In 2018, the global Access Control product market realized a growth of 8% reaching sales of $7.45Bn. This is an average growth across the world and we believe that some western countries have well exceeded this figure.

We forecast that it will grow by a CAGR of 7.5% / 8% to 2023 making sales of approximately $11Bn in that year. Demand will be driven by growth in IP Networking products, ACaaS, Biometric Readers and Identity Management. Integration with other Physical security systems and Building Automation Systems (BAS) is now an established part of the business and this is generating further growth.

Access Control is still a much smaller business than Video Surveillance and today is less price sensitive, but consolidation is creating a more competitive environment and with it comes the confidence to move forward and take up the challenge of embracing new technologies that will deliver better performing products necessary to continue cranking up demand.

However It has now come to a crossroads. Will Access Control now take the bold step of becoming “open” or just continue to ignore the issue? There have been some intriguing acquisitions during the last 2 years, such as HID Global’s acquisition of Mercury and together with the arrival of major Chinese manufacturers into the western access control market this could have a significant bearing on the move to open standards further changing the competitive landscape.

We are bullish about this business as it moves further into IP Networking and strengthens its relationship with biometrics and identity management. These trends are significant drivers that should maintain the growth momentum that has built up over the last 3 years but it will ultimately require open standards to be adopted.

If manufactures continue to be insular and proprietary it will not be good news for continued growth. Traditional proprietary systems mean limited options for the customer and restricted possibilities for integration and scalability.

Winning new business in this environment will be more competitive and will require continual product development, which is absolutely essential in order to maintain growth. Both HIKvision and Dahua, 2 leading Chinese Video suppliers, have recently entered the access control market in North America and Europe and we expect that they will cause disturbance through reducing profit margins. It is inevitable that the market will gradually become more open and competitive and the heritage real estate business will loose much of its protection. New opportunities will open up through the Internet of Things in Buildings, but this will require strategic alliances with companies within the Building Automation business.

It has taken Access Controls companies some 16 years to take full advantage of the transition to TCP/IP based systems. This is despite the fact that the first IP reader was introduced in 1999 by Isonas Security Systems Inc. HID Global, one of the major manufacturers in the access control reader and card business today followed the move into network-based security systems 8 years later, with the introduction of the Edge IP reader family. Whilst IP Network systems are mainstream today there is still major growth opportunities to retrofit existing non IP systems.

In fact, a common, standardized digital environment has the potential to create countless opportunities to integrate other systems such as intrusion detection, fire detection, and so on, into uniform manageable and user-friendly systems. There are a number of systems on the market that can deliver this but the vast majority are proprietary.

Access Control has gradually over the last 15 years moved from just controlling access through doors to identity management, HR enterprise and location services establishing where people are and giving permission to enter different parts of the building. More important information can be gleaned through the integration with Video Surveillance and other services in buildings. This can improve building and staff efficiencies bringing down operating costs and improving the ROI.

Strategic acquisitions are having a major impact on the competitive landscape of the Access Control business, particularly in the area of integrating with identity management. This has been an important factor in a number of major acquisitions of Access Control companies over the last few years. Since as early as 2011 some of the largest acquisitions were in this area, with HID Global, 3M and Hewlett Packard making acquisitions. This trend has continued over the last 6 years and we expect into the future.

In 2015 acquisitions of Access Control companies recorded the second highest share by volume in the physical security industry at 21.6% and value at 36% well exceeding its volume of 11.5% in 2014. In the last three years there have been some notable acquisitions including HID Global’s acquisition of Mercury Security, Gemalto acquired 3M’s identity management business and Gemalto being acquired by Thales.

The growth in Managed Access, or Access Control as a Service (ACaaS) has disappointed since it was first introduced some 10 years ago. However in the last 3 years it has moved ahead and its level of penetration is now larger than that in Video surveillance as a Service (VSaaS). The main reason for this is that it needs less bandwidth but also System Integrators today are much keener to promote their Access Control business and all that goes with it.

Investment capital continues to flow into the ACaaS business and companies such as Brivo acquired 3 years ago are showing sustained growth and more companies are offering this service, all confirming that there is good reason to believe demand will continue to rapidly grow. Future growth looks sound and we can expect that there will be further consolidation in the business over the next 5 years.