Unrealistic Surveillance Market Growth Projections

By John Honovich, Published Jan 24, 2011, 07:00pm EST

A January 2011 report provides an unrealistically bullish market projection for the video surveillance market. With over 20% annual projected growth projected over the next 5 years for the entire global market, this represents the most aggressive projection we have seen since the recession. On the one hand, this is a blessing for those who want a big number to show on their business plans / powerpoint slides. On the other, basing actual plans on this number is almost sure to lead to errors.

Previous to this report, the most recent uber-bullish surveillance predictions was from ABI who in 2009 said that global sales would rise from $19.4 Billion that year to $41 Billion in 2014. Indeed, the 2009 number was actually lower than their 2007 projection when they forecasted a market size of $46 Billion by 2013. Amazingly we still see the $46 Billion figure regularly in vendor presentations despite it being totally detached from reality. Ironically, after the recession, ABI dropped their projections dramatically now only projecting a $17 Billion market size in 2011.

In this new (Jan 2011) report from Research and Markets, they estimate that this 20.4% CAGR from 2010-2015 will expand the market to $37.7 Billion.

While it's quite feasible for individual market segments or even regions to grow over 20% annually for the next 5 years, this is extremely unlikely for the entire market as a whole. For instance, while IP network sales are growing robustly, analog sales are not. Even if IP grows 20% - 30% per year for the next 5 years, this will be heavily offset by flat or declining sales in analog.

The video surveillance business, as a whole, is fairly mature, so it's hard to drive double digit revenue growth across the board.

The other important element for any long term projection (i.e. 5 years) is the risk of a recession. Most forecasts we see assume no recession for the entire period, a risky proposition especially over a long term period.

For a more sensible long term global market prediction, see the Axis/IMS forecast that pegs growth at about 10% CAGR for the next few years.

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