Smart Security – Friend or Foe?

31 Jan 2021
Scott Yeh, Chief Science Officer
Smart Security – Friend or Foe?

As China witnesses further urbanisation and the proliferation of Smart City development, one important factor to consider is Smart Security. Here’s what Smart Security means for investors looking to build their portfolio in the Smart City space.

What is Smart Security?

Smart Security is an essential part of urban safety. This safety refers to the extent to which a city’s inhabitants are able to live, work and participate in urban life without fear of physical harm or intimidation [1]. In China, Smart Security is one of four segments of urban safety, which also includes accidental hazards, natural hazards and public health. Smart Security refers to the advanced security systems, including IP (internet protocol) surveillance cameras, smart intruder alarms, access control systems and others that support the monitoring and surveillance of, as well as protection against, illegal activities. The global Smart Security market is estimated to experience significant growth due to rising demand for Smart Security solutions from Smart Cities, smart homes, commercial buildings and cloud-based security services. The global Smart Security market size has the potential to grow by USD 21 billion with a CAGR of over 16% from 2020 to 2024 [2]. In China, increasing investments by the government for Smart City projects will attract new players to the market. According to a report by IDC, by 2020, USD 27 billion is expected to be invested in Smart Cities in China. Among these investments, Smart Grid, Fixed Video Camera and Connected Back Office are the largest investment sectors, accounting for nearly 40% of the total investment [3].

What does a Smart Security future look like?

In the future, innovative technologies will create smarter security environments where people can enjoy an improved quality of life. Here are some of the trends we observed:

  • Smart Cameras: Recently, Smart Security cameras have been quietly replacing traditional CCTV systems. Smart cameras continue to get smarter. The newest smart cameras can stream and record high-resolution video data and connect wirelessly to backend systems. Some smart cameras are now completely wireless, running on battery power without a connection to main electricity. The use of AI-powered advanced data analysis enables smart cameras to be as much a proactive device as it is a preventative one. AI-powered smart cameras can trigger real-time motion alerts, which can help keep people safe 24/7.
  • Video analytical software: Based on another IDC report [4], smart camera systems and analytical software are major drivers for the growth of the video surveillance camera market. It is estimated that the global video surveillance camera market will grow to USD 44 billion by 2025, up from USD 24 billion in 2019, with a five-year CAGR of nearly 13%. One main reason for this growth: video analytical software. It enables smart cameras to be utilised in a variety of roles, not just simple surveillance. Now, most people are interested in thermal imaging. With the COVID-19 pandemic, health and safety is the number one priority for all organisations as people return to work and public spaces. Hence, smart cameras equipped with thermal-imaging technology have become a necessary screening function for a Smart Security system.
  • Citizen-controlled security strategy: Today’s always-on connected urban security systems seem to force a choice between convenience, privacy and security. A citizen-controlled Smart Security strategy offers a vision in which all three can be achieved together. Although a significant challenge still lies in managing diverse sets of data and finding ways to allow citizens to exercise effective control over their personal data [5], this new vision of Smart Security for the digital era will drive Smart Security market growth.
What is China’s policy direction for Smart Security development?

In China, increasing investments by the government for public safety projects are the major market drivers for the development of the Smart Security industry. These public safety projects — including Safe City and Xueliang Project, which promote public video surveillance networks — have advanced rapidly across China. IDC projected that China’s public surveillance camera network will keep growing to see a total of 2.8 billion units installed nationwide by 2022 [6] as more Smart Cities develop across China. In the future, with the gradual completion of Xueliang Project, growth in public surveillance camera spend in the government sector will slow down. However, the government will remain the largest video surveillance sector in China. In China, public video surveillance is playing an increasingly important role in improving public security levels and preventing and cracking down on crimes. On top of public safety, the public surveillance camera network has also enhanced traffic management, emergency command, disaster prevention and early warning and emergency repair of city facilities. With the development of 5G and AI technology, the application of video surveillance has gradually expanded to more fields, such as passenger flow analysis, environmental pollution monitoring and insurance loss verification. In the future, the application of video surveillance will continue to expand further.

What are the key drivers of the Smart Security Market?

The progress of urbanisation, product development and technological advancements will drive the growth of the Smart Security market in the future.

  • More Smart City projects, more Smart Security needed: The growing number of Smart Cities is the primary factor that will drive the need for Smart Security across the globe. Smart Security is ideal for effective 24/7 monitoring of cities and critical public infrastructure. The need to enhance safety levels and mitigate criminal activities and terrorist attacks will drive market growth. Smart Security also provides technology-assisted tools to curb criminal activities, such as intrusion, murder, robbery and theft. This can be observed in developed regions in China. Developed economic activities result in a larger floating population and more transport, logistics and financial transactions. This leads to further growth of Smart Security services in public security management, traffic management, logistics monitoring, shopping mall monitoring, financial organisation security and more.
  • Availability of advanced technologies: Recently, advanced technology and innovative mechanisms have been increasingly used for Smart Security solutions. Considering the increasing role of technological innovations for Smart Security, it is essential to know some important modern technologies for Smart Security applications. Here are some of the latest tech directions:
  1. Edge computing Previously, users have preferred the public cloud. With the cloud, it’s very difficult for cameras to process data because of latency issues. To mitigate this, now more and more data are processed at the edge rather than in the cloud. For Smart Security solutions, edge computing is ideal to carry out real-time pattern recognition. Analysis of large volumes of data needs to happen quickly in order to be timely and applicable to dynamic and complex urban situations. Edge computing provides an alternative way to analyze endless camera data that has been recorded 24/7. This can lead to safer communities, more effective management and smarter infrastructure.
  2. AI technologies, especially edge AI AI technologies are the future of every industry, especially data and analytics. As AI and 4K rise in adoption on smart video cameras, these higher video resolutions are driving the demand for more data to be stored and analyzed on the edge. AI-enabled applications and capabilities, such as pattern recognition and face recognition, depend on high-definition resolutions. Now, Smart Security is about utilising AI and edge computing to deliver an always-on connection that can help keep cities safe 24/7.
  3. Millimeter Wave Technology Recently, the combination of millimeter wave and video is being gradually applied in the Smart Security sector, such as highway management and traffic signal control. One main advantage of millimeter wave technology is the ability to transmit large amounts of data. Thus, millimeter waves are suitable for the transmission of digital data, cellular communications and radar application.
Which area of Smart Security should investors pay more attention to?

Smart Security is advancing rapidly across China. Investors should be looking at the following two market segments with profit potential:

1. China’s video surveillance market: It is huge. It reached USD 11 billion in 2018. The market is expected to reach USD 20 billion in 2023, with a CAGR of 14%. China’s video surveillance market is relatively concentrated. Hikvision, Dahua and Uniview are the top three vendors which have a combined market share of 56%. Cameras have the largest segment of video surveillance spend, accounting for 64% of total spend. The rest of the market is made up of different products, including recorders, storage solutions and video application software . Based on a report by IDC, although the penetration rate of AI cameras is low at present, accounting for only 2% of total spend in the market, it has a much higher growth rate, with a CAGR of 42%. AI cameras will continue to see strong growth [7].

2. Intelligent Video Analytics: As mentioned above, the need to mitigate criminal activities and the risk of terrorist attacks will drive the development of the Smart Security market and also influence trends in the market. Smart Security offers authorised monitoring of activities of groups or individuals in various commercial and residential environments. However, monitoring is not enough, it has become essential to identify the risk of crimes before they actually take place. Firms that develop intelligent video analytics are poised to capture these opportunities. Supermind is an excellent case. In the future, Smart Security system will be installed in public places, including urban streets, bus stations, airports, seaports, railway stations, hypermarkets, shopping malls, banks, hospitals, hotels and so on. Various end-user sectors, such as government, transportation, education, finance, healthcare, retail and residential, will deploy Smart Security applications and provide citizens with a safer environment, improving their quality of life.