Market Research

The global security industry is a market in excess of $100 billion made up of tens of thousands of businesses engaged in the protection of assets and prevention of loss. While once relegated to the sidelines of property management, security increasingly falls under the purview of corporate IT budgets and is often a major consideration of C-level executives.

This shift in the markets is due in large part to an increase in crime rates, convergence of building control technology with security functions with IT systems, and an increased focus on security demonstrated by the US government through its massive reorganization which created the Department of Homeland Security and subsequently appropriated billions of dollars of funds.

Industry analysts believe the security industry will grow at double-digit rates over the next five years, and we are seeing strength and momentum in the market place to date in 2003. USBX' Integrators and Manufacturing indices have both outperformed the S&P 500 in the year to date and numerous M&A transactions have taken place indicative of the consolidation of a fragmented market. Additionally, certain transactions such as United Technologies Corporation's purchase of Chubb Plc are portentous of the impending drive toward convergence.

The need to protect assets does never ceases, which makes the security industry recession resistant. Indeed, in 2002, the security industry outperformed the S&P 500 even as most corporations struggled during the difficult economic times. Going forward, biometrics, emergency preparedness, security systems integration, alarm monitoring and digital security are a few of the many growth sectors in the industry.

The security alarm industry, servers both residential and commercial customers, but is highly fragmented and widely distributed across the country and throughout the world. The total revenue from the sale, lease, installation, service and monitoring of electronic security systems in the US alone increased eight percent in 2003 to $24 billion from 2002 according to the Security Distributing and Marketing Magazine (SDM Magazine). There are now approximately more than 20 million homes in the United States which have security alarm systems installed. The industry has several large national suppliers in the market; however the majority of the market is served by one of 10,000 local and regional security alarm dealers.

Approximately one third of the $24 billion of annual revenue is generated from commercial sales and installation, one quarter is from residential sales and installation and twenty percent, or $4.5 billion in 2003, is from leasing and monitoring of security systems. Much of the financing of alarm installations by local dealers is provided by third party institutions as are their 24-hour 7 days-a-week alarm monitoring needs. There is a large and active market in the sale of both new and existing alarm contracts by dealers based sales channels.

Residential system monthly monitoring fees in the US are on the order of $30 per month. The commercial market is more engineering, application, and site specific with the installed cost of equipment and monthly monitoring fees being several times that of a residential system. Corporate policy, insurance provisions or municipal regulations often mandate the need for commercial electronic monitoring. In addition to the traditional monitoring of fire and burglary, commercial customers are seeking video surveillance, access control and for mobile assets, satellite-based global position location monitoring.

The resource links below should provide you with more information on the burgeoning security industry and its potential for growth.

Market Research

Company Research

Security Systems News

Mitchell, Silberberg, Knupp - Legal Issues, tips and resources for the Security Industry

Industry Association Links

Third Party Research