EMEA DOING WELL AMID INFLATION AND SUPPLY SHORTAGES

THE KINGDOM OF SAUDI ARABIA IS PLANNING SOME OF THE MOST EXCITING AND AMBITIOUS INFRASTRUCTURE PROJECTS IN THE WORLD, WHILE HEAVILY INVESTING IN SMALLER PROGRAMS ACROSS HOSPITALITY, RETAIL, BANKING, AND GOVERNMENT SECTORS. THE SAME IS TRUE IN THE UAE AS WE CONTINUE TO SEE NEW LANDMARK MULTI-USE DEVELOPMENTS, WHILE THE ADOPTION OF AI IS STARTING TO REACH MATURITY

n By: William Pao, Senior Reporter, asmag.com editorial@asmideast.com

North America suffered great losses during the height of the pandemic but the security industry is recovering. The North American region has experienced pent-up demand for security technologies. Early in the pandemic, we saw a reallocation of funding from security to other facility needs. Now, we see end users looking to secure their facilities with the newest technology.

Amid growth in the North American market, there are uncertain factors that may affect future growth prospects. Among them are supply chain issues that have suffocated the entire world – North America, including vendors’ ability to deliver go- ods in time despite component shortages and logistics issues. There were also certain positive effects coming out of supply chain issues. The supply chain issues that the world has been experiencing have encouraged businesses to be less dependent on single-source, proprietary solutions. Forward-thinking organizations have instead sought open-architecture solutions that offer them increased choice and flexibility based on requirements and current availability. Closely related to supply chain issues is inflation where a price increase is seen in various products, including security. The uncertain factors are expected to remain in North America. Yet security players are cautiously optimistic about the market. While external/internal challenges remain, security will always be a necessity, especially in a country like the U.S. where security and safety issues are always a concern: in 2022 alone dozens of mass shooting incidents occurred – the most severe being the high school shooting in Uvalde, Texas where 22 were killed.

Heading into 2023, the security market is expected to continue to grow in North America as a result of pandemic tailwinds and technology advancements, as well as an unfortunate number of critical threats taking place in 2022 alone. Security will remain a top priority across all sectors, and business and security leaders must see that. They are finding ways to implement, integrate, or upgrade security systems to optimize protection — and they can turn to experts to help them accomplish this quickly and efficiently.

EMEA’s security industry generally performed well this year on various positive factors. “The EMEA region has been performing well for Bandweaver and probably only second to Asia in terms of revenue generated. There was strong growth in the telecoms and utility sectors and of course, the oil and gas sector remains strong as the price of crude oil has recovered strongly from the crash of 2020. Demand from the EMEA region remains high

The Middle East is expected to fare well, too. “Europe is looking at an impending recession that could also impact tourism and business travel across the region. Yet the opposite is true in Turkey, with the weak Lira boosting tourism with visitors flocking to its beaches and cultural landmarks, eating world-famous cuisine, and going on shopping sprees in its bustling retail areas and historic bazaars, resulting in demand for improved surveillance in the retail and hospitality sectors.” Choi said.

“The Kingdom of Saudi Arabia is planning some of the most exciting and ambitious infrastructure projects in the world, while heavily investing in smaller programs across hospitality, retail, banking, and government sectors. The same is true in the UAE as we continue to see new landmark multi-use developments, while adoption of AI is starting to reach maturity.”

market have good growth prospects,” said Thomas Lausten, CEO of MOBOTIX.

as we look towards 2023 with continued investment in the region,” said Mark Horton, VP of Bandweaver Technology. “While COVID was still an issue in some countries at the beginning of 2022 – depending on the incidence – the Ukraine war triggered some uncertainty in the markets from the end of February 2022. Nevertheless, it was clear that security – physical or digital – is increasingly a topic of the future and that the companies operating in this

Technology-wise, AI and cybersecurity continued to dominate security in EMEA. “Security in EMEA in 2022 saw many organizations embrace artificial intelligence (AI) and associated technologies like deep learning and machine learning. „We see cybersecurity and AI in particular as general growth drivers in the market. On the one hand, it has become clear how important cyber-secure infrastructures are, and on the other hand, AI-based solutions are opening up entirely new, forward-looking security solutions that are convincing on the market,“ Lausten said. Banking, meanwhile, was robust in the Middle East. “In the Middle East, we saw continuing high demand in the banking and finance sectors, as institutions pushed ahead with upgrading their video capture, storage capabilities, and centralized monitoring capabilities in compliance with the stringent regulatory standards which have been driving the market for the last four years, most notably the SAMA regulations. Our largest banking customer in The Kingdom of Saudi Arabia continued to upgrade newly acquired branches, traditional ATMs as well as drive-through ATMs that are important for so many consumers,” said Dennis Choi, GM of IDIS Middle East & Africa.

However, challenges remain in the EMEA market, where supply chain issues, rising costs in everything, and the war in Ukraine continue to influence security and user habits. At the same time, inflation, in the form of rising costs in gas, rents, mortgages, food, and energy, is affecting EMEA as it does the rest of the world, and security may be affected. Across all industries, inflationary pressures are impacting raw materials and energy costs. Some of the larger manufacturers can absorb some of this cost so there isn’t a huge price increase for their products. Being agile, buying materials in bulk, and having the ability to redesign if a raw material rises significantly in price will also help to address this.

As for next year, growth is expected to continue. “We anticipate that growth will be at least the same as before the COVID era,” said Tomáš Vystavěl, Chief Product Officer at 2N. “The growth will be driven especially by mobile access. But not everybody is ready for the change from RFID. The answer might be multi-technology readers that combine two or even three access control technologies in one device (Bluetooth, RFID, keypad).” Yet it’s still a bit premature to assume that everything will be smooth sailing, considering the aforementioned negative influences will continue to dim growth prospects in EMEA security.

Overall, the Asian economy had a good 2022. According to the International Monetary Fund, Asia as a whole is expected to see GDP growth of 4.9 percent in 2022. Within the region, advanced Asian economies are expected to grow an average of 2.7 percent, while emerging markets are expected to grow 5.4 percent, IMF said. This, then, has contributed positively to security in markets across the region. „After a couple of slower years during the pandemic, the security market picked up pace in 2022 following the ease of travel restrictions and pandemic prevention measures,” said Tony Wang, CEO of Convergint APAC. „India’s electronic security market was valued at around US$1.3 billion in 2021 and has seen a steady growth continuing in 2022; overall, the industry is growing at a CAGR of 19-20 percent,” said Aditya Khemka, MD of CP Plus.

While COVID remains a health issue in various Asian countries, its impact on security is diminishing as businesses reopen and projects resume. “During the COVID lockdown periods, there was an impact, which was primarily due to no deployment and installation being possible. However on opening the demand more than bounced back,” Khemka said. “The aftereffects of COVID will still be there, but to a minimal impact as the majority of markets have opened up,” said Ian Foo, Business Development Director of Malaysia-based Melectron. “End users and mid-tier projects are still our main driven sales, so when there is a need from clients, definitely they are willing to spend on security.”

It should be noted, however, that the range of cyber threats is growing, and Asia is no exception. “Cybercriminals are as businessminded as ever and employ more advanced tools and technologies,” said Amit Kulkarni, EVP of Cybersecurity at Allied Digital.

“Most CEOs believe they are adequately ready for a cyberattack. A cyber incident of some kind is viewed as inevitable for almost every firm. Security teams must be ready to respond, recover from, and re-establish confidence as soon as possible to minimize the harm from cyber events, which are becoming more and more inevitable.”

A key growth driver in the region’s security market is smart city and infrastructure development. Among the more notable infrastructure and smart city projects in Asia now are Phase 1 of Shanghai Metro Line 21; Hai Lang LNG Gas Power Center in Vietnam and the M4 Smart Motorway Project in Australia.

India also has their share of projects that can benefit security. “India is focusing on ambitious smart city projects and stimulating the transport infrastructure, meaning that all these new infrastructures are deploying security cameras, which has been augmenting the market growth for us,” Khemka said. “Many state governments in India are also playing a vital role by adopting video surveillance equipment to improve security and safety. Many states have incorporated advanced video surveillance solutions in their cities in 2022. For example, the Telangana Government is currently focusing on improving surveillance on the streets to upgrade Hyderabad’s safety, which is already the most surveilled city in the world.”

Inevitably, the global supply chain issue has affected Asia as well. As a result, shor-

“The issue of insufficient IT infrastructure and cyber security supply has been prolonged to 2022 and I predict it will extend till 2023. Chipsets and semiconductors were hard to obtain as a result of the trouble, which resulted in delays of more than 400 days in delivery. There were numerous other issues besides pure chip supply chain problems, such as restricted Chinese companies. Freight prices rose because of logistic problems, causing manufacturers to increase the end consumer price,” Kulkarni said. “It appears that things will gradually improve, but there are still plenty of backlogs left from previous orders that may take up to 8-10 months to be delivered.” tages and price increases for security equipment were seen. Fortunately, vendors and suppliers showed resilience and flexibility to stay afloat.

“The supply chain issue has had a significant impact on the security industry across APAC and continues to be very challenging. Moreover, the issue is not only the surrounding shortage of components and equipment but also difficulties in terms of logistics. This is a real challenge for all producers and service providers,” Wang said. “In Convergint, we try to take a proactive approach and emphasis cross-regional collaboration, extensive communications, and ecosystem management to drive better results.”

As for 2023, Asia security is also seen with optimism. “I expect growth in the security industry across Southeast Asia and India, as enterprise customers continue to invest and expand in these markets. Oceania and Japan will also see growth,” Wang said. “I foresee an average growth rate in the APAC security market in 2023 of around 20-25 percent, but this will vary significantly between different vertical markets. Some of this is fed by mandatory demand, such as major critical infrastructure projects, as well as a backlog of projects which were postponed or delayed due to the pandemic.”

“The rapid growth that the security and surveillance industry is currently witnessing will continue shortly. With wider adoption and aggressive uptake in the consumer segment and large infrastructure roll we will be able to easily sustain the projected industry growth rate of 20 percent-plus,” Khemka said.

“For the whole Malaysia market overall, as long as new businesses are opening up, there will always be a demand for security products. With 5G rolling in soon in Malaysia, we might see an increase in higher specs of security products overall in the Malaysian market. But we still need a younger generation of users to be able to absorb all the new tech gadgets as they are the new market which is most likely to make use of what latest security products we have,” Foo said. n