Canon’s Axis Acquisition Could Herald a Year of Consolidation in Fragmented Surveillance Market

Canon has today announced a public offer to acquire Axis Communications, one of the world’s largest manufacturers of video surveillance equipment.

This is a massive development in the video surveillance equipment market. Until last year, Canon was a small player in this market (as the company’s product strategy and planning director effectively admitted in an interview with IFSEC Global last year).

However, back in August 2013 the Japanese giant’s CEO, Fujio Mitari, hinted at big plans ahead when he declared the company’s ambition to make security cameras an “important pillar” in its strategy and the market having “limitless possibilities for growth”.

Then in June 2014 Canon acquired the world’s largest supplier of video management software, Milestone Systems. Now the company, hitherto most famous of course for being a pioneer in the consumer camera market, is set to buy the world’s largest supplier of network cameras.

All of which shows just how serious Canon is about expanding its interests in the video surveillance equipment market.

Chinese rivals

IHS estimates that Axis Communications was the third largest supplier of video surveillance equipment in 2014 with more than 5% of a global market worth around £9.85bn.

Despite this, the company has faced intense competition, particularly from Chinese rivals, in recent years. The largest of these, Hikvision and Dahua, have both been gaining market share faster than Axis.

At the same time, the average selling price of a network camera has more than halved  between 2010 and 2014.

Canon’s acquisition of Axis will be the latest in a number of major changes to the structure of the supply chain for video surveillance equipment. It comes just two months after Samsung Group sold Samsung Techwin for instance.

Today the supply chain remains highly fragmented: the top 15 suppliers account for less than 50% of revenues and there are thousands of small suppliers.

Consolidation has been anticipated for some time and Canon’s purchase of Axis could be just the start of a series of industry acquisitions throughout 2015.

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