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Security Needs (Part II)

Click here for Part I.

Remote surveillance, all players agree, is a gold mine of a market where only a few veins have yet been struck. Dozens of companies are providing equipment, software and end-to-end solutions, all encouraged by the high margins typical of the security business. Many companies are just now striking deals with their first large clients and eyeing other verticals.

The closed circuit television market is in an extended upswing even without help from its new high-tech dash. According to the SIA, the CCTV industry will grow from $10.4 billion in 2001 to $1.63 billion in 2005. Buoyed by the extended economic boom of the late 1990s, the security industry remained afloat in 2000, partly due to the high rate of new housing starts across the country.

Those who have stepped into the market are seeing big demand. Two years ago, for example, Axis Communications’ networking cameras were a tiny part of its overall business. In FY 2000, however, linked cameras took off: sales grew by 100 percent and the cameras now make up 30 to 35 percent of the Swedish networking company’s business, according to Fredrik Nilsson, head of strategy for the camera division.

While the field is as yet wide open, the contenders are many. They include, not surprisingly, a good number of dot-com refugees that have recalibrated in search of a sound business opportunity.

They include firms like LiveWave, a developer of software to control cameras over the Internet, which started in Internet broadcasting, particularly from zoos. Now the firm is targeting bigger clients, such as Army command centers, which have expressed renewed interest since Sept. 11, said company President Peter Mottur. Or J2 Digital, which, when it found its Internet-services business drying up, moved into streaming video of construction sites. This in turn led to a new enterprise, watching construction sites for break-ins with cameras triggered by infrared sensors and door triggers, said partner Jeff Lucido.

Such firms are competing with a field of large and resourceful security manufacturers and distributors who have gotten the digital fever, including such heavyweights as Pelco, Sensormatic and Ademco, as well as electronics giants like Panasonic, Sony and Philips.

"It’s definitely on the radar screen, and I think you’ll find most of the manufacturers and distributors have a manner to get remote monitoring integrated with their systems," said Dave Saddler, director of strategic planning for the Security Industry Association. " I don’t think anyone in the CCTV market is ignoring digital in any way."

The newcomers do have several advantages, though: an in with other IT firms, who, in addition to being new enough not to have an analog CCTV system, are more amendable to new technology. All-digital firms might also have appeal with tenants of recently built offices that are wired for ethernet.

On the other side, the security industry’s traditional players have their work cut out for them serving both new clients and long-term ones who are heavily invested in analog CCTV.

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