Examining the Impact of the Recession

Author: John Honovich, Published on Nov 30, 2008

With a global recession no longer in doubt, two fundamental issues will shape the video surveillance business:

  • How significantly the global economy will contract
  • How strong will the post-recession economy be

This examination will focus on the US, European Union and Japan - who combined are over 66% of the global economy - and who all are entering a significant recession.

I project that these countries will experience:
  • 6% - 10% reduction in economic growth between Oct 08 and Sept 09
  • Slow growth for a number of years in the next decade (2010-)

These economic trends will cause the video surveillance industry to:
  • Reduce growth rates by 12% to 20% in the next year
  • Reduce industry long term growth rates significantly

Detailed examination of these drivers and recommendations for key steps to thrive in this environment are provided in my 2009 Video Surveillance Industry Guide.

The following overviews the issues involved:

Weakening Economic Results

The US economy already started to contract in Q3 2008 (July - September).  This contraction is especially alarming as it came almost entirely prior to the financial crisis. 

It is extremely likely that the US economy's GDP will fall dramatically in Q4 (October - December). The evidence is everywhere - with layoffs, housing prices continue to fall, the imminent collapse of the auto companies, the decline in stock prices over the last few months, etc.  The US GDP could easily fall 2% - 4% in Q4 2009.

With housing prices still dropping, consumer spending continuing to shrink and the balance sheets of companies worsening, it is likely that the economy will continue to contract significantly through the first part of next year. All of this puts huge downward pressure on economic activity.

Companies Impacted

Expect numerous video surveillance companies to be impacted over the next year – with layoffs becoming common and closures no longer being a surprise. While companies are trying to avoid such measures and hope for the best, widespread poor 4th quarter sales results will increasingly make cuts inevitable.

Consumer Spending Fueled by Debt 

The era of consumer spending fueled by huge debt and massive increases in housing prices looks to be over for years.  Given that this fueled GDP growth for the past decade (or more), the reversal of this trend will create an economic environment where GDP growth (even if positive) will be weak.

Even after the short term rapid contraction is over, the recovery will be weak - eliminating a key driver for rapidly expanding capital equipment such as video surveillance.

Impact on Video Surveillance

None of this is an attack on video surveillance. However, video surveillance business must change their fundamental economic assumptions to match the change in the world's economy.

Business plans and revenue projections must be modified significantly to reflect this new reality.

1 report cite this report:

Pelco Cuts Costs and 1% Employees Layoff 2008 on Dec 02, 2008
Summary: 19 employees cut, salary freeze implemented, corporate jet to be sold, no more personalized license plates. All in all, this is a very...

Related Reports on Consumer

Bad: Dahua Villa Video Doorbell Tested on Jan 11, 2019
Doorbells are one of the hottest segments in the residential market but Dahua's Villa Video Doorbell is the worst we have tested.   We bought and...
Worst Products Tested In Past Year on Jan 09, 2019
IPVM has done over 100 tests in the past year. But which products performed the worst? Which ones should users be most aware of? In this report,...
The Battle For The VSaaS Market Begins 2019 - Alarm.com, Arcules, Eagle Eye, OpenEye, Qumulex, Verkada, More on Jan 02, 2019
2019 will be the year that VSaaS finally becomes a real factor for professional video surveillance. While Video Surveillance as a Service (VSaaS)...
Dahua Lorex White Light Camera Tested on Dec 20, 2018
IP cameras with integrated white light LEDs are a growing trend, led by most notably Hikvision ColorVu. While the Hikvision models are not...
Imperial Capital Security Investor Conference 2018 Review - ADT, Resideo, Alarm.com, Arlo, Eagle Eye, ACRE, More on Dec 14, 2018
Imperial Capital Security Investor Conference is an event matching industry executives with financiers that frequently leads to future funding...
ADT Wins Fire Death Suit But Faces Appeal on Dec 05, 2018
ADT/Protection 1 has won a wrongful death court case in which it was sued by the estate of a deceased customer. However, the attorney for the...
Wyze Explosive Growth Disrupting Consumer IP Camera Market on Oct 30, 2018
Wyze, a company founded only in 2017, is poised to disrupt the consumer IP camera market by combining American marketing and Chinese manufacturing...
ADI's Financials Revealed + W-Box Growth Priority on Oct 15, 2018
  ADI is one of the most powerful distributors in the security industry but how big are they? How much profit do they make? How much do they sell...
Amazon Ring Spotlight Cam Tested on Sep 17, 2018
Amazon's Ring has released their latest camera entry, the Spotlight Cam, which we bought and tested in our Consumer IP Camera Analytics...
VMS Export Shootout - Avigilon, Dahua, Exacq, Genetec, Hikvision, Milestone on Sep 13, 2018
When crimes, accidents or problems occur, exporting video from one's video surveillance system is critical to proving incidents. But who does it...

Most Recent Industry Reports

2019 Camera Book Released on Jan 22, 2019
This is the best, most comprehensive security camera training in the world, based on our unprecedented testing. Now, all IPVM PRO Members can get...
Milesight Company Profile on Jan 22, 2019
Milesight Technology, a Chinese company building an International branded business, says they are slowly building their presence through a series...
Intersec 2019 Live From Dubai Day 2 on Jan 22, 2019
There’s a massive presence from Chinese or China-focused video surveillance firms, chiefly Hikvision, Dahua, Huawei, and Infinova, at...
Cable Trenching for Surveillance on Jan 21, 2019
Trenching cable for surveillance is surprisingly complex. While using shovels, picks, and hoes is not advanced technology, the proper planning,...
Milestone Favorability Results 2019 on Jan 21, 2019
Milestone's favorability moderately strengthed, in new IPVM integrator statistics over their results from 2016. While the industry has been...
The IP Camera Lock-In Trend: Meraki and Verkada on Jan 18, 2019
Open systems and interoperability have become core features of video surveillance systems, as virtually all professional IP cameras integrate with...
NYPD Refutes False SCMP Hikvision Story on Jan 18, 2019
The NYPD has refuted the SCMP Hikvision story, the Voice of America has reported. On January 11, 2018, the SCMP alleged that the NYPD was using...
Mobile Surveillance Trailers Guide on Jan 17, 2019
Putting cameras in a place for temporary surveillance where power and communications are not readily available can be complicated and expensive....
Exacq Favorability Results 2019 on Jan 17, 2019
Exacq favorability amongst integrators has declined sharply, in new IPVM statistics, compared to 2017 IPVM statistics for Exacq. Now, over 5 since...
Testing Bandwidth Vs. Low Light on Jan 16, 2019
Nighttime bandwidth spikes are a major concern in video surveillance. Many calculate bandwidth as a single 24/7 number, but bit rates vary...

The world's leading video surveillance information source, IPVM provides the best reporting, testing and training for 10,000+ members globally. Dedicated to independent and objective information, we uniquely refuse any and all advertisements, sponsorship and consulting from manufacturers.

About | FAQ | Contact