Video surveillance distributors spy increased competition

Dec. 13, 2012
"It isn’t easy being a distributor of video surveillance equipment," contends an IMS Research analyst.

New market reports from IMS Research comparing the EMEA and Americas distribution markets for video surveillance equipment forecast that both of these markets will grow at an average annual rate of more than 10 percent up until 2016.

Much of the newer competition in the market is coming from IT distributors, find the reports. The firm's analysis indicates that the video surveillance market has been gradually migrating from analog equipment to network equipment; and that IT distributors have therefore started to recognize video surveillance equipment as IT devices and a potential new revenue stream.

Related story:Security systems integrators unsure of IT distributors?

Still, "it isn’t easy being a distributor of video surveillance equipment," notes IMS research analyst Jon Cropley, author of the reports. "They usually finance the supply chain, bear the commercial risk of stock being unsold, and...face increasing competition. Still, at least their market is growing quickly."

The analysis contends that security products distributors reflect the level of their involvement in the market with the pricse they charge. This price is typically a fixed percentage of the equipment selling price and is known as the “distributor margin,” notes the report, which postulates that IT distributors are generally used to operating at lower margins than security distributors -- although security distributors claim that IT distributors offer fewer functions. This is placing average margins for distribution of video surveillance equipment under pressure.

Cropley adds, “It is generally recognized that distributors are responsible for transporting video surveillance equipment from manufacturers to installers and systems integrators. They are less well known for other functions that they sometimes perform like advertising and promoting offers and product announcements, on-going technical support, and operating physical locations where products can be viewed and purchased.”

See also:Top 10 installation challenges for IP video surveillance

IT distributors have already gained a firm foothold in the video surveillance supply chain, concludes the study. It is estimated that they accounted for almost 15 percent of the distribution market in EMEA in 2011 and an even higher percentage in the Americas.

What is more, says IMS, is that they are not alone. "IT value added resellers and broadline electrical distributors are getting in on the action too," says Cropley. "This, combined with the fact that some systems integrators try to perform the role of distributor themselves, means that competition for distribution of video surveillance equipment is truly intense."

More information about the IMS Research reports, The EMEA Distribution Market for Video Surveillance Equipment and The Americas Distribution Market for Video Surveillance Equipmentcan be found here.

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