Arecont Vision Revenue and Growth Examined
In this note, we examine the revenue and growth of US megapixel manufacturer Arecont Vision - a company whose growth has clearly been impressive, even relative to the fast overall growth of the megapixel IP camera market. Inside, we look at the specifics of their growth, what is driving their growth and how Arecont Vision compares to ACTi, Axis, Mobotix and Vivotek.
Let's start with some basic financial facts of Arecont Vision:
- Arecont reports $51 Million USD 2010 annual revenue.
- Revenue is up from $9 Million in 2007, an increase of 416% over a 3 year period.
- Arecont's compounded annual growth rate (CAGR) over the last 3 years is 71%
- The overall IP camera market CAGR is generally accepted to be in the 20%-30% range during that time (remembering the dip during the 2009 recession)
Let's contrast this to 2010 revenue for other large IP camera manufacturers:
- Axis: ~$460 Million with solid growth over the last 18 months
- Mobotix: ~$90 Million with solid growth over the last 2 years
- Vivotek: ~$60 Million with fast growth over the last 2 years
- ACTi: ~$40 Million with flat growth over the last 2 years
All of these companies are generally considered among the top 10 largest sellers of IP cameras. Compared to them, Arecont's revenue is competitive, except of course for Axis. However, Arecont's growth rates over the past 3 years is significantly higher than all of these companies (other companies growth rate is closer to 100% range significantly below the 400%+ of Arecont's).
Undoubtedly, Arecont Vision's growth is impressive and formidable. From a product perspective, we see two main drivers of this growth:
Focus on low cost, bare-bones cameras: Even more so than the Taiwanese manufacturers, Arecont has vigorously reduced the cost of MP cameras (their compact series enhancements are a good example of this). Unlike almost every other IP camera manufacturer, Arecont cameras come with no bells and whistles - no audio, no on board storage, no analytics, no auto focus, no WDR, etc. While there are certainly drawbacks of such products, the major upside is that people who want low cost, high resolution cameras have a clear choice. There's no real direct competitor for this especially as ACTi and Vivotek push upmarket with their respective 4MP and Supreme series.
Multi-imager cameras: Arecont Vision is one of only a few manufacturers offering multi-imagers cameras (i.e. their 180 and 360 Surround View [link no longer available] 8MP and soon to be 20MP lines). Our sources indicate very strong sales for these products which we find to be quite believable.
- They are relatively cheap (about $1300 online for an 8MP camera).
- They are easy to integrate as no special dewarping SDK is needed (unlike panoramic fisheye cameras).
- Providing multiple lower resolution imagers/lenses provides better image details than a single higher resolution imager/lens.
- Very few competitive options - the largest manufacturer with a rival product is Avigilon whose offering is proprietary and JPEG2000 only.
We see Arecont Vision having a strong position in the market. No one seems committed to competing against them head to head for low cost, bare bones cameras. This may change but we do not see anyone yet. As for the multi-imager cameras, we think it would make a lot of sense for rivals to enter, especially to differentiate themselves in the crowded HD camera market. However, we have not seen any strong rivals enter this segment yet (the Axis P5544 is a novel camera but no threat to Surround View applications due to much higher pricing and different product design - incorporated PTZ).
At the same time, beyond the relative lack of features, we do find a number of weaknesses with Arecont relative to other top manufacturers:
- Image quality suffers significantly when faced with strong lighting (no WDR) or low light
- Bandwidth consumption spikes very high in low light
- Reputation for poor quality (that the company strongly disputes)
- A shoddy and buggy VMS offering that is needed for majority of camera configuration options
For us, despite the company being American, we view Arecont Vision more as a honorary Taiwanese/Chinese company - very attractive pricing but lots of headaches when dealing with the cameras. That noted, the company has the potential to continue to grow nicely as long as it stays the course and competitors do not attack its lower cost, bare bones market position.