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1. Market Prospects for the Security Industry

2. Market Prospects
for the Security Industry

3. Contents
Summary
Information and physical security is becoming an increasingly
important issue; IoT and AI are key technologies going forward
Definition and Overview
I. Expanding Security Market
II. Related Industries
Market Trends
I. Information Security: Global
II. Information Security: Japan
III. Physical Security: Global
IV. Physical Security: Japan
Main Services and Players
Industry Viewpoint
I. Information Security
II. Physical Security
III. Key Fields in Physical Security
2

4. Summary
Demand for both information and physical security is growing steadily
Crime prevention, anti-terrorism, disaster prevention, along with other industrial and
individual applications are the fields where information and physical security services
are required
IoT is one of the foci for information and physical security
AI will play a more critical role in providing quick responses through automatic, real-
time analysis under various circumstances
3
The Importance of Information and Physical Security Increasing;
IoT and AI to Be Key Technologies in Devising Solutions

5. Summary
4
Information Security Physical Security
1st Stage
• Protection for a limited range of
hardware (e.g. PCs)
• Human monitoring of analogue
devices
• Centred on psychological
precautions and post-incident
measures
2nd Stage
• Protection for massive corporate and
personal data available on networks
• Digitalisation and networking of
security devices
3rd Stage
• Subjects that require protection to
expand and include home electronics,
automobiles, and industrial
equipment, etc.
• To be utilised in a variety of fields,
including marketing and process
improvement
Now
・Development of cloud
computing and networking
・Prevalence of smartphones
and tablets
・Development of IoT
・Increase in terrorist threat
・Advancement of cyberattacks
AI used for data processing, crime prevention, and quick response
External Environment

6. Summary
5
Key Figures
 5-year growth rate of the
global information security
market (2010–15)
70 53 billion%
 Number of IoT devices in
the world by 2020
42 Global security device
market size by 2020
+
80 %
 Share of network-enabled
surveillance cameras by
2018
USD
≥ billion

7. 1. Definition and Overview
6

8. I. Expanding Security Market
 The security service scope is classified into Target (what needs to be protected) and Source (what causes the security
issue), with the scope of Source being expanded over the years.
 Target: Information (in cyberattacks), Physical Objects (buildings, people, printouts, etc.)
 Source: (1) External Attacks, (2) Internal Misconduct and Accidents, (3) Disaster, (4) Terrorism
7
Security Service Scope Extended to Internal Misconduct and Public Safety
b. Physical Objects
(buildings, people, etc.)
a. Information
(1) Crime prevention (external attacks)
(2) Crime prevention (internal misconduct and
accidents)
(3) Disaster prevention and reduction
(4) Public safety (terrorism, etc.)
Target Source

9.  Information security requires measures against external cyberattacks and internal leaks.
 The necessity of security services for disaster prevention and public safety is increasing amidst current social conditions,
despite the difficulty in specifying the subjects and areas that require protection.
8
Subjects That Require Protection Difficult to Specify In Security Services for Internal Crime
Prevention and Public Safety
External Internal Public
(1) Crime prevention
(external attacks)
(2)Crimeprevention
(internalmisconduct, accidents)
(3) Disaster prevention
and reduction
(4)Publicsafety
a.
Information
• Unauthorised access to
and acquisition of
information, targeting
a specific company
• Internal information leak:
- Intentional
- Accidental
• Data loss during disasters
• Business continuity
• Cyberattacks against state
agencies:
- Infrastructure
- Defence
• Illegal activities via the internet
b.
Physical
Objects
• Trespassing, damage,
theft of property
• Accident
• Disaster, accident
(infrastructure, etc.)
• Terrorist attacks
• Indiscriminate attacks in public
space
• Safety check (guarding)
• Immigration and customs
control
Categories of Security
I. Expanding Security Market

10.  Quick detection and response are required for coping with unknown attacks and internal leaks or data misplacement
9
Main Protection Methods: Access Control and Detection of Attacks or Dangerous Activities
External Internal Public
(1) Crime prevention
(external attacks)
(2)Crimeprevention
(internalmisconduct, accidents)
(3) Disaster prevention
and reduction
(4)Publicsafety
a.
Information
• Anti-cyberattack:
- Networks
- Web applications
- Devices
• Limited access
• Log management and monitoring
(detection of dangerous activity)
• Data backup and
distribution
• Emergency communications
line
• Monitoring of internet BBSs
and other sources
b.
Physical
Objects
• Entry control
• Monitoring and
detecting attacks
• Human guards
• Entry control
• Monitoring and detecting
dangerous activities
• Detection of damage and
irregularities
• Monitoring disasters and
accidents
• Disaster prevention systems
(fire extinguishing, etc.)
• Monitoring and detecting
dangerous activities
• Safety check (guarding)
• Immigration control (entry/exit
records, detection of
dangerous objects, people, or
infectious diseases)
Security Methods
I. Expanding Security Market

11. II. Related Industries
 Security tools and services encompass a wide range of technologies, such as cloud computing, camera surveillance,
sensor detection, as well as image and data analysis
Cloud-Based Computing and Data Analysis Required for Protection of Data and Physical Objects
External Internal Public
(1) Crime prevention
(external attacks)
(2)Crimeprevention
(internalmisconduct, accidents)
(3) Disaster prevention
and reduction
(4)Publicsafety
a.
Information
b.
Physical
Objects
Security Software
Log Management
Cloud-Based Services
Surveillance Cameras and Various Sensors
Image and Data Analysis
Key Access and Authorisation Systems
Disaster Prevention Devices
Server-Based Services
Broadcast Satellites
Data Analysis
Guard Services
10

12. 2. Market Trends
11

13. I. Information Security: Global
 Global information security market
grew 70% over 2010–15.
 The service field recorded the
highest growth, with the consulting
and outsourcing segments more
than doubling over the same period.
 The market size is estimated to grow
to USD 170 billion by 2020.
Source: by UZABASE based on various materials
12
Market Expanded by 70% over the Past 5 Years, Driven by Outsourcing Services
0
200
400
600
800
1,000
2010 2011 2012 2013 2014 2015
USD100million
Information Security Market (Global)
toC
toB サービス
toB ネットワーク機器
toB インフラ
（端末・メール・Web）
toB アクセス管理
toC
toB Services
toB Network
Devices
toB Infrastructure
(devices, e-mail, Web)
toB Access Control

14. I. Information Security: Global
 The global IoT security market grew by
94% over 2015–18.
 The growth is attributed to a
considerable increase in the number of
devices, including household appliances,
automobiles, and industrial machinery,
as well as the amount of data.
Source: Gartner
13
IoT Security Market Doubled in Size over 3 Years
0
1
2
3
4
5
6
2014 2015 2016 2017 2018
USD100million
IoT Security Market

15. II. Information Security: Japan
 Japan’s information security market
size was JPY 980 billion in 2016.
 The sales of security tools, as well
as operation/management,
education, and insurance services
witnesses strong growth.
 At the current rate, the market is
expected to exceed JPY 1 trillion
in 2017.
Source: Japan Network Security Association
14
Market Size Expected to Reach JPY 1 Trillion in 2017
0
4,000
8,000
12,000
JPY100million
Information Security Market (Japan)
情報セキュリ
ティツール
情報セキュリ
ティサービス
Information
security tools
Information
security
services

16. 0%
25%
50%
75%
100%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Main Causes of Data Leaks
不正アクセス・
ウィルス盗難
紛失・置忘れ
誤操作
管理・設定ミス
内部不正行為
等その他
II. Information Security: Japan
 Despite fluctuations, data leaks are
primarily attributable to information
misplacement, wrong operation, and
inappropriate data management and
settings.
 Therefore, countermeasures against
internal data leaks are required.
15
Internal Corporate Issues the Main Cause of Data Leaks
Source: Japan Network Security Association
Unauthorised
access, viruses
Theft
Data loss,
misplacement
Wrong operation
Management/
settings problem
Employee
misconduct
Others

17. II. Information Security: Japan
 The leak of paper documents forms
the majority of cases of information
leaks.
 Therefore, proper management of
printed media is also required for
information security.
Source: Japan Network Security Association
Note: Based on the number of cases
16
Paper Documents Often the Source of Information Leaks;
Proper Management of Physical Media Necessary
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Media and Channels of Information Leaks
紙媒体
PC本体
USB等記録媒体
インターネット
電子メール
携帯電話
その他
Paper
PC unit
Storage (USB)
Internet
E-mail
Mobile phone
Others

18. III. Physical Security: Global
 Security cameras occupy over 50% of the
security device market.
 The market is seeing the emergence of
new devices, such as guard robots and
drones, which are not included in the
statistics.
Source: Memoori Business Intelligence
17
Surveillance Cameras Constitute the Largest Physical Security Device Market
Breakdown of Global Security Devices by Type
Video Survellance
54%
Access Control
23%
Intruder Alarms
23%
2015
USD
27.2 billion

19. III. Physical Security: Global
 Similar to the information security market, the
physical security market is also expanding, with
the market size of security devices expected to
grow by 160% over the period of 2015–20.
 The total market size, including the service
segment, is estimated to exceed USD 10 billion
by 2020.
 Demand for physical security devices is
expanding from crime prevention, under which
the necessity of counter-terrorism measures is
growing, to disaster prevention, safety check,
and marketing, amongst others.
Source: Memoori Business Intelligence
18
Security Device Market Expanding, Expected to Grow 160% by 2020
27
42
0
10
20
30
40
50
2012 2013 2014 2015 2020FUSDbillion
Security Device Shipment Value (Global)

20. III. Physical Security: Global
 Due to an increasing number of recent
terrorist acts, security services for
public safety are gaining attention.
 In addition to devising
countermeasures against disasters and
infrastructure damage, physical security
services and devices are also used for
public safety monitoring, given the
difficulty in tracking dangerous objects,
people, and activities in public space by
human. Source: MarketsandMarkets
Note: Includes information security and disaster prevention
19
The Public Safety Market Also Attracting Attention
248
457
0
50
100
150
200
250
300
350
400
450
500
2016 2021
USDbillion

21. 0
200
400
600
2010 2014 2018F
JPY100million
Surveillance Camera Market (Japan)
IPカメラ
アナログカメラ
IV. Physical Security: Japan
 In Japan, there is an ongoing shift from
analogue cameras that use coaxial
cables for connection towards wired
and wireless IP network cameras that
store data digitally.
 Analogue cameras used to cover 60%
of the market in 2010, but IP cameras
overtook the former and became the
mainstream device thereafter.
Source: Fuji Keizai
20
Surveillance Cameras Switching from Analogue Cameras to IP Cameras
IP Cameras
Analogue
Cameras

22. 3. Main Services and Players
21

23. Industry Viewpoint
22
IoT and AI Bringing Great Changes to the Security Industry
IoT widens the scope of objects in need of security services.
→ How to protect the massive number of smartphones and wearable devices?
It is difficult to rely on human power to predict all attack patterns beforehand.
→ Focus on automatic real-time data analysis using AI

24. I. Information Security
23
End-Point
Security
Log Management,
Monitoring
Server-Based Services
Cloud-Based Security
General
[Global] IBM, HP, EMC, Cisco
McAfee
Symantec
Trend Micro
LogRhythm
HP (ArcSight)
Attachmate
Amazon (AWS)
Microsoft (Azure)
Google (GCP)
Security Cloud and IoT
[Japan] Hitachi, Fujitsu, NEC
Specialised
AI
Electronic
Authentication
Comodo
Entrust
Diversified Service Providers Actively Investing into IoT and AI
Diversified service providers are actively investing into IoT and AI, leading the market.
Cloud and server-based services also became part of security solutions.
Top players in the end-point security market are strengthening their cloud segment.

25. Diffusion of IoT Expands the Quantity and Type of Devices and Data;
Physical Security Solutions to Be Used in Information Security Services
I. Information Security
24
 The number of connected devices in the world is
increasing and expected to reach 53 billion by 2020.
 Individual information (location, biometric data,
eating habits, lifestyle, social networks, etc.) and
corporate data are all available on networks.
⇒ Rising quantity and quality of information driving
continuous growth in the market
⇒ Physical security solutions can be used in
information security services (e.g. using biometric
authentication to access sensitive data on
smartphones)
530
0
200
400
600
100millionunits
Number of IoT Devices (Global)
Source: IHS Technology
(White Paper on Information and Communication by the
Japanese Ministry of Internal Affairs and Communication)

26. 25
The Medical and Automobile Fields Contain Life-Critical Information
 The industrial and consumer fields are home to a
large number of IoT devices, causing critical
corporate and personal data to be exposed to risks.
 Data hacking in the automobile and medical fields,
where high growth is expected, might be life-
endangering.
Number of IoT devices (2014)
CAGRofDeviceNumber
(2014–20)
80
40
40
20
Industrial
Consumer
Telecom
Automobiles
Healthcare
Computers
(100 million)
(%)
Number of Devices and Potential
for Growth by Field/Application
Source: IHS Technology
(White Paper on Information and Communication by the
Japanese Ministry of Internal Affairs and Communication)
I. Information Security

27. Mobile
Devices
Wearable
Devices
IoT Home
Appliances
Security Devices
Industrial
Devices
Medical Devices Automobiles
Location,
social network, etc.
Biometric data,
activities and habits
Security information,
corporate data, etc.
Safety-critical data
(concerning lives)
26
IoT Devices and Data Types
I. Information Security

28. 27
 With cyberattacks becoming more sophisticated, projecting all possible scenarios is becoming a difficult task.
 Teaching AI to recognise attack patterns via Machine Learning will
(1) enable it to handle unknown threats (prediction, intrusion prevention);
(2) increase its analysis speed, and enable it to identify the attack types and sources more quickly.
 By doing so, global players that provide a comprehensive set of IoT-related services will gain the upper hand.
Compare to normal state
and detect discrepancy
Detect unknown threats
through pattern recognition
I. Information Security
AI to Be Utilised in Fighting Against Cyberattacks

29. Moves Towards Restructuring Seen Amongst Top Players
28
Recent M&As and Restructuring
2015 Oct Trend Micro acquired Tipping Point, the network security branch of HP.
EMC went under Dell’s umbrella (acquisition completed in September 2016).
2016 Jun Cisco acquired CloudLock, a cloud security service provider.
Sep Intel span out McAfee into a separate company.
Intel ventured into cloud-based/IoT fields; it acquired Nervana, a company involved in Deep Learning, in
August 2016, and Movidius, which engages in Computer Vision, in September 2016.
Oracle acquired Palerra, a US-based cloud security provider.
Symantec acquired Blue Coat, a web security service provider.
 Restructuring and reorganisations are seen amongst top players; for example, Intel span out McAfee and EMC
went under Dell’s umbrella.
 Specialised players strengthening their network security solutions, while diversified players shift towards cloud
services.
I. Information Security

30. 29
Texas Instruments
Murata Mfg
TDK
Nidec
AXIS (Canon)
Hikvision
Dahua
Sony
OmniVision
Samsung
Nippon Ceramic
Hamamatsu
Phototonics
Omron
Keyence
Sofradir
Infra TEC
Infrared Temperature Ultrasonic Waves
CMOS Image Sensors
Excelitas Technologies
Honeywell International
Raytheon
Aerospace Defence
Laser
IBM
Google
NEC
Hitachi
Cameras
Fujitsu
NEC
Hitachi
Biometrics
Sensors
Control and
Computation
Devices
Data
Processing
Guard
Services
G4S
Securitas
United Technologies
Secom
ALSOK
AIIoT
Image Recognition
Data Integration and Processing
Diversified Service Providers Making Active Investment in IoT and AI
 Sensors, devices, and data processing software are key success factors.
 Devices are increasingly connected through networks; differentiation in data processing is an emerging trend.
Milestone Systems
MOBOTIX
II. Physical Security

31. 30
 AXIS (under the umbrella of Canon), Panasonic, and other Japanese manufacturers hold top positions in the
market, but manufacturers from Mainland China, Taiwan, and South Korea are also prominent with their price
advantages.
 OEM manufacturers have a large presence; guard service providers and system developers are also able to
operate in this market.
The Surveillance Camera Competitive Landscape Comprises Chinese Manufacturers with Price
Advantages and OEMs
ACTi
Arecont Vision
Honeywell
AXIS (Canon)
Dahua Hikvision
Bosch Panasonic
Pelco
Samsumg
VIVOTEK
Top Players
Other Leading Players
OEM
Manufacturers
IDIS
DynaColor
AVTECH
Hitron Systems
ITX Security
Hi Sharp
Hunt Electronic
Topica
II. Physical Security

32. Application of IoT and AI Underway
31
 The integration of various security devices and services through networking boosts accuracy and
efficiency.
 The digitisation and networking of surveillance cameras increase the need for bulk data processing.
 Analysis of behavioural patterns can be carried out through image recognition and automatic detection of
irregularities.
AI
Remote
Monitoring
Irregularity
Detected
Analysis
！
II. Physical Security

33. 32
Biometric Authentication Applications Expanding;
Fingerprint and Vein Patterns the Main Methods Used in Japan
Source: Texas Instruments,
“Processing Solutions for Biometric Systems”
 Biometric authentication is used in entry control systems, as well as
various information security solutions (e.g. a login method for various devices);
the spread of mobile devices and IoT is also driving growth in this field.
 Biometric authentication includes fingerprint, iris scan, face recognition, or
voiceprint.
 Fingerprint, iris scan, and face recognition are used worldwide.
 In Japan, vein pattern recognition is the mainstream, with fingerprint
also accounting for a major share, while other methods are rarely adopted.
 In addition to accuracy and costs, convenience and psychological
acceptance are major challenges for the market.
(*) Multi-Factor Authentication
The security level can be increased when combining authentication methods
with two or more factors as follows as they complement each other:
(1) Knowledge factor (e.g. password)
(2) Possession factor (e.g. mobile device, one-time password)
(3) Biometric data
指紋
31%
虹彩
16%
顔
15%
声
13%
静脈
10%
署名
4%
その他
11%
Face
Fingerprint
Iris
Voice
Veins
Signature
Others
III. Focus in Physical Security: Biometric Authentication
Breakdown of
Global Biometric Authentication Market

34. 33
Face Recognition Has Low Accuracy; No Ideal Method Exists to Satisfy All Requirements
Signature
Iris
Veins
Fingerprint
Face
Voice
Convenience
Accuracy
HighLow
LowHigh
Ideal
Source: NEC, National Institute of Advanced Industrial Science and Technology
Accuracy and Convenience Accuracy and Public Acceptance
 The convenience and public acceptance for fingerprint and vein pattern recognition need to be improved.
 The accuracy of face recognition remains low.
Face
Voice
Acceptance
Low
reluctance
Ideal
High
reluctance
AccuracyLowHigh
Iris
Veins
Fingerprin
t
Signature
III. Focus in Physical Security: Biometric Authentication

35. Increasing Efficiency Through Automatic Image Analysis
34
 Automatic image analysis allows for the detection of
dangerous and irregular behaviour.
• Raises efficiency and prevents oversight
• Enables preemptive measures and quicker responses
 Image analysis can be used for a variety of scenarios and
targets.
• Person identity matching (suspicious persons, lost children, etc.)
• Human movement detection (walking, crouching down, looking
around, etc.)
• Characteristics detection (sex, age, clothing, etc.)
• Time-series comparison (object appearance detection)
Irregular Behaviour Detection
(Pattern Recognition)
Suspicious Object Detection
(Object Appearance)
III. Focus in Physical Security: Image Analysis

36. Application In Fields Other than Security
35
 The purposes of implementing surveillance cameras are changing to include customer behaviour
analysis and marketing.
• Customer traffic
• Area density
• Customer paths
• Products picked up
• Customer dwell time
Picked up
Considering
With kids
Customer Paths,
Store Density Customer Behaviour
III. Focus in Physical Security: Image Analysis

37. Focus on Counter-Terrorism Measures
36
 Due to the growing threat of terrorism, the issue of public safety is becoming more and more important.
It is necessary to increase the accuracy of immigration control procedures and build a crime prevention
system that is able to cover a large number of people in public space.
 Meanwhile, it is also desirable to avoid lowering efficiency or disturbing the people’s everyday lives. A
system that takes in account both privacy and convenience is needed.
 With the forthcoming 2020 Olympics and Paralympics, Japan needs to devise measures to ensure public
safety, indicating large demand for security services.
Public safety includes:
• Immigration Control
• Safety Control for Public and Commercial Facilities
• Infrastructure Maintenance and Monitoring
• Public Information Security
• Disaster Prevention
Infrastructure/DisasterImmigration Control Public Space
III. Focus in Physical Security: Public Safety

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