Politics to be a risk ractor in 2012

Whilst IMS Research forecasts that the outlook for the video surveillance market will remain bright in 2012, there are a number of risk factors that could severely impede growth.

By Gary Wong, Senior Analyst, IMS Research (IHS Inc.) April 17, 2012

Whilst IMS Research, recently acquired by IHS Inc.,forecasts that the outlook for the video surveillance market will remain bright in 2012, there are a number of risk factors that could severely impede growth.

The two mains uncertainties floating around the ether are the unknown recovery of the HDD manufacturing base in Thailand and the potential collapse of the Eurozone.

HDDLow/Medium risk

There is currently little visibility regarding when HDD production will restart. From recent discussions with industry players, 4-6 months appears to be the expected time frame.

What impact could this lull in production have on the video surveillance market? The response is again mixed.

Short term, most vendors believe that the impact will be relatively manageable at the high/enterprise level. Vendors who do produce high volume, low margin products, are likely to be more impacted. Unable to absorb much of the HDD price increase, they will likely pass on the inflated prices to their end-users.

EurozoneMedium risk

The other uncertainty is the global economy. In the last few months the eurozone crisis has threatened to derail the slow and fragile economic recovery. With Greece and Italy teetering on the brink of collapse this has generated an air of uncertainty within all industries. Should the Eurozone crisis deepen in the next 12 months, IMS Research still forecasts that the global video surveillance market will continue to experience positive growth given the sustained strength of demand in the BRIC markets.

Whilst these two factors have grabbed the attentions of most, there is a third fact that could potentially be more significant in 2012:

PoliticsLow/High risk

2012 will see a raft of presidential elections, examples include the US, Mexico, France, Russia and Taiwan. In addition to potential presidential changes, there will also be major political shifts in countries such as China and Italy.
What impact will this have on the video surveillance market? The answer, unfortunately, is unknown.

Direct and indirect government/public investment can significantly influence the video surveillance equipment market. In 2010, IMS Research estimated that direct government spend on video surveillance equipment was around 15% of the total global spend. The indirect influence of government investment, for example infrastructure development, is significantly larger.

In a year where politicians are engaging in point scoring exercises, with an eye on the global economy, the level of investment available for security (and video surveillance) could vary significantly depending on political persuasions.

The double edged sword of political uncertainty is likely to overshadow the Eurozone and Thailand as the greatest risk factor in 2012.