Debating Axis's IP vs Analog Cost Comparison

We disagree with Axis's claim that IP is lower cost than analog for 14 camera installations. We believe their 'study' is fundamentally flawed and biased. In this report, we critique the study and provide a tutorial on the relative cost of IP and analog products.

[Update 2012: The economics of IP vs Analog have changed significantly since 2010, making these claims and comparison no longer applicable.]

For background, we recommend readers review Axis's IP vs Analog Cost Comparison announcement/report [link no longer available]. The study was prepared by Lusax [link no longer available] (University of Lund, Sweden).

[Update: 1 Hour Webinar on IP vs Analog now included.]

A Very Green(field) Assumption

Axis's study assumes a critically false and biased assumption - that no surveillance equipment is currently being used (i.e., 'greenfield').

The clear majority of organizations buying surveillance systems today already have analog cameras and cabling deployed. A significant portion of that infrastructure can and regularly is reused. Assuming that they do not helps the hypothetical IP case significantly but ignores the practical reality.

With that noted, we will focus on the greenfield scenario to show even there, IP is more expensive.

Specs of the 14 Camera Scenario

To understand the relative costs, let's examine the other main specifications in their study:

• 12 indoor cameras, varifocal lenses, no WDR, no day/night, no vandal; Axis requires the IP bid to use their M3203
• 2 outdoor cameras, varifocal lenses, day/night, WDR, vandal, Axis requires the IP bid to use their P3343-VE
• Record video for up to 7 days at H.264 with a max of 15fps; Axis requires the IP bid to use their Axis Camera Station
• Cable runs are all fairly short - 100 feet or less

For the analog side, Axis requires bidding "quality 'brand' name cameras" and a "mid-end 'brand' name DVR."

Axis's Results

Axis provided a list of 30 security integrators; 5 of them provide hypothetical bids for both IP and analog offerings. For the 14 camera scenario, the average IP bid was 11% less than the average analog bid. The analog bids averaged about $17,000 while the IP bids averaged about $15,000.

Calculating Comparative Costs

We are going to focus on surveillance product costs as they are the main factors driving overall cost. 

IP Costs

• The 12 indoor Axis domes will cost about $4,700 online (average pricing about $390 [link no longer available]).
• The 2 outdoor Axis domes will cost about $1,800 online (average pricing about $900).
• 14 Axis Camera Station licenses will cost about $1,300 online
• PC to run the software will cost about $800 (assuming a SMB tower PC)

The total costs for core surveillance products on the IP bid is about $8,600. In addition there is cabling, mounting, PoE switch, installation costs, etc.

Analog Costs

The integrator has to decide on what analog products to bid, as it is not hard spec'd like the IP side. A few points to keep in mind:

• The Axis M3203 offers basic hardware and imaging (e.g., no WDR, no day/night, not vandal proof plus only a 1 year warranty). The analog camera can be fairly simple with a varifocal lens as the most important requirement. [Note: Axis offers a vandal proof option but it is not specified here.]
• Since Axis requires 15fps per camera, the DVR will need to be 240fps (note: DVRs are generally sold as 120fps, 240fps or 480fps appliances).
• Since Axis wants 7 days of recording at 4CIF, a 1TB DVR should be fine.

With those points noted, let's pick our surveillance products (again using online price):

• The 12 indoor cameras will cost about $200 each or $2,400 total (e.g., a Sony SSCN21A, a Samsung SCC-B5366 [link no longer available] or Pelco IS20-CHV10F [link no longer available])
• The 2 outdoor cameras will cost about $275 each or $550 total
• The 16 channel H.264 240fps DVR with 1 TB will cost about $3,500 (e.g., a Samsung SRD-1670DC [link no longer available] or Exacq 1600-24-1000-ELS [link no longer available])

The total costs for core surveillance products on the analog bid is $6,450.

Let's compare the costs of the core surveillance products:

• IP products: $8,600
• Analog products: $6,450

Most of the other costs are similar: pulling cables, mounting cameras, configuring the system, training the customer, etc. As such, structurally, there's not major cost differences. However, the IP side requires greater skill and more costly techs as a PC needs to set up for the VMS software and a laptop or a $600 field monitor to focus the cameras. By contrast, with analog, you simply boot up the DVR, plug in the cameras and focus them using a cheap hand held monitor.

Our Total Cost Estimate

With the cost comparison above, assuming the less likely case of pure greenfield, for the 14 camera scenario we estimate:

• Analog: $11,000 - $12,000
• IP: $13,500 - $14,000

In the more likely scenario that the site can reuse existing cabling, we expect the analog cost to be $1,000 or more lower than greenfield (the exact amount lower depends on how much cabling and cameras are reused).

In percentage terms, we expect analog to be 20% for greenfield and around 30% for replacement of existing system.

Alternative Bids / Products

Certainly, different products could be bid. For instance, rather than the proprietary Axis Camera Station, the less expensive and more open Milestone Essential can be substituted. This will reduce the IP cost around $600. You might also choose a different outdoor dome as the Axis P series is fairly expensively and likely overkill for this small site scenario.

On the analog side, you can go even cheaper as well. There are solid Taiwan and Chinese DVRs with similar specifications for under $3,000. You could save on cameras as well by following the same process.

Structural Cost Savings for Analog

The bottom line is that analog has structural cost savings vs Standard definition IP. It's simply more economical to encode cameras in a group (i.e., a DVR) then to encode them individually (i.e., in an IP camera).

For any given feature set, IP cameras always cost significantly more than analog. While a DVR costs more than PC plus VMS software, that increase in cost is less than the savings on the camera side.

Is IP Still Worth It?

Cost is not everything. IP still might be worth based on other important factors such as (1) using their own PCs/servers, (2) using the same cabling as their PCs, (3) flexibility in expansion, (4) the moderately improved resolution of the SVGA IP cameras over the VGA cameras, etc.

However, a fair bid by competent integrators in this 14 camera scenario will give the price advantage to analog.

The Importance of Megapixel

We are surprised that the 'hypothetical' bid does not include megapixel because the higher resolution of IP provides the strongest change for an IP system to beat analog.

• The price increase is minimal: For instance, that same Axis M series has a higher resolution option (the HD 720p M3204) for only $60 more. That's a major increase in detail/image quality for a little money. Now, Axis has a major hole in its portfolio - only it's expensive premium cameras support over 720p. However, for less than $100 more, we can choose from (15) HD 1080p, 2MP or 3MP cameras.
• With the greater resolution, we can replace some of the indoor cameras that are close together (saving camera cost, install cost, VMS software license cost, etc.)
• With the greater resolution, we can provide far superior outdoor coverage that would be impractical or extremely expensive with analog (requiring deployment of numerous outdoor analog cameras).

Note: Pro members can review our analysis of Megapixel IP vs Analog Cameras where we breakdown and compare the costs and positioning of the two options.

The full 60 minute webinar is embedded below. Segment Breakdown:

• Start: What percentage of new cameras are IP?
• 3 Minute Mark: What impact did the Study have on Axis?
• 6 Minute Mark: For 14 Cameras, what would you use?
• 15 Minute Mark: Megapixel vs Multiple SD Tradeoffs
• 21 Minute Mark: Low light Megapixel Issues Examined
• 25 Minute Mark: Would you use a $1,000 DVR?
• 33 Minute Mark: Differentiators Inexpensive DVRs vs More Expensive
• 40 Minute Mark: PoS Integration Options
• 46 Minute Mark: For upgrading 16 analog cameras, use Hybrid DVR or VMS Software + Encoders?
• 57 Minute Mark: Maintenance Support Costs