Axis Bad Financial Results Again (Q4 2014)

Author: John Honovich, Published on Jan 30, 2015

Bad results last quarter spurred a debate about Axis performance.

Now, Axis has turned in equally bad Q4 2014 results.

In this note, we look at:

  • America's weakness and inventory drop
  • Asia's weakness
  • Avigilon and analytics
  • AVHS progress
  • Competing with VMS partners
  • Failing with smaller systems and emerging markets
  • Outlook - the new normal

*** ******* **** ******* ******* * ****** ***** **** ***********.

***, **** *** ****** ** ******* *** ** **** *******.

** **** ****, ** **** **:

  • *******'* ******** *** ********* ****
  • ****'* ********
  • ******** *** *********
  • **** ********
  • ********* **** *** ********
  • ******* **** ******* ******* *** ******** *******
  • ******* - *** *** ******

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

Overall **********

**** ********* ** **** *** **** **** **% - **% growth.

*******, ** ****** *** **** *% ** ***** **********, *** second ******* ** * *** **** **** *******. *** *** year, **** *** ******** ** **%, **%, *% *** *% growth.

*** ******* ** / **** *** **** ******,***** ************* ***********'* **** *********.

Americas **** *** ********* ****

**** **** ****, ******** **** **** *% ** ***** **********. Quarter **** *******, ******* ******** ********.

**** ***** * *********** **** ** ********* ****** *** *** distributors ** * *** ****** ** *** **** ******. ** believe * ***** ****** ** **** ** **** ********* *************** and *** ****************** ** ********* ****** **** / ***** ** ****. *** ***** ** ***** ******** *** ******* ******* *** Axis *** ****** ******* **.

Asia ****

**** *** ********* ****, ** **** *% ****** ** ***** currencies. **** ** **** ****** **** *** ******** ******* **** Axis, **** **** ****, **** **% ** ****. **** ********* that "*** ******** **** ** **** *** **** ***** **** what ** ********."

** *** **** ****, ***** ******* **********, ******* ************ *********, finished **** ** **% ******* ** ~$*.* ******* *** *******.

Avigilon *** *********

**** ************ *********** / ** ****** *** ****, ****** ****:

  • "** ******* ********* *** *** *** * *** ****** ** the ****** ***"
  • "*** *** ********* ** *** ****** ** *** ********* **** we **** *** ***** **********"
  • "** ***’* **** *** ******** ** *** *********** **** ** comes ** **** ***********."

AVHS ********

**** ***** ********,****, *** ********* ** *** ** ***** '********* ******', ****** Axis ******** **** ** *** ‘**** ***** *** ******* ******’, despite ***** ******* *** *********** * ****** ***.

Competing **** *** ********

**** ** ********************* **** ***** *** ********. **** ********** **** *** ***** ****** *** **********, **** ******* ********, "*** *** ******** ***’* ********* **** ***** own ********." ******, ***** ******* *******,*********, **** ********** ***** **** **** ****** **** ***. ******* ***** ********. ***** ***** ********, etc.

**** ********** **** **** *** **** ***** *** ******** **** was ******, *********** * "*********** *** **** ******", *** **** partners **** "**** ******** *** **** ***** ****", ****** ************* that "***** *** ******** ***** **."

Failing **** ******* ******* *** ******** *******

*** ******* ******* *** **** ** **** **** **** *** ***** that ****** ** ***** ****** ** ******* ******* *** ******** markets *** **** *** ********* *** ******* ********* *** ******* to ******* ****.

****** *** **********, ***** ******* *** *** ******* ** ****, ** ********** expensive. **** ** ** ** '*****', *** ***** ***** ** 2x ** ** **** ***** *** *********** *** ******** *** small / *** *******.

******* ***********, **** ** ******** ** *** *** ****** ********, while ********* *** ***** **** **** *** $*** ** ** dome *********** (** **** **** ***** ** ****). **** ********* to ** **** **** *******, ***** *********, ******* ******* ********* ********* **** ********* ** *** ******* *** **** ****** **** of *** ******.

Outlook - *** *** ******

**** ******* ** ******* ******** **** **** ** ******** *** small ******* / *** *** ****** *** **** *** ********* results **** ******** ** ******* **** ********* **********.

*** ***** ****, **** * *** ***** ***, ** **-**% growth *** *** * ***** ** *** ****, ********* *** to *** ********** ** *** ****** *** **** ******* ** Axis ******* / *********** *********.

Comments (17)

This quarter is further evidence that Axis is ignoring the small systems / low end market

Is there any evidence that they can actually compete with the low-cost Asian manufacturers in that space?

It appears they are not even trying that much.

Look at their dome camera offerings (which are the most popular overall type). They have just 4 under $400. None of them have integrated IR.

Hikvision has 22 dome cameras, most with IR, many at half their price of Axis.

I fully believe Axis can demand a modest premium over Hikvision but not at the price gap they are today.

M-series price points are pretty competitive.

Competitive with whom? I presume you mean Panasonic, Sony, etc., right?

But the problem for all of them is the competition with Hik, Dahua, etc. For example, see Panasonic's acknowledgement in today's VMS deal.

Competitive with Geovision, Vivotek, etc...those lines.

I need to research the Dahua HDCVI a little more. It seems like a no-brainer for a retrofit/hybrid solution, but for a new install I don't think I'd be pulling coax again.

Those Taiwan manufacturers are closer to Axis, for comparable feature sets. However, there are some notable gaps, e.g., Vivotek's closest comparable to the Axis M3004.

The bigger issue is that the Taiwan companies are under just as much or more pressure from the Chinese manufacturers as the big Western brands.

Btw, for price comparisons, I am looking just at Dahua and Hikvision IP offerings. Their analog HD 'solutions' are even less than their already low cost IP ones.

Interesting comparison. I worked for an integrator that used primarily Geovision products for about 4 years. We crushed it against AXIS. It's going to be interesting to see Geovision on their heals as HIKvision emerges.

That Vivotek model looks exactly like the Geovision FD series. I suppose they're OEM's of the same manufacturer?

I'm new to this whole IPVM world. What a wealth of knowledge. I look forward to seeing your Dahua and HIKvision comparisons.

Jeff, welcome!

Good eye on the Vivotek / Geovision comparison. I am not sure myself but there's quite a lot of OEMing going on in general!

Btw, our most recent Dahua / Hikvision comparison is here: Hikvision HDTVI VS Dahua HDCVI

Agree that Axis' market position is becomimg more tenuous but since the Swedish Krona got hammered by the dollar this year I think to fairly judge their US performance you need to look at those numbers in USD.

We are looking at it in USD, i.e., local currency terms.

I think that this is no surprise to anyone. I too agree that the western manufacturers have not yet understood/reacted to what's coming from China. But when they do how will they react. Will Axis/Avigilon/Bosch... drop prices by 50%? With the manufacturing overheads that they have, can they reduce the prices by that much? It is as if we are talking about 2 different worlds. The only thing surprising for me is that we don't hear about more hardware manufacturers closing shop.

I don't think any of the big IP brands need to match Hikvison / Chinese companies. However, they need to close the gap somewhat if they don't want revenue to continue to decelerate and eventually decline.

Plus, eventually, Hikvision et al. will want / need to raise prices as they bring on more sales, marketing and support staff.

Finally, the companies being hurt the most are certainly the tier 2 and 3 analog OEMs who are either small subsidiaries of public companies or private ones. If Axis is growing at ~7%, you can be certain that those companies are seeing revenues actually deline 10-20%.

[IPVM Mod Note: Edited for clarity]

Most of our past projects were awarded to the lowest price. Only a few ever consider higher pricing with premium cameras and advanced features. For example, Axis, Arecont, Panasonic, and Hikvision offer different levels of advanced features.

For the sake of comparison, we think of our mainstream brands like this:

Highest : Axis - Premium features, with resolution same or lower that competitor

Arecont - Premium features, resolution same as competitors

Panasonic - Premium features , same software platform

Lowest : Hikvision - Generally comparable quality, warranty, and replacement as the others. Hikvision has some software features we don't like, but for the price we sacrifice the features and use/emphasize the features of the VMS instead.

We've used this approach for 2-3 years.

We have learned that:

  • You cannot justify higher cost for namesake or reputation.
  • Sometimes adding in other components for the achievable results (ie: illuminators) is a good solution.

This market is not biased to be elitist or arrogant, as with any market you must keep up and make concessions with the different options.

If Axis wants to remain dominant for the next 10 years they need to aquire competitors, market share, and complimentary technologies. They are trying to combat Avigilon but not willing to go "all in", innovation is limited to their Lund talent, and their partner ecosystem has become a ruse.

Last year, I asked, What If Axis Acquired Genetec?

That said, I still think Axis would be hard pressed to do any major acquisitions.

Why?

I agree with your point about being hard pressed to do any major aquisitions, culturally they lack the chutzpah, and feel they don't need foreign companies to help innovate.

Also, there is the real concern about blowing up the partner ecosystem. For example, if they buy Genetec (or any other major VMS) what will the remaining VMSes do? How much will they lose in undermining those partnerships?

I still think buying a big player like Genetec is a net benefit for Axis but it would not come without serious headaches.

That said, looking back, it appears foolish that Axis did not buy VideoIQ. So now Avigilon has a strong analytics core offering and Axis has dozens of weak partnerships with small analytic partners that need to be manually added on.

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