Is the U.S. economy finally affecting security?

WELLINGBOROUGH, UK--Though the talk at every trade show from ISC West to PSA-TEC has been about the security industry’s insulation from the downturn in the U.S. economy, at least one research firm has released a prediction that some impact will be felt. IMS Research, based here and a supplier of market research and consultancy services on a wide range of global electronics markets, said in early June it is revising its predictions for the growth of the network video surveillance market in the United States because of the “struggling U.S. economy, which narrowly avoided entering a recession in the first quarter of the year, recording a modest increase of just .9 percent.” While IMS estimates the market grew by 45 percent in 2007, its first quarter feedback has led it to believe the market growth will cool down, though will grow at a still substantial rate of more than 30 percent, and possibly as high as 40 percent if the U.S. economy recovers. “We collect data on a quarterly basis,” said Simon Harris, senior research director at IMS Research, “from a group of manufacturers that take part in a quarterly tracking service ... So, looking at the quarterly numbers, at the end of 2007, we saw the market slowing, and then in the first quarter it was a marked slowdown. And we keep our ear to the ground at the trade shows and we’ve started to pick up a few comments to that effect, too-some projects being cancelled—and you can see it in the quarterly results. March Networks’ first quarter was a bit lower; Axis has been down a bit. So it’s a combination of things, really,” that has led IMS to cut its estimates. IMS doesn’t collect hard data on analog sales in the same way, but, said Harris, “I don’t see any reason why IP should be different than analog; the same arguments apply, really: retailers, the biggest market for video surveillance, are scaling back on expansion plans, consumer spending is down, etc.” However, said Harris, “I think that there’s no great pessimism in the industry. There’s a resiliency in the industry to the effects of the economy-in other industries that we cover, there’s more of a direct correlation, but in security it’s less so. There is an impact, but it’s not as dramatic. So, they’re not pessimistic about the year, but maybe just don’t expect as strong a year as last year, which was a very good year for the industry. It’s a slight lowering of expectations.”