Subscriber Discussion

OEM Recommendations - Appliances Manufacturer Looking To Brand And Sell Cameras

KS
K Shaikh
May 16, 2017

Hello All,

I've recently taken over business development duties for a large appliances manufacturer in a developing/3rd world country with a very strong brand (Large market share, 40+ years in the industry) We want to expand our product line and have identified the security camera market as a potential high-growth segment and would like to find a good OEM that we can source from.

Being that our expertise lies on the home appliances side, we don't really have much of a clue (yet) as to how best to approach it, what companies we should consider (from what I've read on the site so far, Dynacolor and Longse seem to be viable alternatives to Hikvision/Dahua)

I know this is a fairly broad question, but this seems to be a community filled with super-knowledgeable people and I'm sure I'll be able to get some good advice.  What is the best way to approach this project?  What are some issues to keep in mind?  Anyone have past experiences they can share in similar situations?  

Appreciate any help/advice I can get!

 

 

 

UI
Undisclosed Integrator #1
May 16, 2017

Dynacolor won't be able to match the cost of Longse but it won't be Chinese made and competing against you.

Those are good starting points. 

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UM
Undisclosed Manufacturer #2
May 17, 2017

wow, big question! Not an easy one to answer without some level of details...

If you were in North America or Europe I would say don't waste your time and money, you are 3-5 years too late. But since you are in a developing/3rd world country, then there might not be much existing competition either from the original manufacturers or from other re-branded solutions.

The problem you will have is generating profit from products whose prices have not stopped decreasing for the last 5 years. At the moment, if you can make $50 on a 2MP varifocal outdoor dome with IR, you are lucky (and you had better hope the quality is good because a couple of bad cameras per hundred and your profit dwindles)

Since 2009, we have done what you describe twice and I'll try to help define the process the first time we did it (when we were new at this): We first used ACTi cameras. The relationship was excellent with ACTi, they were (and still are) a minor player "not from China" and the initial camera quality and image quality was above average for 2010.

The process of starting a new OEM brand is extremely time-consuming (not necessarily complex but each step, if done well, takes  a lot of time). It took us close to 2 years to fully expand our camera offering using ACTi (about 30 camera models total).

These are the steps involved in qualifying an OEM manufacturer and putting out an OEM product: identifying  the partner you want to deal with; approach with the partner and negotiation with the partner; identify the camera models you want to test and qualify (this can be anything from 3 to 50+ cameras depending on your business plan and target market. This is the longest and most difficult part and the one where you MUST spend the most time. You need to test, qualify and understand every single model of camera you OEM and there needs to be a market driven reason for introducing each and every model or you will lose your shirt in dead inventory).

Once the camera (and mounts and accessories) models are chosen and tested you also need to do the same process to qualify the recorders you will want (very important and as time-consuming as the cameras). You will need to source additional things like hard drives, perhaps power supplies, maybe wiring and other items.

Once the cameras and recorder models are chosen and tested (you are now more than 6-9 months into the process, maybe more if you have done the technical testing work correctly), you need to start on the marketing work of being an OEM 9you might have already started on this if you are convinced of the market viability): find a brand name (sounds silly but it took us more than 3 months back-and-forth with brand lawyers to be sure we were not using someone else's brand), customization of the software user interface (complex, expensive and time-consuming); customization of the firmware user interface (and functionality); logo design, box design and contents; writing the manuals (or at least personalizing them; they can be hundreds of pages long!); translating everything from English into your local language; doing the website design; social media; planning industry security event participation; hiring and training tech support (an ongoing process); hiring and training sales staff (an ongoing process); having someone to answer the phone when they are not happy (an ongoing process)... and so on and so on ans so on... By the end of all of this, you are more than 1 year into the whole thing (probably closer to 2 years) when you start selling and generating revenue.

We had 2 long-term issues with ACTi that will be common no matter which OEM manufacturer you choose:  the long-term quality needs to be high or you will simply not sell anything repetitively to customers (this was poor with ACTi and did not show up in any of our extensive tests before release- in some instances - with anything autofocus, for example- we had over 25% failure rate of a line of cameras after 1 year); secondly, we could not pretend to be Axis or Avigilon and demand 50% more for our cameras- our name was new to the market and we needed to compete on a daily basis- so our margins gradually diminished as the Chinese products (especially HIK) gained popularity. We needed to compete against these Chinese products or die out. ACTi was never able to provide us with OEM pricing to even remotely approach where we needed to be against HIK.

So after 4 years of reasonably successful OEM of ACTi (and 1 year of dramatically losing our customers as HIK came in the market), we had to make a decision: find a new OEM partner that could give us long term quality AND the ability to compete OR get out of the camera market.

We chose to find a new partner and are now in the 3rd year of that new partnership. We sell 5x more cameras in volume (compared to 2014) but we make essentially the same profit at the end of the year because of the tiny profit per camera.

In your original question you asked for advice. This is my 2 cents worth:

1. If HIK/Dahua/Hanwha are present in your local marketplace, then do NOT chose them as an OEM partner. You will not be able to differentiate yourself from them and will simply fight over price all the time. And if they are not in your local market, as soon as you have some success they will screw you and enter your market.

2. If you are not technical, surround yourself with competent technical people to advise you (from the security industry) on product selection.

3. This is a major endeavor you are considering. it will take time if you do it- do not cut corners or skip steps or you will regret it later.

4. If HIK/Dahua/Hanwha are present in your local marketplace, then you should seriously consider not doing this at all unless you are convinced that you have something more of value to provide the industry. There are already enough good-quality low-cost cameras on the market. if you do this, you need to provide more to the market (such as better stock levels, better tech support, local language support, local sales resources, etc...) All of these things are of value to the marketplace and they are essentially the only reason why an OEM can eventually succeed.

5. If you are simply providing an existing camera under a different brand name (with no additional services), you will fail. The gold rush for OEMs was 5 years ago and you are late to the game.

Sorry this answer was so long (I could have doubled this with a description of our current camera OEM relationship) and I hope that this little bit can help in your process.

BTW: we considered all of these risks and opportunities in 2009 in our business plan. The one thing we did not consider was that HIK would release good quality IP cameras at $200 (now less than $100) when everyone else was at $300-$500.

“The best laid schemes o' mice an' men / Gang aft a-gley.” (Robert Burns)

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JH
John Honovich
May 17, 2017
IPVM

#2, just wanted to say that was a terrific and insightful analysis of the issues and challenges in OEMing. Thank you!

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UM
Undisclosed Manufacturer #5
May 29, 2017

[Note - Hanwha Employee]

I want to clarify if anyone read this post like I did, that Hanwha does not OEM in the USA.

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UD
Undisclosed Distributor #3
May 17, 2017

If you are simply providing an existing camera under a different brand name (with no additional services), you will fail.

I don't completely agree with this. If you are targeting the professional/integrator market then this might be true. But if you have strong brand recognition and are targeting the consumer/small business market and selling though your existing retail channels you may do OK. A consumer with little product knowledge shopping for a camera at a retailer will pick a brand they recognize and have experience with, provided it's cost competitive. In the US market if a retailer has D-Link cameras side by side with Hikvision cameras, the D-Link cameras are likely to move faster even if the D-Link cameras are made by Hikvision and are a bit more expensive. This isn't a guess, I have some experience with this.

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JH
John Honovich
May 17, 2017
IPVM

In the US market if a retailer has D-Link cameras side by side with Hikvision cameras, the D-Link cameras are likely to move faster even if the D-Link cameras are made by Hikvision

Is that true as a point of fact? Maybe I am misreading it but D-Link IP cameras have seemed to struggle the last few years and one key factor has been Chinese direct competition, most specifically Hikvision.

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UM
Undisclosed Manufacturer #2
May 17, 2017

I agree with John on this - DLink (and other big names such as Cisco and others) have had very little practical impact on the industry and a very limited success.

Another thing to consider is that these major name brands actually tried the OEM game years ago when it was the gold-rush and they still (relatively) failed. Everything is harder now that the prices are SO low. There's no room left to make mistakes.

So maybe a major brand name with a small amount of low-cost cameras selling through a major retail distribution network would work but I think they would need to be selling direct to end-users. I think there would be major resistance from the security trade to this newcomer, especially since there are already well-known low-cost quality providers (HIK, Dahua, Hanwha) in this space.

I stand by my statement: even if you have a well-known name, you need to provide something more (others have failed with well-known names...)

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UD
Undisclosed Distributor #3
May 17, 2017

My experience is anecdotal.  You can substitute Dlink for any brand widely recognizable to the consumer and Hikvision for one that is not. I had an experience with a large retail chain where known consumer brand camera sold like hotcakes side by side of the same cameras from the OEM that made the known consumer brand's cameras. Those cameras were priced lower but didn't sell at all and were eventually returned. If I go down to Best Buy to buy a router and I see a Dlink router next to an unknown brand, I will buy the Dlink (What do I know about routers) even though I know damn well the DLink doesn't actually make routers (or anything else for that matter). This is largely because DLink has been around for a long time and carefully vets products and OEMs before assigning their name. #2 mentions Cisco but they are a completely different story. I refer to consumer brands and these guys are selling a lot of cameras. It may be true that they have no "practical impact" on the business that most of us on this site are involved with. I am not disagreeing with what number 2 has outlined. He offers some excellent advise. I'm just saying "not so fast". If Mr. Shaikh's brand has a broad recognition and a good reputation in his market, that can be very powerful at the consumer level. And if he is targeting the consumer market there very well may be an opportunity.

JH
John Honovich
May 17, 2017
IPVM

I had an experience with a large retail chain

I agree with you about that, e.g., with your example of Best Buy. Hikvision will have a very hard time against D-Link or Netgear or other known consumer brands.

The Hikvision impact has been more on the DIY / online buyer side where they are looking more into specs than brand.

U
Undisclosed #4
May 18, 2017

Try to list my idea in the following table.Some points may confict each other.Just try to list different parts.It is always important to adjust strategy according your marketing situation and your own company situation.

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U
Undisclosed
May 22, 2017

Don't buy crap as it will come back to haunt you.  Don't become that next rebranding camera vendor who thinks they can shrug their shoulders ignoring security issues in their (e.g. Dynacolor) cameras.  If it has your logo on it it's your problem.

 

BB
Ben Bodley
May 22, 2017

Hi,

Rebranding/reselling OEM cameras is a race to the bottom.  Unless you only care about taking a small piece of margin with a product that enables you to have an ongoing service relationship with an end customer - don't do it.

Depending on the strength of your brand and channel, if you're looking to be doing 100-200k+ pcs pa then its best to go custom.  Look at your brand, channel, develop your industrial design in-house/with a design partner and point of difference - then put out an RFP your camera spec to ODM and Camera Design Firms.  

In the end you don't want to just sell your customers a camera, you want a relationship with them to up-sell and sell on-going services that cameras enable you to offer.  The benefits of building your own camera with a recognised ODM/Design firm is that you control what end user experience is, link with your own cloud software, analytics, etc.  Mix/match and create a competitive offering.

Work with recognised manufacturers that don't sell their own brands in overseas markets, and strong design firms that give you competitive advantage.  Protect your IP and Brand from margin erosion by innovating.

My (biased) 2c. (@Teknique)

Ben

 

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DW
David Wise
Jun 05, 2017

Smartvue has been providing OEM cloud video surveillance services for years and currently uploads more than 49 million minutes of video to the cloud everyday. We do this for companies like Time Warner Cable, Cox Communications Hewlett Packard Enterprises and Ayla Networks.

 

Smartvue can provide the software, cloud and integration services required to add video to your appliances. We also have relationships with camera manufacturers to provide you with the right hardware at the best price.

 

Please contact me at:

David Wise
VP, Sales and Product Development
Smartvue Corporation
www.smartvue.com
5211 Linbar Drive #507
Nashville, TN 37211
Ofc: (888) 754-4543 x1215
Direct: (615)-988-9644
Email: dw@smartvue.com

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