market 2016 to 2021
5. Intruder Alarms / Perimeter Protection Market 2016 to 2021
6. Wireless Technology
8. Software Markets in the Physical Security Business
9. Business Opportunities Through Integration, IT Convergence & IoT
10. M&A Performance by Sector - Valuation and Outlook 2000 to 2021
11. Identifying Potential Acquisition Targets & High Growth Sectors
12. Investment & its Impact on the Security Industry
13. The Role that Strategic Alliance Plays in the Security Business