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10 Trends of the Security and Protection Industry in 2017

1. The formation of a new ecological chain of the security and protection industry(SPI).

The former closed security and protection system(SPS) is developing to be more open, so is its ecological chain. With the rapid change of technologies in this field, the old ecological chain has fallen into pieces gradually.

Over the past three decades, the ecological chain was simple: designing and manufacturing–engineering integration–software and hardware maintenance. But now it has evolved to be more complicated: user requirement–customization–designing and manufacturing–engineering integration–service, operation and maintenance–innovation and improvement.

However, with security products become more and more homogeneous, the whole industry has started to shift from productivity-orientated to consumer-demand-orientated. In an era of data being the king, SPS has transformed from being IT (information technology)-based to being DT (data technology)-based.

As anti-terrorism and maintaining stability have become a rigid demand for countries around the world, the value of video data has been gradually discovered. Besides, due to the steady growth of the SPI and other reasons, many new faces have been attracted to this industry from their former ones, which leads to increasingly significant changes in the SPI. The future of this industry is more than a stage for security enterprises.

Be it equipment suppliers, integrators, or installers that are responsible for the evaluation of data and providing more management value to consumers, there is no unified conclusion. Now what the SPI faces is the trickiest question: how to properly and comprehensively structuralize and manage data? It is not something that can be fundamentally pushed forward by a single enterprise. But on the other hand, it can facilitate the formation of a new ecological chain.

2. In order to tackle the problem of unstructured data, videos should be given more value.

In the SPI, 99% of the data is unstructured. The improvement of intelligent security system has been limited for a long time because of the stagnation in the development of traditional algorithms and chip technologies. Therefore, Deep Learning is required to make breakthroughs, so that objects can be studied, scenes segmented, people and vehicles analysed.

On the 2016 China International Exhibition on Public Safety and Security, Deep Learning was seen as the lynchpin for breakthroughs. The advancement in technology enables the SPI to develop more quickly and extend into more fields, and grants video more value.

In terms of “developing more quickly”, companies used to focus on “seeing clearly” (high definition video images and the equipment’s capability to work in harsh environments), but now they attach more importance on helping users to “understand what they see”. In other words, the former emphasises the evidence collection after incidents while the latter strengthens the prevention of such incidents. Surmounting the difficulty of unstructured videos, the monitoring system is able to study and judge the situation, and dynamically recognize human faces, which remarkably promotes the real-time alarm rate and reduces the false alarm rate.

In terms of “extending into more fields”, the video monitoring system not only meets the demand for security and protection but also further explores the value of videos by virtue of Deep Learning and the computing capacity of unstructured data, such as making business decisions and improving business operational efficiency.

As a matter of fact, the SPI can draw lessons from the experience in other fields. State-of-art image chip technologies and algorithms have been widely used in areas such as dynamic facial recognition, intelligent transportation system, unmanned aerial vehicle(UAV) image processing and remote sensing geographical image processing.

3. Burglar alarm, with the transformation accelerating.

In the past few years, although enterprises were constantly emerging in the burglar alarm industry, the overall trend seemed to remain relatively moderate. That was partly because the price war among companies resulted in profit squeeze, and partly because company strategies were inadequate. In the future, with burglar alarm system hardware being cheaper, the core profit for companies will inevitably come from their alarm service. Thus, it is worth discussing how to bring the system to families, to communities and to operators.

In 2016, Hikvison announced its acquisition of Pyronix, and Dahua Technology decided to cooperate with ADT China. Similar movements of these giants have caused panic in the industry: whether they will duplicate what happened in the video monitoring industry, sweeping the whole burglar alarm industry?

4. Will UAV, VR, robots be the new lifebuoy for the SPI?

If asked, what are the three most popular products in the electronic technology circle?Without doubt UAV, VR spectacles, and robots will the answer. They are the blue ocean market which various companies are eager to explore.

Some original equipment manufacturers in Shenzhen, China, have embraced waves of new businesses, ranging from smartphones to video cameras and to robots. These new market demands are their dependence for business. Nonetheless, their products share one thing in common: the excessively surplus supply, with low product quality and in all sorts of related forms. Very few of them can be called as quality and competitive goods.

5. The sluggish smart home market and the SPI.

According to a research report by Statista, the top five countries in the world in terms of the capacity of the smart home market are the US, Japan, Germany, China and the UK. The US has a $9.7125 billion market capacity in this industry, while Japan $1.1289, Germany $925.6 million, China $ 520 million, and the UK 477.5 million respectively.

In China, no company in the area has achieved real success. On one hand, Chinese consumers do not have a strong demand for smart home devices with simple functions. On the other hand, the core business of the consumer market is services, rather than basic hardware supports. For example, if an elder has a fall at home, even if the incident is detected by the camera, his family will still have to inform relevant workers for help. In such an emergent circumstance, time is gold. If the camera is linked directly to the community service and users pay for the service, then the product probably will be better welcomed.

But how to solve the privacy violation issue is a big concern for companies. That is why many companies go beyond the home monitoring into consumer camera products. Sports cameras and live video broadcasting service have been launched to meet young people’s demands and these products are less involved with people’s privacy and service problems while being more suitable for security companies to expand their businesses.

The biggest hindrance for the smart home market is that although the user group consisting of villa households and geeks is large, but average consumers between them are not interested in these products. Only when the average consumers are developed, can the smart home market has a fertile soil to thrive.

6. O2O, the popular business model, who are the winners?

It is reported that China’s O2O (Online to offline) market size has reached 300 billion Yuan in 2015, and is projected to be 380 billion Yuan in 2016. The group-buying service represented by Dianping.com has been deeply Internet-enabled and connected with users’ day to day life. Besides, the food delivery service, such as the one offered by ele.me, has not only helped restaurants to increase their business but also provided solutions, like intra-city delivery, to promote efficiency considerably. In the transportation service industry, companies such as Didi Taxi have successfully reduced the operation cost of taxis, created the Sharing Economy, and improved the transportation efficiency for citizens.

Even so, in the golden age for industries, has the SPI got a share? At present, owing to having the largest amount of consumers, the building intercom and parking lot businesses are closest to O2O among others in the industry. So theoretically, they can be expected to develop service models through their products. But realistically, the brand royalty has not formed among consumers yet, so there is no guarantee for consumption and consumer volumes.

Focus on the essential characteristics of O2O—The next goal for the SPI is to improve the efficiency of the supply chain through integrating resources, utilising and analysing user data thoroughly. Platforms are the future, though the most basic products are not good enough to attract customers now. How to establish new business and industrial chains is still waiting to be explored.

7. Mobile entrance control, infinite business opportunities apart from the hardware.

In 2015, the entrance control business has witnessed a 6.6% growth and is predicted to reach 7.2% in 2016, which is significantly higher than that of the video monitoring market. Behind those figures, there is an important message reflected: the trend is moving from the traditionally mechanical entrance guard system towards the electronic one. New innovative entrance control and recognition technologies are going to propel the industry with wireless access control and facial recognition being the most eye-catching ones.

For users, along with the showing up mobile entrance control, the biggest concern is the safety. Mobile chips replace entrance cards and keys, so how to bolster security will be the most important thing for manufacturers to think about.

To open doors remotely with mobile terminals is certainly going to save many troubles for users, and when such mobile applications gain their recognition, the business will soar to its greatest height.

8. The electronic lock, the saviour for the building intercom.

The growth of property development in China was only 1% in 2015, compared with its rapid development in the past decade. The building intercom business was hugely affected by this change. In order to face the challenges, building intercom companies have continually extended their product lines. The electronic lock market has great potential in China, plus the existing channels which can be used to promote sales, this can be a new goal for building intercom companies.

There are two pivotal challenges facing the electronic lock industry: first, the encryption technique for its software; second, the improvement of quality requirements of lock cylinder against the mechanical unlocking. To endow their electronic locks with the necessary adaptability, companies are required to address the safety problem which consumers care most. Up to now, intelligent locks account for less than 3% of the market share in upscale hotels, villas, apartments and average families. But they will have a bigger market share with the maturity of techniques and decrease of prices, which will open another door for building intercom enterprises.

9. The end-to-end trend facilitates the emergence of giants.

The term “end-to-end” is not completely new in the SPI, and it has become increasingly noticeable with the development of security solutions. Such a trend will inevitably affect three kinds of practitioners in the industry: first, mere distributors, second, mere installers/integrators, and third, small and medium-sized equipment suppliers.

For distributors, the All-In-One model saves users a lot of hassles from picking products and enables them to enjoy the one package service. Albeit costs of distribution channels are reduced, the profit for distributors has been greatly cut.

For mere installers/integrators, the solution consulting service team from equipment providers has played a role which is similar enough to replace them. If they want to survive, the only job left for them would be “plumbers”, which is incomparable to what they used to do.

For small and medium-sized equipment suppliers, their profits have been tremendously squeezed due to the homogeneous competition. The lack of integrated solutions and the product cost-effectiveness has made these companies lose competitiveness and they will be eventually washed out from the market.

Some famous companies help users to solve the safety problem and meet their demands for camera applications. They integrate resources to provide end-to-end total solutions from cameras to data storage and to video streaming service with camera technologies at the core. Giants are springing up in the SPI which is an unavoidable trend after the industrial reshuffle in the past few years.

10. Cyber security, the sore point of the SPI

In the last 2 years, there are an increasing number of discussions about cyber security while the demand for information security solutions is constantly surging. Product security will be a new rigid target in the years to come.

According to a selective inspection conducted in China, 8 out of 10 home cameras in the market has security flaws, which enable hackers to observe, record, and even broadcast users’ daily life.
Many a security manufacturer begins to enhance the security of their products on the levels of technique, designing, and business management. But so far, these measures are not adequate to deal with new security challenges as new problems are emerging ceaselessly. There will be some security companies particularly built with the purpose to tackle cyber security issues in the future. Meanwhile, governments and the industry need to establish safety standards for intelligent hardware so as to regulate the whole industry and promote the information security capacity of products.

2017-07-22T17:07:22+00:00 February 2nd, 2017|Industry News|