Axis Hosted Video Decade of Failure

Author: Brian Karas, Published on Aug 29, 2016

Do you want to 'head up' Axis hosted video offerings?

Axis almost never publicly promotes senior positions, but for such an unattractive job they made an exception with the following seen on LinkedIn:

For more than a decade, Axis hosted video offerings (previously STS, now AVHS) has struggled and is still going nowhere.

In this report, based on inside accounts, we examine what went wrong, how Axis failed while Dropcam built a half billion dollar business they sold to Google and why Axis now competes against itself in hosted video.

** *** **** ** '**** **' **** ****** ***** *********?

**** ****** ***** ******** ******** ****** *********, *** *** **** ** unattractive *** **** **** ** ********* **** *** ********* **** ** LinkedIn:

*** **** **** * ******, **** ****** ***** ********* (********** STS, *** ****) *** ********* *** ** ***** ***** *******.

** **** ******, ***** ** ****** ********, ** ******* **** went *****, *** **** ****** ***** ******* ***** * **** billion ****** ******** **** **** ** ****** *** *** **** *** ******** against ****** ** ****** *****.

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

AVHS ******* ** ********

**** *** ** *** "*****" ********* *****, ******* *** *****. Their ******* ******** *** ****** "** ********",* *** ** *** **************** ********* ***/*** ****** *** ******* ******* ******** *** ******* interface. ** *** **** ** ******** ******** ** **** ** cameras **** ***** **** *** *********, ****** **** * *** fit *** *** ******/*****-******** *** ***** **** ******** *** ** Services.

*** ******** *** ********* ** **** ** ****. **** *** costly (******* ** *** **** *** ~$**-$**/******/*****). * ****** *** is **** ************* ** **** ********* ** ** * "******** grade ******* ** ****" *** "**** *********** ****** * *******". Here ******'* **** **** **** **** ****, ********** **** **** **********.

** **** **** **** **** **** ********** ********* **** **** had ******** ** *** ***** **** ** **** **** ********* with *** ******** ** ***** ***** ** *** *****. ****** **** ******** ************* ** **** ******* **** **** ***** ***** **** *******.

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

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*** **** ** ********* * *** *** **** ******** ** sell * *******-***** ******* ** *** ************* **** **** ******** for **** **** *********. *******, *** **** ******** *** *** free, ********* *** ******* ** *** **** * ******* ***-****** fee.

Current ***** ** ****

*** ****** ****** **** ** *** ****** ** ***** ****** *** simply *********** ****, *** **** *** **** ******** ** **** any ***** *********** ** ****. **** **** * ****** ********* base **** **** ********* ** *******, *** **** ****** *** service ** "**** *****", ******* *** ***** ************.

Complicated ***** ******* ** ******* ****** *****

**** ** * ********-***** *******, **** ** **********-***** ***** *******. Customers ****** ****** *** ** **** ****** *** ********* ** the ******* **** * *** ****** **** *** **** *** with *******, ** * ****** ** ***** ************. **** ** they *****, **** ***** **** *** ***** ***** ****** ** much ****** **** *******.

**** ****** **** ***** ** **** ******** *** **** *** time ** ******** ********* ** ** ********* **** ****, *** with **** ***** ***** ******** ****** **** *** ****, ** a *-**** ******* ***, *** **** ******* **** *** **** to ******* ** ******* **** **** ****** ****** ** *****.

Axis ****** ***** **** *******

**** *** *** ** ***** ** ****** **** **** * solid ********, *** *** ****** ** ** **. **** **** been ******** ** ******* *** ******* ***** ********-******** ******** ** the side ** ******-***** ********* ** ******* **** ** ***** *** subscription ****, *** ** *** ************* ******** **** ****** ****** apps/remote ****** ** *** ********** ****. ** ********, ***** **** from ********* *** ***** ******* ***** ******* *** **** ****** apps **** *** **** ********* *** *** *** ****** **** wants ********* ** *** ******.

** ** ******** **** **** **** ******* ****, *** ***** are ** ********** ** **** **** ********** ******** *** **** Axis ** **** ** ***** ** *** *** *********** *****.

Comments (13)

Two issues for Axis, the AVHS platform is designed to be OEM'd and is incomplete out of the box. Secondly, the don't sell it direct which limits their ability to influence the final product.

IPVM has suggested numerous times that AVHS is a failure of a product. I curious how you define that?

The $2.8B acquisition by Cannon last year represented a %50 premium over Axis’ stock price. That happened despite several poor financial reports from Axis where AVHS (although small by percentage of overall revenue) was one of the only shinning areas of growth. AVHS may not have given Axis the surge in growth like the VSaaS offering from Alarm.com or the insane purchase premium boasted by Dropcam, but it did help Axis secure a monster buyout.

IPVM has also suggested that VSaaS growth is weak in general for an emerging technology (26% CAGR) but by comparison to the growth of the rest of the industry, it is more than double. Everything is relative right? I would agree with the argument that AVHS is feature limited or niche in application, but an outright failure? That seems like a surprisingly hash assessment coming from IPVM(wink).

Nick,

You love some cloud video, don't you ;)

That happened despite several poor financial reports from Axis where AVHS (although small by percentage of overall revenue) was one of the only shinning areas of growth.

I am not sure where you are getting this. Axis does not break down product segments in their financials.

That said, we can get a fairly good sense of what is doing well for Axis based on what they release and they promote. AVHS has very little on either front for a number of years now, which is a very bearish signal.

Let's find some common ground here. The issue is not that cloud video is impossible to make it as a business. The issue is how Axis went about it. We are bullish about Axis Companion, it is an excellent cloud video access implementation at an attractive price (free to sell more cameras). But AVHS suffered from too many errors. Cloud is the future? Yes. AVHS model of multi-level OEMing / Reselling? No.

Nick,

"I would agree with the argument that AVHS is feature limited or niche in application, but an outright failure? That seems like a surprisingly hash assessment coming from IPVM(wink)."

I'm not sure how you can associate the relative success or failure of AVHS to Axis getting bought by Canon at what most would agree was a ridiculously high price. What is the revenue generated by AVHS vs Axis revenue as a whole? I can not imagine it is anywhere close to being significant in the grand scheme of the value of buying Axis.

What I find the most confusing is:

How can Axis offer two competing platforms (AVHS vs Companion) with two wildly different pricing structures? Anyone who is paying AVHS monthly fees who happens to stumble across Companion would certainly feel that they are being hosed by paying AVHS rates for the same feature sets that Companion offers for free, no?

How can Axis offer two competing platforms (AVHS vs Companion) with two wildly different pricing structures?

Companion is a turn-key product marketed to end-users, and sold directly under the Axis brand by dealers.

AVHS is a framework that Axis sells to a hosting provider who then adds some of their own components or services on top. That is then sold/marketed under a new brand (ex: Secure-i).

End user customers of AVHS most likely do not know that they are using AVHS.

As for the fees, users of AVHS who price shop the product might come across several cheaper alternatives, not just Companion. Or, if they are less tech savvy (which I would suspect), they may not realize what their alternatives are.

Disclaimer - I work for Axis. Not going to comment other than to say that Companion is not a cloud service in the same way as AVHS. Storage for Companion is at the local site, while storage for AVHS is (by definition) in the cloud. Just wanted to clarify.

Agreed, thanks 3.

We think most buyers will be happy with cloud access alone vs cloud access + cloud recording, especially given the relative cost / limitations of AVHS.

The problem is not VSAAS, the problem is the Axis AVHS (why put VHS in your service name???) is just a crappy product. It has been that since day 1, very juvenile.

Lack of traction over the past 10 years is an indictment of the business model (reselling "cloud" service through dealer/integrator channels) rather than necessarily the offering itself.

The history of everything cloudy--or even going back several decades when it was called simply "on-line"--shows that it is an economy of scale business that doesn't need or tolerate a middle-man in the sales and operations process.

The business depends on many happy customers who are paying monthly, receiving a sense of value, and not experiencing too many technical problems. If a middle man is not providing value month-to-month then they don't deserve that monthly revenue. What's more, margins are low which requires tremendous scale, which a small reseller can't afford to support or operate. Everybody loses.

Local central monitoring? Maybe. But scaled up mass-marketed, low-touch, just-cash-the-monthly-checks? No.

Axis is still looking:

Update: Axis promoted RSM Mike King to this position.

So....they couldn't find anyone to apply? Or are they not looking in the right places? Or just admitting that product is a failure due to their execution?

We do not have any information about their decision process / options so could not speculate.

It will be interesting to see what they do with AVHS. They still clearly want to go to a recurring revenue model, they just need to figure out how to do it better than the current approach.

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