Surveillance Strategies

Software in the Middle of the New Physical Security Economy

In the middle of the physical security convergence industry are the open platform software providers making significant contributions toward the adoption of IP-based physical security solutions. These companies aren’t the largest in the industry, yet by providing innovative software features they meet the customer’s needs and unlock the innovation of the hardware manufacturers. Without these software features and integration services, customers would not likely adopt IP cameras over analog security video systems. This innovation is the fuel of the new physical security economy.


New Economy

The new economy is based upon software and service business models that contribute substantially to a company’s bottom line. The IT industry went through a very similar shift in the late 1990s, which drove hardware margins into the high single digits. This new economy is disrupting many of the analog or DVR hardware-based business models in both subtle and dramatic ways. The predictable signs of this have been both declining analog and DVR security video growth, and a steady increase in growth for the future of networked surveillance and open-platform software. Declining growth for the traditional security market has sparked consolidations in the analog security video camera industry. Consolidation is used to simulate growth and buy time for companies to reposition themselves for future changes in the business climate.


Integration Services

As a part of this new economy, the software providers enable integration services, which bind together many different systems, including surveillance, networking, servers, storage, access control and other building systems.  This ultimately results in a highly integrated and more advanced physical security solutions. This scenario is the reason why large companies like ADT will buy smaller software companies like Proximex. The Proximex acquisition propels ADT into a good position relative to the new physical security economy, and provides ADT and its channel partners additional integration services options.  These types of acquisitions by traditional analog companies will continue because of the difficulty in innovating and changing from within their existing business structures.


Licensing Models

At the center of the new physical security economy are the licensing models of software solutions. These models are tied to all aspects of the technologies used to facilitate convergence. From camera licensing tied to MAC addresses, to operating system and application registration requirements, licensing models are the fuel to the new economy. This is how we put a price on all of the value the software industry provides, and for the most part, this is a very flexible way to grow the industry. Today, software license prices range from $25 to $25,000 dollars per device (based on the type of device and the system integration itself), and generally represent a fraction of the acquisition cost of new solutions that are typically less than 15 percent of a new systems’ purchase price, and 50 percent of a system upgrade. However, a key shift in the new physical security economy will be ongoing software product maintenance fees, which can be as high as 20 percent per year.  


In the Middle

Open software providers sit between the surveillance camera equipment and everything else, literally in the middle of converged solutions. This vantage point is truly unique, leading the software providers to support many types of third-party solutions and many types of partners.  These new partnerships create new certifications of product integrations. For evidence of this trend, look at Milestone Certified Solutions and Axis Compatible Applications, which are setting the standard for the new physical security economy. Being in the middle also means they work closest with the end customers, because the software interfaces directly with the operators. Being in the middle is clearly a good place to be in today’s changing industry.   

Did you enjoy this article? Click here to subscribe to Security Magazine. 

Recent Articles by Keven Marier

You must login or register in order to post a comment.



Image Galleries

ASIS 2013 Product Preview

ASIS International 59th Annual Seminar and Exhibits, September 24-27 in Chicago, Illinois, will include an exhibit hall packed with innovative security solutions. Here are some of the products that will be shown at ASIS this year.


Virtualization and Data Center Security: What You Need to Know for 2014

Data centers are increasingly becoming the center of the enterprise, and data center and cyber security is following the same path for security departments. According to Justin Flynn, a consultant at the Burwood Group, the virtualization of data centers allows enterprises to scale more easily and faster, with a smaller footprint.

However, hosting enterprise data in the cloud can make intrusion detection more difficult – how can enterprise security leaders team up with other departments to keep aware of cyber risks and traffic, and physical and data compliance during the virtual transition? How can CISOs and CSOs discuss cyber threats with the C-Suite to get the resources they need? And how can the proper infrastructure test and verify possible malicious attacks? 

More Podcasts

Security Magazine

security 2015 january cover

2015 January

In the January 2015 issue of Security, learn how PTZ and fixed dome cameras do dual duty in video production and surveillance applications, improve security on college campuses, and how to better cope with harsh environments in surveillance. 

Table Of Contents Subscribe

Tougher Cybersecurity Legislation

On January 20, President Barack Obama called for tougher cybersecurity legislation in his 2015 State of the Union address. Which of the following points do you feel is most needed today?
View Results Poll Archive


CompTIA Security+ Certification Study Guide
CompTIA's Security+ certification is a globally-recognized, vendor neutral exam that has helped over 60,000 IT professionals reach further and higher in their careers. The current Security+ exam (SY0-201) focuses more on being able to deal with security issues rather than just identifying them.
More Products

Clear Seas Research

Clear Seas ResearchWith access to over one million professionals and more than 60 industry-specific publications,Clear Seas Research offers relevant insights from those who know your industry best. Let us customize a market research solution that exceeds your marketing goals.


Facebook 40px 2-12-13 Twitter logo 40px 2-12-13  YouTube  LinkedIn logo 40px 2-12-13Google+

Vertical Sector Focus: Critical Infrastructures

criticalhomepagethumbFrom terrorism to vandalism, it’s preparedness, response, training and partnerships. Learn about some of the critical security issues facing this sector.

Visit the Critical Infrastructure page to read more.