Axis Video Revenue Down (Q3 2016)

By: John Honovich, Published on Oct 20, 2016

An important milestone. Axis revenue for video products is down year over year.

But Axis is now focusing on 'diversification'.

In this report, we analyze Axis' financials, what this means to them and how it fits within the Chinese expansion globally.

Financial Overview

Overall, Axis revenue was up ~5%. However, all of that growth came from outside of video surveillance.

**** ******* **** ******* **** *************** *** ********:

'*****' **** ** ***%. 'Other' includes ***** *****, ****** control, intercom (e.g.,** **** **** ******** in *** ****), ***.

Down ***** / ** *** *****

*****, *** **** ************ cameras, *** **** **** growth ****** *** **** than * ****** *** this ** *********. ***, Axis ** ******* ** VMS / *** ***** hard (*.*.*,*,*). ********* **** *** of *** ***** *** / *** ***** (***** **** does *** ********) ***** certainly **** * *********** fall ** **** ******* from ****** *****.

*** *** ******* ** that **** ** ********** growing camera ***** *** *** chosen ** **** **** VMS / **** *** 'other' ******** ** *** only **** ****** *** to ******* *** ******* in **** ****** *******.

Diversification ********

****, *** *** ***** time ********, ************ *** 'diversification' ***** ****,******:

*** ***** ******* *** dominated ** ********* **********. As **** **the *************** ** ****’ ********, in September the company unveiled two network loudspeaker models – AXIS C1004-E Network Cabinet Speaker and AXIS C2005 Network Ceiling Speaker. [emphasis added]

*** *********** (***** **** ******* here) *** **** *** of *** **** '****************' Axis *** ******* ********. Axis **** *** ******** their *** *********, ********* an ******** ************ (**), ********* * ***** analytics ********* (********** ***********), **** ****** *******, even** **** ******* ******.

R&D ******** **

** *** ******** ****, Axis ********* ** ****** heavily ** *&*, ** nearly **%, ** ***** for **** **** $*** million *** *** ****. And **** **** ******** to ******* **** *** cameras (**** ******* *********** **** ***** / Axis ************ ***** ******* ***).

*** *** ********* ** **** ultimately *&* ******** ** cameras ***** ** ******* revenue ****** ** ******* continued ******** ** *** **** term.

China ******* ****** ***** / **** ******** **

**** ********* ******* ********** the ******* - ***** (most ************ *********) ** significantly *********** **** ****** sales. *** **** **** some ***** ** **** to ******* ***** *********** but ** *** *** been ******, **** ******** shown ** ********** ****** (*** *** still ************* *********) ********* approach ***** ***, **************, **** poorly.

***********, **** ** ******* that **** *** ***** to *** ******** (*** Dahua) ** ******** **** want. **** ** ******** *****, pursuing ***** ***** '*** to *** *********' ******** intercoms, ****** *******, *********, etc. **** ***** *****. Hikvision *** ***** ***** falter *** ** ***** own ****** (*.*., *****'* dysfunctionality) ** ******* ** Chinese ********** / ******** challenges. *******, ****** ** until **** *******, **** diversification ******** ** * retreat **** ******** *** Chinese **** *** ***** of **** ********** **** market.

****

Comments (10)

Canon already has a strong VMS in Milestone. It no longer makes sense to keep Axis and Milestone separate if their is an aim to provide and "End-to-End" solution

I agree, the Axis partner ruse is up!

Update: Canon video surveillance Americas and EMEA sales will now fall under Axis revenue, Axis confirmed. This will likely increase Axis revenue by 2-5% for the next year relative to the previous year w/o Canon. As such, it will not be a huge factor, but it will somewhat skew Axis results up.

We estimated Canon video surveillance revenue in the Americas and EMEA to be the in $20 - $50 million range annual, compared to Axis ~$800 million annual revenue.

Contrast:

With:

Axis is in trouble. To us it all started when Samsung made the push a couple of years ago. We finally got hit in the head with the huge price differential. It took a year an a half for the quality to get in line but then this issue went away and then we were left with this feeling of how much we were over paying and possibly losing work because we were carrying Axis. This opened the door and Axis was asking us to be patient, they were going to come out with new camera models/lines that were cheaper but they missed the boat, they were cheaper, sure, but had less features and we then started using Samsung even more. Now over the last year and a half they have even more models but they are still slightly more than their competitors and they want us to ask for special pricing every time, well ah no, sorry. They have always known they were pricing their cameras too high, that is why it was always about "value", I get it. Now to me it is getting worse because they want to "diversify", this is just a way of blurring the issue, they now are going to be aggressive regarding the whole Eco system. They are going to want their recorders or soon they will be having deals with free Milestone licenses when using Axis cameras, they will have free access control software integrated with Milestone if you use the A1001 etc. They have no choice, they will always have trouble competing with Hikvision and Hanwha and Dahua etc., they can't sell on price (still). Now I will say I love Axis, they remind me of my own business, we don't sell on price either! We sell on service/expertise and capability and there our customers that want what we have to offer and are willing to pay for this level or shall I say "value". Issue is we are not a manufacturer in a business now flooded by a large quantity of manufacturers making good to great products and these companies are not trying to nor need to own an entire Eco system.

As an aside, I see a second flood of lower price cameras/manufacturers coming to market (just like I say five years ago when Samsung made their push - before Hikvision). I am now carrying one brand and find my self losing projects to competitors carrying $100 cameras, this leaves Axis in the dust and now that old Samsung company, they are making a push with an even lower cost product series to compete with Hikvision. Axis isn't even in the loop on these which is why their share of the business is going down. IMHO.

#2, thanks for the detailed insights into working with Axis.

You mention:

As an aside, I see a second flood of lower price cameras/ manufacturers coming to market

Do you mean new manufacturers (beyond Hikvision)? Who specifically?

It was several years ago that Samsung came to the US and made a push, it was when they had that VP of Sales guy, I can't remember his name, I think it was last year he passed (the guy that ran Paul Reed Smith Guitars).

Their timing was great because it gave us a competitive advantage and there were no credible Japanese/Chinese/Korean manufacturers in the states that were (to me) viable options. Panasonic was out there but they were equally as expensive and Sony wasn't and isn't a player. Bosch was out there but, well somebody fell asleep at the wheel with them.

We had a good run, couple of year where our competitors hadn't jumped the Axis ship. Again, my competitors were going in with Axis i.e. the value proposition, better product, more reliable, less out of box failures. We won project carrying Samsung. We gave Samsung a year to fix their problems, we carried extra $ for the issues and eventually all of their issues went away, took 1.5 years.

So what I am saying now is we have a ton of Japanese/Korean and Chinese manufacturers trying to rule the world that actually have American distribution relationships/a presence.

So five years ago we have a drop in IP camera cost/prices and now with this influx, it jumps down even more. For example I lost a large project recently that was specified Axis and I carry Samsung Wisenet Lite cameras which are in the $200 range. I loose it to a guy using Hikvision and from what I have been able to find out - he is trying to use $178 cameras that when I look at the cut-sheet for the model, going to be hard to reject.

The above scenario is real and this is why I get passionate about Axis's business plan. I get what they are trying to do, again because what they are doing is my business plan as well. Find the differentiators (is that a word?) and sell that. But they make cameras first and foremost. We just need a camera that works and has the features that most customer's need or do what I tell the customer it will do. That's it.

This is fun, thanks and anonymity is key!

For example I lost a large project recently that was specified Axis and I carry Samsung Wisenet Lite cameras which are in the $200 range. I loose it to a guy using Hikvision and from what I have been able to find out - he is trying to use $178 cameras that when I look at the cut-sheet for the model, going to be hard to reject.

I believe you. We've seen numerous examples of that as well. Plus Hikvision's US sales team is like far far larger than Hanwha / Samsung and Hikvision is far more aggressive about price cuts.

the guy that ran Paul Reed Smith Guitars...

Frank De Fina

Axis will have to reduce their prices to avoid losing in front of companies like Hikvision, which although not yet have the quality of Axis, every day are closer.

In Mexico, this year Hikvision has become the no. 1 in IP cameras, leaving Axis in No. 2

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