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The Rise of the New Integrator Business Model




The physical security segment is by far going through the most rapid technological change in history. With the combination of rising IP adoption, declining analog sales, emerging communication standards and the acceptance of security technologies as a service, the physical segment is transforming.

Security integration makes up about $8 billion of a highly fragmented ($250 billion at end-user level) industry. Over the last 2 years, the security integration market has been on a downturn, not for all integrators, but for many.

Today, for many companies, the service component is critical. Some commercial integrators are facing challenges between where their commercial monitoring business ends and their integration business begins. Rising standards for video & access will most likely show positive outcomes for the industry. However, this isn't necessarily the case for product margins. Companies aren't finding much of a choice but to increase prices for pre-installation design and consulting, post-installation services, or marketing access and video as a service over the Internet.

What does this mean for security integrators? We need to live with lower product margins and also develop and maintain those long-lasting relationships with customers who will pay on a recurring basis. The economy seems to be turning around in a more positive direction, but the hard truth is that service and licensing revenues and margins will determine the success of the industry over the next few years.

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