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IHS Research Note: ‘Middle East and Africa set for strong growth opportunities in access control’

In the company’s latest Research Note, Blake Kozak (senior analyst for security and building technologies at IHS) highlights the potential growth opportunity for electronic physical access control equipment in the Middle East and African regions.

The EMEA region continued to make strides toward recovery in 2013 and is expected to see moderate growth from 2014 through 2015 for traditional electronic access control.

For traditional access control, IHS has estimated growth of about 3.1% in 2014. When including electronic locks (mechatronic, digital cylinder and electromechanical), IHS estimates a growth of about 7.4% in 2014.

According to IHS’ 2014 report on access control, the Middle East and African regions are forecast to be worth about $180 million in 2014, which combine to have a CAGR of about 15% from 2013 through 2018.

Cutting-edge technology is sought after

IHS found that many countries across the Middle East are searching for and installing the most cutting-edge technology available.

To encourage Best of Breed adoption, many countries in the Middle East have programmes in place to reduce the amount of counterfeit product entering the country (for example Saudi Arabia with the Intertek program). IHS expects this program is helping to keep margins higher than in other parts of the region.

Detail of a typical mechanical combination lock

Detail of a typical mechanical combination lock

For Africa, many international banks and regional banks have been investing in expansion across the African continent. When banks expand and/or new banks are created, this presents a growth opportunity for electronic access control.

In the past, South Africa represented the most opportunity for access control adoption but this may be changing soon. In April 2014, Nigeria’s official statistics agency released rebased GDP data – the first such revision since 1990 – providing a more accurate assessment of the economy. The broad revision puts Nigeria ahead of South Africa with a GDP measure for 2013 of US$509 billion (89% higher than the corresponding figure from the now outdated series).

Additionally, infrastructure such as airports, seaports, education and critical sites (including oil and gas and energy) are all experiencing very strong growth. IHS expects a significant impact on the access control industry in the short to medium term.

Rate of movement towards IP

Lastly, IHS has assumed the consumption of IT equipment suggests the rate of movement towards IP and other more advanced security technologies.

According to IHS’ Global Insight, the Middle East and Eastern Europe/CIS countries were expected to both have a CAGR of about 6.5% from 2013 through 2018.

Overall, the Middle East and African regions are expected to be great markets for growth over the next 2-3 years. Wireless locks, IP-enabled devices and iris recognition readers will be at the forefront of product requests.

Training and educating not only integrators, installers and distributors but also end users is going to be critical for success.

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IHS Research Note: The Year Ahead for Access Control

In the latest Research Note produced by market analyst IHS, Blake Kozak – senior analyst for security and building technologies – summarises the year head for electronic access control.

The electronic access control sector saw many changes in 2013, and the next 12 months should be no different.

Indeed, the access control industry could begin to see rapid changes in the short to medium term. In an historically slow moving market when compared with video surveillance,) the access control market has seen many new entrants, such as Axis, as well as new end user demand from the residential space and continued adoption of newer technologies such as wireless electronic locks.

IHS expects that the market size for electronic access control will top $3.5 billion in 2014, driven by returning growth in the Americas market as well as emerging regions such as the Middle East and Africa.

Detail of a typical mechanical combination lock

Detail of a typical mechanical combination lock

For hardware, much of the growth will be driven by electronic locks which can either be offline-standalone, data on card or wireless-online.

Wireless continues to see strong growth as end users begin to trust and understand the technology. Additionally, IT departments are more involved than in the past and will likely continue to be heavily involved. In some cases, they may even begin to manage and dictate access control installations.

Open standards: beginning to take shape

IHS also expects that open standards will begin to take shape for the access control industry in 2014, although widespread adoption may take a few more years.

Prior to investing in R&D, many suppliers are waiting to see how the rest of the industry will adopt and implement standards.

Other trends such as NFC continue to garner interest. However, adoption hasn’t been as extensive as originally expected. According to IHS, NFC has not yet been installed for access control purposes and some manufacturers are beginning to look toward other options such as Bluetooth Low Energy (BLE).

Lastly, IP devices are seeing more uptake and are being pushed closer to the edge, allowing for more remote management and reducing installation costs.

Overall, this is an exciting time for the access control industry. With continued interest in big data, many commentators are wondering how access control can be leveraged to harness some of this information which is leading to more seamless integrations.

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IHS Research Note: ‘PSIM software continues to see strong growth despite increased competition’

In the latest Research Note from IHS, senior analyst Paul Bremner discusses the Physical Security Information Management (PSIM) software market.

A new report from IHS reveals that the world market for PSIM (Physical Security Information Management) software is estimated to have been worth $160.3 million in 2013.

While being a small segment of the larger security and fire market, the PSIM market continues to enjoy 20% and higher growth rates, and will do so until at least 2018. This growth is being driven in part by end users deploying PSIM software platforms as a tool to enforce compliance of both internal policies and external legislative requirements.

Despite these growth rates, confusion surrounding what constitutes PSIM software remains. Competing products such as command and control platforms, advanced video management software and security integration platforms have muddied the water as their capabilities and functionality have expanded into what was once considered PSIM’s territory of situational awareness and situation management.

Connectivity and integration aspect eroded

In previous years, one of the key selling points for PSIM platforms was their ability to connect and integrate multiple disparate systems, both security and non-security. It is this connectivity and integration aspect to PSIM which has been eroded over the past two years, with many other products being able to offer various integrations to expand their software’s reach.

PSIM software has thus had to shift its USP away from this integration aspect. Customers that are buying PSIM now are really coming with a top-down view, with a need to improve their security operations in a cost-effective, operationally efficient way while improving the overall security of the environment in which they are working. This is where the PSIM value proposition lies.

That said, the market has grown in line with expectations from the previous edition of the report, with the market being $7.5 million larger in 2013 than previously expected.

However, longer-term growth will be muted compared with previous expectations. The market’s long-term growth is limited by competing products successfully being deployed in the mid-tier, a market that has historically been out of reach for the high-end PSIM software platforms due to their high price tag.

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IHS Research Note: ‘High expectations for Next Generation HD CCTV technology’

The latest Research Note from IHS has been authored by David Green (the company’s senior analyst in video surveillance and security services), who provides some valuable insight on the market for HD CCTV equipment.

Growing slice of the $13 billion video surveillance equipment market or a small-time niche which can never keep up with the double-digit growth rates for network surveillance?

It’s a very different outlook for HD CCTV technology, depending on who you speak to.

There are those who see the growing revenues and a viable alternative to HD IP cameras for many applications. There are those who want to remain technology neutral by introducing the ‘third string to their bow’ and there are those who simply don’t believe in the technology at all.

Even accounting for the inevitable bias towards their own product line, there seems to be genuine uncertainty among manufacturers at the future direction for HD, low-latency video provision.

Starting with the ‘basic’ form of HD-SDI technology drafted in from the broadcast world, HD CCTV offered live view HD images with the chance to keep legacy coaxial cabling. Relying on demand from markets with high volumes of installed analogue systems hasn’t been a guarantee of success though.

There are high expectations for Next Generation HD CCTV solutions

There are high expectations for Next Generation HD CCTV solutions

For example, over four million analogue cameras are sold each year in the USA to a market that is predominantly replacement rather than new installation, yet penetration rates for HD CCTV are low (especially when compared to the likes of China).

So what other factors are in play? Cost and cable reach are the common discussion points that seem to put many off. While there’s clearly a demand out there for this third solution, it’s fair to say that sales cannot hit that next level of growth until costs reduce and 100 metre transmission limits are improved.

Second Generation HD CCTV solutions

However, there is cause for optimism with the launch of ‘Second Generation’ HD CCTV products starting to kick in.

For example, Dahua has already launched its CVI technology, the HDcctv Alliance has released the 2.0 standard and it’s more than just rumour that other equipment and semiconductor manufacturers have their own proprietary solutions in the latter stages of development.

In all cases, the claims of 300-1,000 metre transmission ranges and prices closer to analogue than network equipment should break down some of the barriers to adoption.

In particular, this will sustain the growth in revenue for South East Asia but could yet open doors to other developing markets such as Latin America.

Whether or not HD CCTV can crack more developed markets such as the USA remains to be seen, but Second Generation HD CCTV solutions sold to developing markets definitely pushes the global picture towards a growing slice of the market rather than the small-time niche.

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IHS Research Note: ‘Big change forecast for enterprise data storage used in video surveillance market’

IHS Technology’s market analyst Sam Grinter comments on recent findings from a new report on the market for enterprise and IP storage used for video surveillance.

Changes to legislation are significantly impacting the market for enterprise data storage in video surveillance on the global stage.

For example, in Germany the maximum retention time for video surveillance has been increased from 24 hours to 48 hours, effectively doubling the maximum capacity requirement of video surveillance data storage systems.

In the Andhra Pradesh state of India, all establishments where a gathering of 100 or more people is expected are required to provide video surveillance protection according to the Public Safety Enforcement Act passed in 2013.

Both examples of legislation are expected to increase the demand for video surveillance data storage.

Greater value placed on video surveillance data

According to leading vendors in the market, end users are placing greater value on their video surveillance data. This is due to video surveillance increasingly being used for business intelligence applications, as well as evidence for defence in law suits.

Changes to legislation are significantly impacting the market for enterprise data storage in video surveillance

Changes to legislation are significantly impacting the market for enterprise data storage in video surveillance

In both cases, investment in storing video surveillance data for extended periods of time – or at a higher quality – affords the end user increased return on investment.

Network attached storage (NAS) is forecast to increasingly compete with storage area network (SAN) solutions. Technological development of NAS is making it more comparable (in terms of performance) with SAN.

Typically, NAS is also more cost-effective to install and maintain compared to SAN. With price being a major factor in the buying decisions made around video surveillance, IHS forecasts strong growth for NAS solutions over the next three years.

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IHS Research Note: Impact of Access Control on Mechanical Locking Devices

Adi Pavlovic (analyst for access control, fire and security at IHS) comments on how the adoption of access control systems is impacting mechanical and peripheral locking devices.

The increased popularity of electronic access control systems is contributing to the market growth of electric strikes and electromagnetic locks, each of which is forecast to outperform mechanical locks through 2017.

From 2012 to 2017, IHS expects global revenues for electromagnetic locks and electric strikes will grow at compound annual growth rates (CAGRs) of 6.9% and 7.8% respectively. In comparison, mechanical locks are projected to experience a weaker CAGR of 4.5% in the same time frame.

Access control systems are becoming increasingly popular because they provide a higher level of security while offering integration opportunities with time management and building automation systems. While the main barrier for growth of electronic access control is higher upfront cost, the long term benefits involve reduction in costs associated with re-keying mechanical cylinders.

Typical Mechanical Door Lock

Typical Mechanical Door Lock

Although the trend towards access control solutions is driving the uptake of electric locking devices, they are not completely replacing mechanical locks.

IHS expects most applications still require a mechanical lock override in the case of a power failure or system error. Thus, access control is only limiting the growth of mechanical solutions in the medium-term, not necessarily replacing them.

Electric lock uptake

In terms of electric lock uptake, electromagnetic locks and electric strikes are the most common electric locking devices used in accordance with access control systems.

Traditionally, electromagnetic locks have been the standard solution. However, mature markets such as the United States and Western Europe have started adopting electric strikes at a stronger pace.

Electric strikes are assumed to be more secure, aesthetically-pleasing and more energy efficient than electromagnetic locks and are projected to have stronger growth from 2012 to 2017 in every region except Asia. This is due to the Chinese market’s preference for using electromagnetic locks over electric strikes.

Electromagnetic locks are easier to manufacture, more affordable and simpler to install making them ideal for more price-competitive markets such as China.

This trend towards electric locking solutions is not only impacting mechanical locks, but also exit devices as well. Globally, standard mechanical exit devices were estimated by IHS to account for 70.8% of all exit device revenues in 2012. This number is projected to decline to 69.8% by 2017 due to the increased adoption of electrified trim and electrified latch retraction exit devices.

Solutions that implement electric locking devices as a means of security will commonly install electric exit devices for egress in order to fulfil a complete access control system.

Growth and predicted revenues

Overall, the trend towards electric locking solutions is active on a global level. While growth for mechanical locks is expected to be somewhat limited due to this trend, the global mechanical locks market is still projected to have healthy growth in the medium-term.

In terms of revenue, when comparing the markets for exit devices, mechanical locks and electric locks (strikes and electromagnetic), IHS estimates that about 77% were mechanical in 2012.

By 2017, IHS expects the market for mechanical solutions to represent only 71%.

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Challenge of airport perimeter security highlighted by Christmas Day breaches

In his latest Research Note, Blake Kozak (senior analyst for access control, fire and security at IHS) comments on the recent perimeter security breaches at the Phoenix Sky Harbor Airport and Newark International Airport in the United States.

Protecting the perimeter of airports remains a difficult task across the US. On 25 December 2013, perimeter fence breaches occurred at two separate airports: Newark, New Jersey and Phoenix, Arizona.

In 2013, IHS estimated electronic perimeter security installations at airports in the US to be worth about $25 million for the hardware and software alone, or about 9% of the perimeter security market in the US.

The breach at Newark went unnoticed for 24 hours, when security footage was reviewed and revealed the trespass. At the time of the incident, Newark reportedly had CCTV and motion sensors in place which alarmed. However, there was a significant delay in response.

At Phoenix Sky Harbor Airport, no electronic perimeter security systems are in place, with the airport operator instead relying on layered physical barriers, cameras and airport employees.

Newark International Airport

Newark International Airport

As of 2013, no update has been made for any guidelines surrounding the requirement for perimeter security at airports. Most of the requirements are for physical fencing, not electronic security.

Additionally, the Transportation Security Administration (TSA) isn’t directly responsible for all security functions within an airport, and perimeter security is one of those areas.

Perimeter security is primarily the responsibility of airport operators. That said, the airport operators must adhere to certain security plans that meet Federal standards.

The budget for perimeter security falls with the airport operator and is not funded by the TSA. Two examples of regulations that must be abided by include 49 CFR Part 1542 and 14 CFR 139.

Overall, IHS expects that airport management teams will continue to invest in perimeter security and the investment will be for technologies such as fence sensors, radars and video analytics – all sensor types which will not be impacted by the noise and vibrations of aircraft.

Since many, airports have a limited budget, they must work to win grants in order to procure such a solution.

For their part, manufacturers should continue to work with airport operators in order to provide the most cost-effective solutions and evidence of a solution’s reliability and proven probability of detection in real-life Case Studies.

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Regional-specific technology set to increase the adoption of Safe Cities

The latest Research Note from Paul Bremner – market analyst for IHS Inc – examines new technology for Safe Cities.

FirstNet, a high-speed broadband data network dedicated to public safety using a nationwide spectrum licence, is expected to increase collaboration between emergency responders.

Revenues in the American market for electronic security equipment in city surveillance applications totalled around $200 million, with wireless infrastructure forming almost $80 million of that total and more than doubling to 2017.

Wireless infrastructures, wireless networks

In the past, wireless infrastructure has been plagued with both quality and capacity problems, both of which FirstNet is expected to resolve.

For their part, wireless networks have varied dramatically from city to city. The differences in quality and capacity of these networks can be very noticeable and affect how the city can use that network. A very low cost wireless network cannot stream video from, for example, an officer to a command centre or vice versa.

FirstNet will level the playing field for every city and, for a significant portion of them, will raise the bar, in turn offering possibilities that didn’t previously exist.

Regional-specific technology such as FirstNet is set to increase the adoption of Safe Cities

Regional-specific technology such as FirstNet is set to increase the adoption of Safe Cities

FirstNet will be built to public-safety grade standards using LTE wireless technology, and is a network that is defined, administered and only relevant to the US. However, if FirstNet proves a success in providing emergency service providers with the first nationwide, high-speed network dedicated to public safety, this will pave the way for other countries to follow a similar path.

A key feature of FirstNet is the integration of land mobile radio (LMR) networks alongside the LTE voice capabilities because police, firefighters and emergency service personnel all rely on LMR networks for their mission critical voice applications. For FirstNet to be a success this integration was crucial.

Safe Cities: Understanding the Market Opportunity

The IHS report entitled ‘Safe Cities: Understanding the Market Opportunity – World – 2013 Edition’ is a first edition report providing qualitative and quantitative analysis to identify where the market opportunities are for Safe City projects.

The report explores the technologies and business models enabling Safe City projects, regional market drivers and what the competitive landscape looks like.

Quantitatively, the report includes the IHS Safe City Index, incorporating IHS Global Insight and IHS Jane’s data to measure the potential of different countries across the globe.

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Video surveillance: IHS predicts the trends for 2014

Market analyst IHS has issued its fifth annual White Paper on the key trends for the video surveillance industry. Niall Jenkins (research manager, video surveillance and security services at IHS) states that 2014 is all set to be another exciting year for the industry with big data, thermal cameras, embedded audio capabilities and the rise of the cloud in China just a few of the trends to watch out for during the next 12 months.

1. Video Surveillance: The Star Markets for 2014

IHS has been researching the video surveillance equipment market for more than ten years. During this time, the market has grown quickly, most years at a double digit rate.

The year 2014 will be no exception. IHS forecasts that the global market will grow by more than 12%. Within the global market, IHS has identified fixed-dome and 180/360 degree network cameras as the fastest growing product segments, and the city surveillance and utilities/energy sectors as the vertical markets to watch.

2014 is all set to be another exciting year for the CCTV sector

2014 is all set to be another exciting year for the CCTV sector

2. Big Data: Crowd Sourcing Video Surveillance and Social Media Analytics

The prevalence of smart phones with cameras and Internet connectivity in tandem with social media apps such as Vine and Instagram has led to the first ‘crowd sourced’ data collection for an investigation in 2013 (following the Boston Marathon bombings).

Now that this trend has begun, IHS predicts it’s likely that police forces will increasingly request – and need to manage – crowd-sourced video surveillance data. While this will allow law enforcement agencies to react more quickly, especially with the use of social media monitoring, it will also create data analysis and manipulation challenges.

Meeting these challenges will provide systems integrators and software vendors with a new opportunity to create solutions that improve police incident responses in 2014 and beyond.

3. Cloud-Based Video Surveillance Opens Markets in China

In China, the concept of the cloud is becoming increasingly popular, particularly so as the telecom infrastructure matures. As network bandwidth improves and network product pricing declines, cloud-based video surveillance solutions are drawing the attention of more suppliers.

While a cloud-based solution isn’t a compulsory choice, it does represent a great opportunity to leverage the massive demand for civil video surveillance.

With more attention and an increasing customer base, IHS predicts that cloud-based video surveillance solutions will be defined by the value created in the applications they offer to customers. With more than one billion potential users in China, getting the right mix of product and security features will be a successful combination.

4. Thermal Cameras Hit the Commercial Market

IHS forecasts that the video surveillance product market that will see the largest average selling price (ASP) decline during the next few years will be the un-cooled thermal camera market.

While the number of un-cooled thermal camera units shipped to the commercial security industry suggests that the market has not yet been commoditised, increased competition, new products and new end user markets will mean 2014 is a breakthrough year for the technology.

IHS predicts it is likely that police forces will increasingly request, and need to manage, crowd sourced video surveillance data

IHS predicts it is likely that police forces will increasingly request, and need to manage, crowd sourced video surveillance data

5. Panoramic Cameras: Providing the Full Picture

The big video surveillance camera category winner in 2014 will be 180/360 degree panoramic network cameras, with global unit shipments forecast to increase by more than 60% year-on-year.

In particular, the cameras are predicted to gain market share in verticals such as retail, airports and casinos where monitoring wide indoor areas is a key requirement of the video surveillance system.

6. Power over Ethernet: Watt’s the Story?

As the transition towards network video surveillance continues, increasing focus is being placed on the supporting network infrastructure. A crucial element of this is power.

Recent developments in Power over Ethernet (POE) standards and products make the technology a much more viable option for security managers. Looking forward, IHS expects that security camera manufacturers will expand and develop their portfolios of low-powered cameras to conform to the POE+ standard.

Technologies that overcome the distance limitations of Ethernet and POE also will find general market acceptance.

7. Is it Time for a Different View on Live Video and Mobile Access?

Following the events of the school shooting in Sandy Hook 12 months ago, there has been renewed focus on the idea of facility security managers securely sharing live video footage with law enforcement in the event of an incident.

The technology needed to provide this already exists, yet issues over ongoing cost – and, more importantly, who pays for the system – have meant that market penetration has been limited.

However, with costs dropping and a refocus on protection of assets of both the physical and human kind in the post-Sandy Hook era, 2014 could be the year where live streaming of video surveillance to law enforcement becomes the norm.

In 2014, the market for video surveillance devices with chargeable VCA will remain a viable market in applications where the end user needs advanced reliable analytics

In 2014, the market for video surveillance devices with chargeable VCA will remain a viable market in applications where the end user needs advanced reliable analytics

8. Video Analytics Market Reaches a Fork in the Road

For some time now, video surveillance device vendors have been embedding low-end video analytics applications in their devices and offering them as ‘free’ features. A question has therefore been raised: ‘Will there continue to be a market for video analytics, or will all applications simply be offered for free?’

As the market reaches this fork in the road, it’s clear that vendors can no longer charge for basic algorithms. That said, in 2014 the market for video surveillance devices with chargeable VCA will remain a viable market in applications where the end user needs advanced reliable analytics.

9. Security Cameras to Make Some Noise in 2014

More than 70% of network cameras shipped globally in 2013 had either unidirectional or multidirectional audio capability. However, the consensus from security systems integrators is that these capabilities are rarely used.

Nonetheless, with increasing awareness of embedded audio analytics and even sound source localisation, market penetration could be about to rise.

With much of the technology already available and the constant need to differentiate products and increase system efficiency, IHS predicts that the market will see greater emphasis on the audio capabilities of video surveillance systems in 2014.

10. Video Surveillance Vendors to Enter New Markets

Contrary to popular belief, the physical security market is not consolidating, at least not in the near future. However, video surveillance vendors are beginning to look at new markets as they invest the profits made from years of fast market growth.

Following the announcements of new products from companies like Milestone Systems and Axis Communications and new services from Hikvision and Dahua during 2013, IHS expects this trend to continue into 2014 with more new product and service announcements from network focused security companies as they seek to add new revenue streams to their portfolio.

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Critical infrastructure helps stabilise perimeter security sector

Blake Kozak – the senior analyst for access control, fire and security at IHS – comments on the high growth and adoption of perimeter security equipment in critical infrastructure applications.

Although most critical infrastructure sites are target applications for electronic perimeter security, electrical utilities and oil refineries are projected to have the most growth opportunity.

The global market size for electronic perimeter security sensors and video in electrical utilities and oil refineries is forecast to top $160 million in 2014.

Electrical utilities have experienced strong growth despite the economic slowdown in 2011 and 2012. Part of this growth is resulting from the trend to use remote video and networked sensors in order to configure and maintain sensors from remote locations.

Although most critical infrastructure sites are target applications for electronic perimeter security, electrical utilities and oil refineries are projected to have the most growth opportunity

Although most critical infrastructure sites are target applications for electronic perimeter security, electrical utilities and oil refineries are projected to have the most growth opportunity

For example, there has been demand to integrate video with detection sensors and network these back to a central monitoring station. This has helped increase demand for applications and locations where sensors couldn’t be monitored in the past.

Another driver is the updates to the NERC CIP standards which are mostly concerned with cyber security and classifying/identifying critical assets, which could lead to a change in the security requirements for transmission substations.

For example, NERC CIP Version 4 states any substation that maintains transmission lines at a capacity of 500 kV or higher are now considered a critical asset.

Solar power plants and oil refineries

Solar power plants, oil refineries and LNG plants are also expected to be strong markets to sell perimeter security equipment.

The capacity of solar power is expected to increase dramatically, especially in the Americas. This will increase the demand for remote sensors as well as sensors which can cover long distances cost effectively (namely fibre optic cables).

As of October 2013, the US was on pace to top Russia as the world’s largest producer of oil and natural gas. This presents a good opportunities for thermal imaging, ground-based radar, VCA and fence sensors.

Moreover, from 2013 through 2017, globally over 200 oil refineries are planned for construction.

Overall, critical infrastructure sites are projected to be the fastest growing end user applications for electronic perimeter security because of the strong construction growth, regulations and more advanced security sensors and solutions which allow for proper surveillance, maintenance and configuration of the sensors.

While these factors impact the short term, the future outlook will reside with new technology developments and changes to end user demand.

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