As a factory rep, we are hearing more and more about HikVision "fatigue". Meaning, dealers saying they either can't make much profit or win many jobs where they lead with HikVision and the end user solicits other bids. This due to HikVision being on constantly on sale at any given moment and therefore anyone can underbid anyone given Hik's scorched earth go to market strategy. All this coupled with their multiple OEMs private label buyers being able to compete against each others. The ultimate cake-and-eat-it-too scenario.
Hence, why the video market is in a race to the bottom.
With HikVision coming down the backstretch and no one else in sight... Lots of longshots already scratched from the race.
It is even more prevalent in the foreign markets where the Dahua/Hikvision war continues the race to the bottom. As low as the prices are in the domestic US - the foreign markets can be 20%-30% lower. Products are sold under different part numbers with similar specifications and yes when there is a project there is no bottom.
Russia, Latin America, Middle East, Africa
Going to be interesting set of circumstances since now they are undercutting the OEM channel partner prices with their branded products, which one knows is not going to sit end well.
You just need to take it to a different level:
City of Industry, California – April 5, 2016 –
Hikvision USA, the North American leader in innovative, award-winning CCTV and IP video surveillance products, is pleased to launch a new level of its Dealer Partner Program—Diamond...
The Diamond level was created to meet the needs of enterprise-level partners via built-in incentives for enhanced profitability, enriched training certification, and specialized support.
Come on, HIK is still making $ even selling a camera for $20. Raw materials are sub $10 and slave labour is almost free. Machining/tooling/R&D has been paid for long ago. Now they just crank em out and ship em off.
IPVMU Certified | 04/17/16 08:39pm
The method of winning here is clear... Hikvision has great amount of resources... first world economy support by now. They can wait virtually forever getting investment from the government and the point is to wait long enough to watch all major competitors death from starvation. Then they will have situation close to monopoly and trust me they will regain everything they have spent 10 times.
Even now while most of vendors are thinking about how to handle Hikvision low prices, Hikvision is thinking about technology and where to invest money... They will keep market unbalanced to the death of major competitors and then their own development will be so strong that any new emerging company will be bought or will not be a threat cause of great technology advantage and customers loyalty.
The exact same situation was several decades ago with operating systems... While IBM was selling OS/2 for $200, Bill Gates has decided to sell MS-DOS for $40, and now we all know where is Microsoft in client operating system market position and OS/2 is dead... Novell Suse desktop - in agony... other OS? Mac? You know the share...
And the most extraordinary example is Microsoft Office which cost considerable amount of money (Pro versions up to $800 here) compared to FREE OpenOffice. And vast majority is ready to pay money compared to free usage... because of MS infrastructure, updates, management, knowledge, simplicity and everybody just used to. Any other competitors?
China knows good the Art of War, this book was published in ancient times, like in chess you make "stupid move" and your opponent is happy taking your queen and next move you put the opponent in checkmate with a pawn. Pricing and profits are now tactics for Hikvision a local battle they can loose to win the strategy.
As undisclosed 3 puts it, the discount until everyone is out of business and then raise prices IS a fantasy. That leaves one possibility - HIK is making money.
I know it seems hard to believe, but HIK is making money. It literally costs them nothing to produce a camera - if Walmart is selling $30 cameras after marking it up from manufacturer, that says a lot about production costs of cameras.
Yes HIK has to pay for rent, employees, advertising etc, but when you are the #1 camera producer worldwide and you make $$ on each camera sold (even if it's not a lot of $$) - these expenses are covered.
It's pretty simple - low profit, high volume. The convenience store model. Or the dollar-store model. Except in this case, HIK products are not cheap dollar store crap, they work as well as any other expensive IP camera, Axis, Panasonic etc. So the people buying cheap HIK are not being penalized, they enjoy a quality product that works well.
The market is expanding like crazy - everyone has camera now everywhere you go, they are no longer a luxury item but a necessity for any business. HIK is grabbing all that expanding market, while the old boys club is whining and gouging where they still can - but they are in a major decline. There will always be the luxury market, you'll still be able to find a $2000 IP camera from Axis, but for every one of those you sell, you're gonna sell 50 HIK cameras. So you've got Versace and Old Navy. Both can co-exist, and both can make money.
IPVMU Certified | 04/18/16 05:48am
As for me, Hik do kill competitors, and even if they are spending now more than gaining, market monopoly will allow to sell with minimum effort for the same price... sales strategy will be switched from aggressively pushing equipment to just process large number of incoming queries. Such change will lead to marketing and sales people reduction and subsequent expenditures making business profitable. Then they surely will try to grab hi-end segment too using the same strategy.
As for the history... Can anybody tell if China government has bought any other company in a security field this big and forced sales so aggressively? 30 years old China with food problems and nowadays China with first economy is just completely another country. I think US businessmen are surprised how quickly China is moving to the lead position in the world producing almost everything starting from cutlery and ending with heavy machinery. That is why history can not be applied here, cause we have two much global factors which appeared first time.
And what will stop Hik to make equal Axis $2000 IP camera and start selling it for $500?
IPVMU Certified | 04/18/16 02:17pm
One more small story to proove China abilities
About 7 or so years ago China has bought brand 2 new speed trains from Siemens (Germany). Trains were bought for very low price compared to standard pricelist as a pilot project assuming that China will try and buy more in several years. After pilot project was done, Siemens asked about results and of course China has said that trains are good but we will think about greater deal for some time. Next year Siemens local representatives have registered the fact that there are about 16 new "Siemens" like trains on the rails... The questions were asked... And China said that that was their native products... Patents scandal appeared and courts and so on, but Chinese government has analyzed Siemens all product market in China and conducted a meeting with Siemens. They just have threatened Germany that Siemens and other brands will not be able to sell a single kettle on China territory if Siemens continues to blame in patent abuse. The result? Siemens has surrendered...
And Russia had the exact same story with tanks T-90 which were disassembled down to screws 3-D scanned and reverse engineered...
Comparing to this, to make a copy of a camera is a piece-of-cake job.