New report looks at state of convergence

SANTA CLARA, Calif.--Santa Clara Consulting, a market analysis and consulting firm based here and traditionally working in the IT storage field, has released a new report for the security marketplace: Technology Convergence: Trends for the Physical Security Industry. Though it does contain some market numbers and charts, it is primarily focused on identifying the market drivers for IP technology and IT standards in the physical security marketplace. David Bunzel, Santa Clara managing partner, penned the report. He said the report discusses "the critical factors for the companies involved in this business and for the companies implementing the technology ... [identifying] the opportunities for educating the market and allowing for the transition to IP-based systems to be faster and more broadly serviced." Bunzel said the physical security industry reminds him of the IT industry in the early 1990s, when technology converged to IP, but "one of the things that surprised me was the reluctance on the part of companies [in the security industry] to move more quickly to new technology. A lot of companies are holding on to business models that will soon be eclipsed, holding on to proprietary systems that are more expensive, more difficult to use, compared to the data storage industry, where there's broad acceptance of industry standards and the transition has been much faster, partly because the products are easy to use. The complexity of the products in this industry surprises me; that more companies haven't worked together in associations to develop standards to make products easier to use surprises me." Does he have a theory to explain that reluctance? "I think it's purely an economic situation," he said. "The traditional way has a very high profit margin, and once you go to standards-based products, they tend to be plug-and-play and also have standards that allow them to be easily integrated with each other. It makes it a totally different business model. There may be a bigger market, but there's lower margins, and there's concern [on the part of traditional players] that business won't be as lucrative." So where will Santa Clara look next in the security marketplace? "One area that needs a lot more intelligence is the development of the IP camera business and IP video surveillance," Bunzel said. "We plan on having a report out early next year that will reflect 2007 market conditions." He said he hopes to have reports thereafter in quarterly form, "so readers get data that's much closer to it happening, rather than a year after the fact." He's also interested in the access control segment. For more on the convergence report, visit www.sccg.com.