Security Managers are Not Demanding Higher Image Quality

This statement may appear absurd because obviously security managers are buying higher resolution cameras, encoders and recorders. I do not doubt that. However, supplier's lower costs, rather than higher demand, is driving the purchase and use of greater image quality.

This may sound like splitting words but this is a very important distinction. How we understand this phenomenon is critical for manufacturers and integrators to serve customers appropriately and for their organizations to be successful.

This has 3 main practical implications:

1. Understanding how costs are dropping is critical to projecting what security managers will buy.

2. Communicating cost changes will best serve customers (security managers)

3. Determining who is going to be successful depends on who is generating a cost advantage.

Demand vs. Supply

When demand increases, customers are willing to pay more even if suppliers do not improve their products.

In the security industry 9/11 is a classic example of increased demand. Video surveillance suddenly became more valuable because the risk of catastrophic security incidents occurring increased. Customers were quickly willing to pay more and buy more.

In today's news, crashing cranes in New York City is a classic example of increased demand for safety inspectors. Safety inspectors do not need to lower prices or offer novel innovations to acquire more business. People in NYC are now very concerned about crane safety and are willing to pay much more than they did 3 months ago to ensure their safety.

There is no equivalent source of demand increase for megapixel cameras. In general, the world's security situation is not particularly worse than it was 5 years ago. And specifically, types of crimes that need high resolution images have not disproportionately increased. This is not to say that we do not have security problems. Simply, that new security problems are not driving demand for high quality imagery.

By contrast, when supply increases, customers buy more, not because they view the product as more valuable but simply because the cost of the product has decreased.

Cell phones are an ideal example of this. While cell phones have improved over the years, the biggest reason why almost everyone has cell phones now is because they have become so inexpensive. In other words, vendors are willing to supply more at lower costs and consumers can more easily justify the purchase.

In our industry, storage duration is a prime example of this. 5 years ago, most security managers targeted 30 days or recording. Today, it is very common to see security managers targeting 90 days. 5 years ago, security managers knew that there was value in keeping video for longer. The problem was it was quite expensive. For the same amount of money they paid for 30 days in 2003, they can get 90 days today. This is increased supply at work, not demand.

Helping Security Managers

The biggest problem is the misconception that security managers will simply buy more. Security managers are responding to the decreased cost and only in the areas where decreased cost continues will the buying of greater image quality solutions continue.

For most security managers, the problem has been justifying costs rather than 'getting' technology. It is easy to think that security managers are starting to 'get it' finally. That may be the case for specific individuals, but as a community, the issue is much more an issue of the costs. 5 years ago, the costs were so much higher, it was hard for most to justify it. With each year, as costs decrease, the justification becomes clearer.

We need to focus more on understanding costs and the rate of cost decreases. Rather than focus on all the benefits of greater resolution, prudence dictates focusing on the power of decreased costs making these solutions more economically feasible. We need to communicate that costs are changing and how much lower the costs are now.

Optimizing Demand Generation

Security managers do not need lots of education on the power of increased quality. It is fairly obvious that it is beneficial. The problem has been how to justify the expense. Educating on the reduced expense is the critical step to 'generating demand.'

To the contrary, a lot of marketing concentrates on increased requirements. The assumption is that once security managers realize the requirements are increased, they will buy more. Unfortunately, the situation is the reverse.

Requirements are increasing because costs are decreasing not because the need has suddenly grown. For years, discussions have continued about the appropriate requirements for video quality and duration. The requirements have historically been set fairly low because smart security managers realized that high requirements could not be afforded. With technology products, requirements are rarely 'requirements' and calling them so is a misnomer. Requirements mainly document what the current best practices are given current costs and capabilities.

Security managers are better served and manufacturer's resources are better spent focusing on identifying solutions who costs are decreasing rather than advocating abstractly about the merits of better image quality.

Determining Who will be Winners

While most attention is focused on releasing new features and higher resolutions, winning will be better determined by who provides customers with the lowest overall cost structure. Since demand is not naturally increasing, suppliers most motivate by decreasing costs The lower the cost goes, the more security managers will buy.

The features and functionalities of megapixel cameras are not so dramatically different from 5 years ago but their adoption is significantly up due to significantly lower costs.

- Megapixel cameras themselves are 50 - 80% cheaper than 5 years ago.

- Megapixel cameras can now be integrated with mainstream video management systems.

- The storage for megapixel cameras is 2 to 3x less than 5 years ago.

The companies that lead the charge to reduce the overall costs for high quality imaging will have the best change for success. This is, for instance, why I believe H.264 is so critical for megapixel camera adoption. H.264 significantly reduces two of the remaining cost penalties (storage and bandwidth).

Both security managers and integrators will benefit from paying close attention to this phenomenon.