Los Angeles, CA (PRWEB) August 19, 2012
The Security Alarm Services industry provides the installation, maintenance and monitoring of alarm, fire and surveillance equipment. While the industry has benefited from an overall trend toward alarm and surveillance systems, the recession caused many clients to reduce security budgets. Consequently, in the five years to 2012, IBISWorld estimates that revenue will decline at an annualized rate of 0.8% to $16.7 billion. “The fall in demand for construction following the recession reduced the number of new security systems installed,” says IBISWorld industry analyst Andrew Krabeepetcharat. However, many companies have started to replace labor-intensive security measures, such as guards and patrols, with electronic security systems, which are often more cost-efficient. Government changes to fire and security codes have also boosted industry demand, increasing premiums on insurance policies and fueling consumers' concerns over a potential rise in the crime rate. The availability of low-cost monitored security systems for the residential market has also increased the household penetration rate. Still, the residential market is sensitive to changes in economic activity, and the recent fall in disposable income dampened demand for new and ongoing services.
In 2012, industry revenue is expected to increase 1.6% as the economy returns to recovery and businesses start to invest in security again. Despite this growth, profit will remain constricted. In 2012, IBISWorld estimates industry profit to be 5.0% of revenue, down from 6.0% in 2007. As a result, the number of industry firms has declined over the five years to 2012, largely due to major players acquiring competitors struggling in the poor operating environment. For example, Tyco's ADT Worldwide, the largest player in the industry, acquired Broadview Security in 2010. “In fact, says Krabeepetcharat, “the industry is characterized by a large number of small players, some of which are subcontractors for major players and provide installation and maintenance services.” Most industry enterprises are small businesses with nine or fewer employees. On the opposite end of the spectrum, the largest player occupies a significant portion of the market. Although the industry's largest player, Tyco, is expected to account for about one-fourth of industry revenue in 2012, the next largest player is a fraction of that size. This provides the Security Alarm Services industry with a low level of concentration. Industry concentration has increased during the past five years due to merger and acquisition activity.
In the next five years, firms will increasingly take advantage of new technologies such as biometrics, which involves face or fingerprint recognition, leading to a healthy increase in revenue. Small business growth and increased disposable income levels will also contribute to rising industry demand. Profitability will also improve as operators take advantage of the cost savings and restructuring implemented following the recession.
For more information, visit IBISWorld’s Security Alarm Services in the US industry report page.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld
Friend IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189
IBISWorld industry Report Key Topics
This industry comprises establishments that sell security systems, such as burglar and fire alarms and locking devices, and offer installation, repair or monitoring services of electronic security alarm systems.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.