South Korea’s second largest vendor of video surveillance equipment, IDIS, has announced its intention to acquire Costar Technologies, a US-based vendor of video surveillance equipment. Analysts at Novaira Insights believe by doing so, IDIS could be signaling an intention to emulate the success of South Korea’s largest vendor of video surveillance equipment and long-time rival, Hanwha Vision.
According to Josh Woodhouse, lead analyst and founder of Novaira Insights, “We estimate that, together, Hanwha and IDIS accounted for over a third of the domestic South Korean market for branded video surveillance hardware and software in 2022. Despite this, IDIS has seen its long-time domestic rival Hanwha grow rapidly recently having much higher revenues domestically and globally, with particularly rapid growth internationally.”
Like Hanwha, IDIS has grown its revenues in recent years. This is partly the result of US Government restrictions on Chinese video surveillance equipment vendors leading their customers to look for alternatives. Hanwha and IDIS have been capitalizing on the opportunity using different strategies. Hanwha has mainly sold equipment using its own brand name while IDIS has mainly been an OEM, making equipment for other vendors which is sold under their brand. However, generally speaking, there are higher margins and profit in manufacturing and selling your own branded products.
Woodhouse continues, “The acquisition signals that IDIS appears to be attempting to develop its own brand portfolio in the potentially lucrative US market. Costar is one of the companies for which IDIS makes equipment. By buying Costar, it acquires a brand which is better known than IDIS in the United States. The aim is to kick start a branded business there with IDIS’ manufacturing knowhow behind it. Nevertheless, it still has a long way to go if it wants to catch up with Hanwha Vision.”
Novaira Insights’ research shows that, Hanwha had around a 7% share of the United States branded market for video surveillance hardware and software in 2022. This compares with Costar at less than 1%.