The total installed base of access control readers, panels, credentials and electronic locks is expected to reach 2.3 billion by 2016, up from 1.8 billion in 2012. About 95 percent of the installed base in 2016 was credentials, which is not surprising due to the requirement that each user have a card or pass. However, the growth of credentials is slowing, even though it makes up a majority of the market, because the turnover of credentials is much higher as employees move jobs and people accidentally misplace them.
Panels make up the smallest portion of hardware, with less than one percent share, but this category comprised 32 percent of revenue in 2016. Due to the capability for panels to cover a large number of readers, the quantity required is far lower than the number of readers, which are needed at each entry point. If credentials are removed from the installed base, panels make up 18.8 percent of all installed hardware and 38.3 percent of revenue.
The continued growth of electronic locks has started to affect the overall access control market. Previously, readers made up the second-largest segment of hardware, but in 2016 they have finally been overtaken by electronic locks. Electronic locks will make up 16.7 percent of the installed base, while readers will make up 16.6 percent. The growth of electronic locks, especially in the residential and utilities sector, will continue its upward trend. The installed base growth may start to slow, as the mechanical nature of the locks shorten their life cycles in comparison to readers.
Within the various vertical markets examined by IHS Markit, the commercial sector holds the largest portion of the installed base in 2016, with 495 million units or 21.6 percent share. The government sector is the second largest, with 17.1 percent of the total installed base in 2016. These two vertical markets have been the earliest adopters of access control products, since they share a growing need to secure their premises and properly audit entry and exit.
The residential sector is expected to rise the fastest from 2012 to 2016, growing at a compound annual growth rate of 7.4 percent, from a small base of 47.6 million units installed in 2012. There will be continued growth in this sector, as the use of electronic access control products has started to gain momentum. The sector does, however, suffer from more frequent replacements, since a greater portion of this market is electronic locks with mechanical moving parts that can wear out. Consequently, as replacement shipments rise, the installed base growth will begin to slow sooner than it has in other markets.
Annual revenue from electronic access control devices in the Asia-Pacific region (APAC) hit $1.2 billion in 2015 and is projected to grow by 6.6 percent in 2016, reaching $1.31 billion. Asia-Pacific continues to be the fastest growing market for the access control industry, but declining economic conditions and exchange rates hint that the market is changing.
The slowing Chinese economy and the collapse of the commodities industries (which helped improve gross domestic product growth in Australia, Indonesia and Malaysia over the past five years) has forced IHS Markit to lower expectations for the APAC region to a modest 7.3 percent compound annual growth rate (CAGR) from 2015 to 2020. Chinese economic problems are expected to improve in 2018 as the region responds to lower commodity prices. APAC regional revenue will start to increase starting from 2017.
Across APAC, there has been increasing use of IP-enabled panels, biometrics, electronic locks and mobile credentials. In fact, in 2016, IP-enabled panels represented about 28 percent of panels shipments, primarily because they are easy to install. Even though this region normally has cheap labour and installation costs, ease of installation is still a major selling point. With improving internet infrastructure, especially in commercial offices, the major barriers holding back the market for IP-enabled systems have been removed. Both IP-enabled panels and biometric readers are projected to have a CAGR exceeding 10 percent from 2015 to 2020.
Biometrics represented about 21 percent of reader shipments and have been embraced in both commercial and residential settings in India, China and other countries in East Asia, but Southeast Asia has lagged behind. The main barrier to more widespread adoption of biometrics in Southeast Asia was pricing.
Electronic locks are projected to be the fastest growing equipment type in the APAC region. Wireless locks once flourished in Australia’s mining industry, because of reduced infrastructure costs. However, since the mining industry began to contract, the wireless lock market in Australia has been declining. Overall, the development of wireless locks has led to mixed trends. The residential segment and the growth of the smart home should lead market growth for wireless electronic locks, as convenience and ease of installation may be bigger deciding factors than security. Uptake in China will only start when China Telecom, China Unicom and other companies start to invest heavily into the residential access control market and the smart home market.
For mobile credentials, APAC was the smallest region in 2016, representing about 16 percent of the global market. By 2020, however, APAC will grow to encompass 25 percent. One aspect of the Asia region that is positively impacting the potential for mobile credentials are young people with an affinity for all things mobile and who are excited to adopt new mobile-based technologies, so there is a high prevalence of smartphones with both near field communication (NFC) and Bluetooth technology. The Asia-Pacific region generally – and China specifically – will start to gain momentum in 2020 as the region catches up to Western nations.
The Indian access control market, including electronic locks, will be the fastest growing market in the Asia-Pacific region from 2015 to 2020, as the use of biometrics, smart cards and electronic locks finally starts flourishing there. The market is predicted to benefit from new residential, IT and manufacturing projects, and increased consumer demand for better technology.
The Australian economy is now slowing more than previously thought, especially in oil, gas and mining and other high-yield industries, so growth in the access control market is expected to remain less than 2.5 percent per annum until 2020. The use of cellular panels in Australia will also play a role in bringing web-based access control solutions to more remote regions of the country. Lastly, biometrics has played a lesser role in this market, as concerns over privacy have held the technology back; however, suppliers are reporting increasing demand at the enterprise level.
Blake Kozak is a Senior Research Analyst with IMS Research. Now part of IHS Electronics & Media, IMS Research is a leading supplier of market research and consultancy to the global electronics industry offering syndicated market studies, bespoke client research and consultancy services.