Part 1 of 2
by Gary Larson
Access control providers may be heading for a disruptive threat and a big opportunity. There is strong evidence for a massive, untapped market for access control. The need, while growing, has likely existed for some time. High cost and complexity created by the industry’s heavy focus on enterprise systems have created barriers to this market. The industry has been relatively stagnant for three decades in terms of technology, business models, and channel structure. Two notable technology evolutions were the move from analog to IP and tighter integration with video surveillance. However, the disruptive influence of IoT, the Cloud, and the explosion of other technologies, marketplaces, and standardization such as the hyperbolic growth of cross-industry APIs, containers, microservices etc. that is disrupting other industries have barely begun to penetrate the security industry. The industry’s significant structural changes have primarily been limited to consolidation of manufacturers and integrator channels, perhaps further calcifying the status quo.
Two key points about this idea of a massively untapped market are worth looking at. First, development of this downstream non-enterprise market is likely more underway than we realized, and therefore already very underestimated. In a January 2021 Security Sales & Integration article, “Scope of Access Control Market Grossly Underestimated?”, Senior Editor Rodney Bosch quotes Lee Odess, founder and CEO of consulting firm Group 337, on this point. “Consider that the size of the combined small and medium-sized business (SMB) and enterprise market in United States is well over 90%”. And further that “Typical market research also fails to account for the true demand for protecting doors. That omission will become even more glaring as the industry figures out a value proposition to penetrate the vast, mostly untapped opportunity presented by interior doors.” (An earlier version of the article can be found at https://www.securitysales.com/access/access-control-market-misconstrued/.)
A second key point about this idea is that awareness of this massive opportunity might be higher outside the industry. Take for example, the IPVM article “Latch Goes Public, Raises ~$500 Million At $1.56 Billion Valuation” by Isabella Cheng, published Jan 25, 2021. This is a remarkably high valuation for an access control company.
In part two we’ll explore what the emerging market segment might look like, how to prepare for the threat of disruption, and how we might approach it opportunistically.