2017 - Better Or Worse For The Video Surveillance Industry?

JH
John Honovich
Dec 29, 2016
IPVM

Vote below / comment inside:

JH
John Honovich
Dec 29, 2016
IPVM

One theme I see is wounded manufacturers. Of course not all, but I think most manufacturers are wounded from the past few year's price war, obviously almost all the Western ones and even Hikvision (because of the cyber and government issues) and Dahua (because they're Dahua).

Things I am curious to see in 2017:

  • What does Hikvision do? Will their huge hiring continue (it has certainly slowed in NA during H2)? Will they continue to cut prices or cut even more if the cyber and government issues slow unit sales?
  • Will new product releases be better or worse? How much are price cuts and profit declines going to translate into less willingness to spend on R&D for fear of not enough new business to justify it?
  • Do enough manufacturers give up / get out in 2017 that it reduces pressure on the rest?

I won't make predictions here because there are too many variables impacting this but I look forward to seeing how it plays out.

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Luis Carmona
Dec 29, 2016
Geutebruck USA • IPVMU Certified

I think 2017 will be better for integrators who cater to more complex systems and installations with higher skill level service orientated structures.

I think it will be worse for discount and low budget dealers as DIY and commoditized equipment continues to become more prevalent.

I think low cost product manufacturers will continue to eek out very small margins and will have a really tough time of it.

I think the bigger and higher end manufacturers will do ok provided they are partnered with better adapt integrator/dealers. But by ok I mean maintaining. I don't see "explosive" growth on their horizon. So maybe that is actually bad for the publicly traded companies who are especially beholden to showing growing revenues where maintaining is the same of doing bad. It would also do well to start holding their partners to a much higher standard than what I have seen. Not just looking for partners promising sales, and not just someone who is highly skilled and proficient. I mean both.  And if they can weather things while more of the well known names either fold or are absorbed.

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Jon Dillabaugh
Dec 30, 2016
Pro Focus LLC

From an integrator standpoint, things look good for 2017. That could all change based upon the political shift coming soon, but nothing is pointing that way today. 2016 was pretty busy and 2017 looks better. 

If you don't have a positive outlook on your 2017, make the necessary changes to adapt to the market. It certainly won't adapt to you. 

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JH
John Honovich
Dec 30, 2016
IPVM

That could all change based upon the political shift coming soon, but nothing is pointing that way today.

Can you elaborate on that? What political shifts?

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Jon Dillabaugh
Dec 30, 2016
Pro Focus LLC

Trump is bringing sweeping changes to the US political landscape. Many forecast this as a positive for our industry, but time will tell. I don't have any savvy insight, other than change itself can somewhat be disruptive. It is the uncertainty ahead that worries me. It could be a boom, or not. 

JH
John Honovich
Dec 30, 2016
IPVM

Trump is bringing sweeping changes to the US political landscape. Many forecast this as a positive for our industry, but time will tell

Well, since the election Trump's has been critical about China and trade, so if he continues that it could be very bad for Chinese manufacturers. Of course, what he does, and how far he goes, remains to be seen. 

I see two factors:

  • Rhetoric - just by bringing negative attention to China, it will make things harder for Chinese manufacturers in our business as it keeps the issue top of mind.
  • Policies - increased tariffs, restrictions, etc. would certainly have a much more direct impact.

How far Trump goes remains to be seen.

The other interesting question, is if Trump goes hard on China, is that good for the industry or not?

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Jon Dillabaugh
Dec 30, 2016
Pro Focus LLC

That's a hard one to say with any certainty. I can see the Chinese brands being punished under his regime. That would lead to better times for "western" (read: non-Chinese) brands, but also an overall slowdown of the industry as a whole. Less projects would be able to afford systems that they normally could today. When prices rise, total number of projects will shrink. And I don't think you will ever see margins back to where they were before Hikvision and Dahua entered the market. As soon as prices rise due to the Chinese tariffs, you will see even greater pressure on integrators to reduce margins (and subsequently dists & mfgs) in order to close the gap from where we are today. 

JH
John Honovich
Dec 30, 2016
IPVM

That would lead to better times for "western" (read: non-Chinese) brands, but also an overall slowdown of the industry as a whole. Less projects would be able to afford systems that they normally could today.

It's a fact that the industry has already slowed down specifically because of Chinese driven price cuts.

I agree that there would be less projects / less cameras if prices went up as we have already seen that lower prices have increased unit sales. However, the question is one of magnitude. If price cuts were so great for overall industry growth, than industry growth would not be declining right now.

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Jon Dillabaugh
Dec 30, 2016
Pro Focus LLC

I could certainly understand how the Chinese brands have cut into premium brands, but unsure how they have so negatively affected the rest of the industry. If all you look at is total revenue, then I guess I could see that slipping. I just can't imagine total shipped units being affected the same way. 

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Luis Carmona
Dec 30, 2016
Geutebruck USA • IPVMU Certified

This is why it's a little subjective in some ways. What may be bad or good for manufacturers may not affect for dealers. What products customers buy may not be bad for distributors but may be bad for dealers. What manufacturers fold or merge may be bad for customers, but may be good for dealers.

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JH
John Honovich
Dec 30, 2016
IPVM

What may be bad or good for manufacturers may not affect for dealers.

That's a good point. For example, there are quite a number of integrators who are 'laughing all the way to the bank' as has been cited / bragged within IPVM. Those tend to be the early adopters of China products who were rewarded with a significant price advantage against typically larger more conservative companies.

I do wonder how long that lasts as Hikvision / Dahua move from entrant stage in the US to widely used / offered product.

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Abdelhamid Metwally
Jan 02, 2017
IPVMU Certified

Doubt that whatever Trump does will affect the Middle East in terms of CCTV purchases. Overall though, security spending in the Middle East continues to increase (for reasons that are obvious) even in countries that are suffering serious economic challenges. This is already benefiting both nigh-end and low end manufacturers. We are also seeing a slow but steady increase in demand for high end surveillance solutions based on thermal and video analytics in government and utilities projects. The challenge though will remain the lower end of the market, and the rapid increase in number of integrators in the market. Overall, their is business for everyone, but integrators need to adapt rapidly to changes in the market.

ST
Steven Turney
Jan 03, 2017

Really depends on how you define Better or Worse.  I see more video related work in N. America but the real question is who can aford to win it!

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