The video surveillance industry is expected to grow, but there are still challenges ahead, according to a market research firm.

iSuppli forecasts that global revenue from video surveillance cameras will grow to more than $9 billion by 2011, maintaining a compound annual growth rate of 13.2%. The figures, announced Tuesday, are up from $4.9 billion in 2006. Surveillance unit shipments will more than double to 65.7 million units in 2011, with a compound annual growth rate of 17.1% from 29.8 million in 2006, according to iSuppli.

The migration to digital, fully networked systems, increasing security needs, and innovation are driving the growth, said Mark Kirstein, iSuppli VP of multimedia content and services.

"With the emergence of networked Internet Protocol video surveillance cameras and IP video servers -- along with the rising use of digital video recorders -- video surveillance is moving beyond traditional security and into new applications such as transportation, retail, government, and even home networking," Kirstein said in a prepared statement. "This expansion is being helped considerably by the idea of networked video surveillance, which allows for greater flexibility, field upgradeability, increased automation, and more intelligence to be incorporated into the overall system."

IP cameras will continue to displace existing closed circuit television cameras, even among consumers, while DVRs are increasingly evolving into networked devices, Kierstan said. Telecommunications companies will offer IP video surveillance through broadband and IP cameras will overtake closed circuit television cameras for surveillance by 2011, according to iSuppli.

The surveillance camera semiconductor market will reach $1.25 billion in 2011, up from $525 million in 2006, iSuppli said. The company said sales of video processor chips and interface chips also will grow.

However, the video surveillance market still faces challenges. Customer awareness and expertise with networked surveillance should increase, according to iSuppli. The company identified other barriers. They include: Security customers are traditionally conservative; security distributors and sellers lack expertise in IT and networking; IT competitors lack security expertise; decision-making and buying will become more complex because of coordination and conflicts between IT and security organizations.