Russian Security Market Expected to Grow Significantly

By: Olga Fedoseeva, Published on Nov 27, 2008

The consensus expert position is that the Russian security market shall continue to grow significantly despite the turbulent global economy. This report examines the Russian security market, explaining the key participants and factors in the industry. Both pessimistic and optimistic forecasts are presented with an explanation of why most experts are optimistic.

Overview of Russian Security Market

The Russian Security market is one the most dynamic markets in the world. The total values of purchases of security equipment and services in 2008 will exceed $17bn.

In 2006-2008, the Russian market for electronic physical security equipment (EPS) grew 20% per year. Over 80% of technical security equipment sales take place in 4 out of 85 of the Russian Federation areas: Moscow and Moscow region, Saint Petersburg and Leningrad region.

The number of solid customers of the EPS market in Russia is relatively small. Approximately 500 state and corporate customers comprise 80% of EPS purchases in Russia. Of that, the share of the three largest Russian monopolies-CJSC “Gasprom”, RAO Unified Energy Systems of Russia and CJSC “RZHD”- constitute about 18% of the total supply share. The total number of prominent players in the market (producers, re-sellers and fitters) dealing with technical security systems does not exceed 1,000. A maximum of 20 companies control at least 50%, and in some cases, up to 90% of the total volume in each segment of the Russian EPS market. Demand for technical security equipment in the private sector falls below 5%. 

Three branches of Russian customers provided in 2006-2007 - 50% of EPS demand in Russia:

  • Government (23%)
  • SMB (Small & Medium Size Business) (15%)
  • Retail trade (12%)


In 2007 there was made a forecast of even growth of consumption of electronic physical security equipment in main regions of Russian Economics in 2008. However the crisis on the world financial markets, decrease of affordability of the foreign investments for the Russian enterprises, slowdown of growth rates in construction sector led to decrease of forecast growth rates of electronic physical security equipment in a range of branches.

In SMB segment, the sharpest slowdown of growth rate is observed (practically zero increase). Purchase growth rates in segments of Retail trade and Finances has tangibly decreased.


Insignificantly, in contrast with the forecasts, purchase growth rate is decreasing in segments of Industry and Power Engineering. In 2008, contrary to all the experts' forecasts, one can observe a sharp growth of the government purchases of electronic physical security equipment. In 2008 they will increase by $435 million (as compared with the earlier forecast value of $355 million). That is why a government share of purchases of physical security equipment in Russia will increase from 23% to 28%.

The Russian electronic physical security equipment market in the segment of the largest and large corporate and state consumption is characterized by a high concentration both on the part of the customer and on the part of the consumer.

In each segment of the Russian electronic physical security equipment market (complex projects, projects in the area of video surveillance, PACS, FAS, IDS) there has been a division of installation companies (integrators) into three to four groups, namely; very large, large, medium, and small. Intergroup competition is next to impossible. Companies of one group compete with each other. A tendency for alliances is observed in the group of the biggest players.

Installation organizations dealing with medium and small projects work in a very competitive atmosphere and fight for small and very small orders. The same companies often act as subcontractors of big integrators in large-scale projects working on the verge of profitability.

In the course of update researching the security market experts has formulated several scenarios of security market growth in 2009 - 2011. All the three scenarios rely on the expert’s forecasts in the area of two fundamental causes, having an influence on the Russian market growth and its additional segments:

  • Oil price
  • Economic politics of Russian Government
  • The majority of experts has inclined towards the optimistic scenario.

Scenario 1. Pessimistic

Oil price is going down below $60 for barrel. Government is going on its previous economic and budget politics. Government’s expenditures (expenses) are reducing a bit. A quantity of spare money is cutting down. Proportions of security expenses by the branches are saving approximately at the level of 2008. Russian security market rate will slow down up to 10% in 2011. Not more than 10% of participants of the market take this view.

The following facts are cited contrary to the given scenario:
Vice-Premier of the Government of Russian Federation, the Minister of Finance of Russia – A.L. Kudrin declared that the main operation factors of the budget for 3 years (2009-2011) would execute the budget. In case of going down of oil prices below $40 for barrel for financing budget deficit, the government reserve will be used.
  1. The biggest corporate customers (from the first top thirty biggest Russian companies) do not expect shortening of budgets for purchases of electronic physical security equipment in the nearest three years in connection of realization of scale projects in the area of oil and gas industry, transport, energy sectors, telecommunications.
  2. Income growth rate of the population will be supported by the Government at the level of 2006-2008.

Scenario 2. Optimistic. Evolution

Oil price is above $60 for barrel. The Government continues its previous economic and budget politics. The tendency for strengthening of Government’s participation in economics, as well as for overcoming of the negative consequences of the world financial crisis, is increasing.

State consumption goes on growing. Financing of big projects (as well as pipeline, transport, social, sport, politic) continues to grow in volume.

Growth rates save at the level of 20%. High end equipment share increases sharply in the total volume of purchases. Perimeter systems share exceeds the volume of equipment in the area of security and fire alarm. State consumption share increases sharply in the Russian market of electronic physical security equipment -up to 33% by 2003. In connection with the growth of the population incomes, private consumption share of electronic physical security equipment increases up to 10% by 2011. SMB, retail, finance shares reduce.

Over 70% of participants of the market take this view. 

In case of optimistic evolution scenario, state purchase’s growth in total volume of purchases of electronic physical security equipment will be stipulated by the following factors: 

  1. The beginning of the scale investments to building and equipping of Olympic objects in Sochi.
  2. Speeded up completion of building and equipping of the objects on Russian island in Primorsky region (for the APEC Forum in 2012).
  3. Sharp increasing of state investments and equipping of cities with the video surveillance for the street traffic (as well as within the bounds of anticorruption programme of the President – D.A. Medvedev).
  4. Increasing of state consumption to re-equipment of the enterprises of defence and industry complex (as well as modernization of security systems).
In case of optimistic evolution scenario, purchase share of electronic physical security equipment in oil and gas sector also can increase from current 10% up to 13% and higher.

Opinion piece submitted by Alexander Vlasov, Business Development Executive at GROTECK Business Media, Russia

[premium_content]

Related Reports on Retail

11 Facial Recognition Providers Review (Secutech) on May 09, 2019
Adding to our 19 Facial Recognition Providers Profiled report from ISC West, IPVM focused on facial recognition technology for our Day 2 coverage...
Restaurant Security Manager Interview on May 06, 2019
Wright’s Gourmet House in Tampa, Florida has been around for over 50 years. During most of that time, there were no security measures in place. Now...
19 Facial Recognition Providers Profiled on Apr 23, 2019
IPVM interviewed 19 facial recognition providers at ISC West to understand their claimed accuracy, success and positioning. 9 from China, where...
Cambium Wireless Video Surveillance Profile on Mar 27, 2019
Cambium Networks, spun out of Motorola Solutions in 2011, says "outdoor durable radios are in their DNA" and they are targeting video surveillance...
Solink Raises $12 Million - Company Profile on Feb 12, 2019
Most industry professionals have never heard of Solink, a company whose tagline is: It's time to revolutionize the way business uses...
CES 2019 Show Report on Jan 10, 2019
IPVM was at CES 2019 for the second year (see our CES 2018 Show Final Report) and is reporting on announcements and interesting news from the show...
Intel Neural Compute Stick 2 / Movidius AI Test on Nov 21, 2018
AI is a major trend in video surveillance with manufacturers paying significant attention to Intel's Movidius Myriad chips. Indeed, Avigilon has...
Kogniz Silicon Valley AI Startup Profile on Nov 07, 2018
Kogniz is a Silicon Valley company that aims to bring AI analytics to security and surveillance, centering on their own smart cameras: We spoke...
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...
Why Vivint / Best Buy Failed on Aug 31, 2018
DIY has bested Vivint. In 2017, Best Buy and Vivint partnered with Vivint employees on the floor of 400+ Best Buy stores, helping customers with...

Most Recent Industry Reports

HID Mobile Tested on Jun 21, 2019
HID Global is one of the largest access brands, but their mobile access has had challenges. Indeed, the company has already restructured their...
Genetec Beats Milestone For IHS #1 on Jun 21, 2019
For years, Milestone has touted that they are the #1 VMS. Now, Genetec has beaten them in IHS rankings. But what is this? Even other manufacturers...
Risk of Amazon Alexa Guard: No Battery Or Cell Backup on Jun 20, 2019
Amazon positions its Alexa Guard Service as a "smart home security system" and says it can help you "keep your home safe". However, the...
Exacq Remote Cloud Access Tested on Jun 20, 2019
Remote cloud access has been missing from most VMSes (including Exacq and Milestone). Now, Exacq, after releasing Cloud Drive Storage earlier in...
Briefcam Buys Frost Award* on Jun 20, 2019
Frost 'awards' are well-known and widely disrespected. Now Briefcam is touting their win. The way it has worked for many years is that Frost...
IFSEC 2019 Show Report on Jun 19, 2019
The UK's largest trade show, IFSEC, is underway and IPVM has been examining what is new and happening at the show. Inside, we cover: Huawei...
Repositionable Multi-Imager Camera Shootout - Avigilon, Axis, Dahua, Hanwha, Hikvision, Panasonic, Vivotek on Jun 19, 2019
Repositionable multi-imager cameras are one of the fastest growing segments in video surveillance, with a slew of new offerings being recently...
Genetec Synergis Cloud Link - Complex, Costly and Confusing on Jun 18, 2019
Genetec's Synergis Cloud Link is complex, costly and confusing compared to competitor access control architectures. Inside this note, we examine...
Startup Vaion Launching End-to-End AI Solution Backed with $20 Million Funding on Jun 17, 2019
An EU / USA video surveillance startup, Vaion, founded by ex-Cisco Senior Directors is launching an end-to-end VSaaS platform with $20 million in...
Biometrics Usage Statistics 2019 on Jun 17, 2019
While face and fingerprint recognition are used regularly for smartphones, it is not as common in physical security. In this note, we examine...

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