Wireless Technology Propels Expansion of European Residential Security Market

(01/03/2007)

The European residential security market is in its development stage and has high growth potential. While security remains the most important driver, technologies such as wireless have also been propelling market growth. The market’s move towards IP technology and video surveillance has positively reinforced this trend.

Frost & Sullivan estimates that the European Residential Security Market was worth €1.6 billion in 2005 and estimates it to reach €2 billion by 2012.

The market’s potential has not yet been fully exploited because of issues related to the vagaries of false alarms, perceived high prices of equipment and services and the lack of awareness about security products.

“Using mature technologies such as wireless, market participants have been able to successfully reduce the number of false alarms and also provide equipment and services at competitive prices,” notes Frost & Sullivan Research Analyst Shailaja Pradhan. “The availability of technologies such as IP offers immense possibilities to security companies as well as end users. These factors, together with heightened awareness about residential security and increasing confidence in security products are supporting market expansion.”

Wireless technology has become an integral part of everyday life. This mature technology has found wide applications in voice and messaging (including cell phones and pagers), hand held and Internet-enabled devices (Internet-enabled cell phones and PDAs among others) and data networking (WLAN, broadband wireless and others). End users prefer this technology since it enables quick, trouble-free and convenient installation, is reliable and eventually reduces total set-up costs.

Manufacturing and security services companies have seized this opportunity to drive wireless technology further. Currently, nearly half of the new installations are based on wireless technology, and this figure will rise in the next few years.

At present, the most critical market restraint is the lack of end-user education. End users do not perceive the need for a security system in their premises. Security companies are trying to change this end-user mindset and have found it extremely challenging.

This situation has led to other challenges such as increased competition - with the market growing sluggishly, companies are competing to maintain or increase their market share. The result has been downward pricing pressure and narrowing profit margins.

“In the residential sector, security remains a ‘grudge purchase’ and therefore a speciality product,” explains Ms. Pradhan. “A security product is usually purchased by the owner of valuable property, or due to perceived increase in crime or sometimes on the recommendation of an insurance company.”

This attitude is proven by the fact that only 5.5 per cent of homes in Europe have an intrusion alarm system. Unless end users are educated about the benefits of security systems and encouraged to willingly invest in them, security is likely to remain a speciality product.

“Security companies should invest in end-user education to overcome these challenges,” advises Ms. Pradhan. “This could be achieved in partnership with security associations and local authorities by promoting the use of security as a necessary part of everyday life and not as a low- priority adjunct.“

Related topics:  IT Network and Computer Security   Security industry   Security market sectors 

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