Arlo, Bigger Than Avigilon, More Valuable Than Axis

By: John Honovich, Published on Feb 08, 2018

Arlo, the wireless IP camera offering that Netgear bought ~5 years ago for a few tens of millions is now doing more revenue than Avigilon and likely will get a higher market valuation than Axis' $3+ billion USD.

Sounds crazy to those in the professional video surveillance market but that is the details and projections coming forward from Netgear's plan to spin out Arlo.

[Related - IPVM test of Arlo Camera System and IPVM test of Arlo Go Cellular Camera.]

In this note, we analyze Arlo's financials, examine the consumer video surveillance space, compare to other video surveillance major players and explain why Arlo faces major competitive threats in the next 3 - 5 years.

****, *** ******** ** camera ******** **** ******* bought ~* ***** *** for * *** **** of ******** ** *** doing **** ******* **** Avigilon *** ****** **** get * ****** ****** valuation **** ****' $*+ billion ***.

****** ***** ** ***** in *** ************ ***** surveillance ****** *** **** is *** ******* *** projections ****** ******* ***********'* **** ** **** out ****.

[******* -**** **** ** **** Camera ************* **** ** **** Go ******** ******.]

** **** ****, ** analyze ****'* **********, ******* the ******** ***** ************ space, ******* ** ***** video ************ ***** ******* and ******* *** **** faces ***** *********** ******* in *** **** * - * *****.

[***************]

Why - ******* **** **** ******* ********

*** *********** ****** *** this ********* ****** ** customer ******** **** ******* wire **** *******, **** Arlo. **** ***** *** problem ** *** ** run ***** ******* ***'* house ** ***** ********, eliminating **** *** **** and *** ********** ****** or ******* *****, ****** it ****** *** ********* to *** ***** *** security ****** ******. ** be *****, **** **** drawbacks, **** ******* ******* / ***** ************ ***** with ******* ********* ** video ******* *** ** that.

Surging **** ******* - $*** ******* ****

****'* ******* ******* **** $188 ******* ** **** to $*** ******* ** 2017, **** ** **** along, ****** ** ******* sales ********** $*** ******* (at * $***+ ******* revenue *** ****). *******, Arlo ** ********* *********** 2 ******* ********* *** 7+ ******* ******* ****.

*** **** ******** ** that ****'* ******* ******* is **** ~*% ** sales ** ****, **** by ***** ********* * days ** **** ******* (though ****** ******* ******* sales ***** **********'* **** Nest ******** **** / shorter **** ******). *** table **** ****'* ********** shows *** *********:

*** **** ***** ***** how **** **** *** been ******* **** *** past * ***** (**** the ******** ****** *** each ** / ******* quarter):

Share ********

******* ** ******** **** as #* ** ** IP ****** ***** **** over **% ** *** market, ** **** ******* from***** ** **** / Arlo *****************:

******* ** *** ******** side ****** * ******* pattern ** ****'* ******* position, **** ******* / Dropcam ****** ******* ******.

$378 ******* ** **********

****'* $*** ******* ** quite **** *** ***** surveillance. *** *******, ********* is $***+ *******, ******* is ~$***, ******** ** ~$400 *******, ****** ** ~$600 *******, ***. (*************** ******* / ********** Directory).

*** ***** ***** ******** is ****'* ******. **** 100% **** **** ****** and *********** *** ~**% growth *** *** **** few *****, **** **** Arlo ******** **** $*** million *** ** ***** way ** $* ******* in ******* (******, ** we **** ******* ** the **********, **** ***** major *****).

Marketed ************** ********* ** $*.* *******, ****** **** ****

**** *** ******** *** ~$2.8 ******* *** *** stock, ***** ******, ***** stays ** **** *****. By ********, ** ******* is ********** $*.* ******* for ****, ** *** reports [**** ** ****** available]:

****** ******** ******** ******* Trip ******** ****Arlo ***** ****** ** ****** ** $*.* *******, topping the price Alphabet's Google paid for Nest. Google bought Nest Labs in January 2014 for $3.2 billion. Nest makes smart thermostats, smoke detectors, security cameras and other devices.

**** *** **** ******* at ***% **** **** year *** **** ** the **** ***** *****, Chowdhry ****.

"******* **** ****** ******** to **** **** **% on * ******* **** of ***** $*** *******," he **** ** * report ** ******* *********. "Conservatively, ** ** ******* a ******* ****** **** of **% *** ****** 2018, ** ***** (****) revenue ** ***** $*** million ** ****** ****. Less **** *% ** U.S. ********** *** ** Arlo, ***** ***** ** huge ****** ***** *** Arlo." [******** *****]

* *****-******* ****** ********* may **** ******** *** investors ****** **** ****** stories *** *** ******* to *** * ******* for ****. ****** **** Avigilon's ******* *** ***** $200 *******, **** ******* their **** ********* ** $1.4 *******, ***** ** be ******* ***** ******* that *** ** *** peak ** ********'* ********.

Amazing ***** / ****** *** *******

**** ***** *** ***** more ******* ** **** Netgear *** *** ******* or ****** **** ******* / ******* **** **** cameras. **** ****** * California ************ (***** ** ******* back ** ****)** **** *** ~$** million. ***** *** ***** and *** **** **** then ** * *******.

*******, ** *** **** few ***** ***** ********, as ******** ******** ** video ************ *** ****** to ********* ******* ***** to **** ****** ****, combined **** *******'* ****** channel ********.

Competitive ******* ***********

*********** *** *** ******* in *** ******** ***** surveillance ****** *** ********* the ******** ** **** market. *** ** *** past ****, ******** ******** have **** ** ******.

***********, *** ******* ****-**** camera ****** ** ***** to **** ********. *** challenge ** ******* ** independent **** *** ********* the ********* ** *** these ****** *** *** rallying *** ***** ***** Arlo's ********** ********. **** might ** * ****** ship **** ****** **** $1 ******* *** **** are **** ****** ** hit ***** ********* ** rivals ***** ** *** use ***** *** ******* power ******* ****.

Vote / ****

Comments (15)

I helped, tried to help, a friend install one of these last summer. We got so frustrated with trying to get the video up and running on a consistent basis we finally gave up and sent it back. To me one of the big issues today, and not just with video, is that the average consumer no longer expects any kink of quality to what they buy.  Whether it is a wireless IP camera or going out to eat at restaurant people just don't seem to care any more. I guess this is one of the side affects of the instant society. If you don't like it then buy something else online and have it the same day.

Two of my coworkers whom I highly respect regarding there technical skills love the Arlo line that they installed in their homes,  and highly recommend them to others. My guess is that much of their success has been word of mouth.

Its a no brainer that the Arlo was successful as it gave what every consumer wants: Hassle free wireless. They also got the setup and software right. Super easy to setup and easy to manage. Goes to show you that a simple idea combined with intense focus on getting it right can be super successful. Ring is the same way. The consumer market can sometimes be difficult to get into but when you get it right it can be wild! Awesome!

To your point more often than not when you have a strong technical background we typically overthink the simple things. The first Axis Companion we installed was a mess. We put static IP's in everything and put it through the normal paces when we should have just taken to the customers site and plugged it in and let it work. 

Overnight, it seems, Arlo dominates the local Fry's display...

 

Design had a fixed password, until they got caught.

Maybe not so secure.  I would recommend keeping an eye on the competitors.  Swoopy cool revenue numbers and gushy analyst reports do not necessarily imply a secure product.  See previous post r.e. tolerance of poor quality.

Rodney, and as our multiple Arlo tests have found, it's not particularly good quality all around. But being early and having a strong channel will get you places, at least in the short term.

Design had a fixed password, until they got caught...

‘Getting caught’ is a prerequisite to employment at Arlo:

 

The timing of this piece is funny because i was recently at a Target store and I saw an Arlo camera in the electronics section. Having the retail presence is huge for their channel. Most people with their own homes would not need more than 1 or 2 cameras and this gives them tremendous availability to their average customer.

Maybe Arlo is a big reason why Lorex Flir was willing to sell so cheap because they were getting crushed in that market? I'm simply thinking out loud here...

As for Lorex, probably not. Lorex was big in the traditional wired kit space but was just starting to enter the wirefree one. Related, likely that FLIR was not interested in spending development in that area because even their new wirefree kit was OEMed.

IMHO This seems like it was right time, right place for Netgear.  Their marketing folks understood what the market was asking for and leadership must have listened.  They got in fairly early and spent money (acquisition, dev, marketing) to go after a mass consumer grade wire free camera solution.  Finally, they had a huge amount of resources to leverage in the process.

Hopefully with continued consumer adoption in this type of product we'll see the trickle down effect of money being spent in product development as manufacturers compete. This could ultimately result in more robust/full featured solutions which become realistic for more demanding applications.

Interesting article since as cctv engineers i think its not always best solution going through wireless solutions a lot, so has there been any tests in checking backdoor vulnerabilities for these wireless cameras?

Arlo's S1 for the IPO has been released. Notable, Q1 revenue is up ~66% year over year, driven at least somewhat by doubling sales and marketing expenditure:

 

Devices/Services breakdown:

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