Busted - Wireless Surveillance Sales

Author: John Honovich, Published on Mar 14, 2013

"Boom Times Ahead for Wireless Video Surveillance," blares a trade magazine. Ironically, the underlying stats show the opposite - a bust for wireless surveillance. Unfortunately, warped statistics, used to help buyers of these reports, paints a misleading picture. In this note, we break down the state of wireless surveillance, the problems it faces and its future growth prospects.

Doubling?

A recent report says that global wireless surveillance infrastructure sales are set to double by 2016. That sounds good abstractly but once you dig into the details, it is far less impressive and even a bit depressing. On an annual basis, the average growth rate projected is ~17% which is notably less than they project for IP cameras over a similar time period.

Here's the raw data. Look closely at this because it reveals a very peculiar assumption:

When you map out the year over year growth rate, it shows very weak actual growth last year but continuously accelerating projected growth rates for the next 5 years. Here's our breakdown of the numbers:

While current achieved growth is an anemic 11%, by 2017, the annual growth rate will somehow nearly double to 21.3%.

Either this is a clever attempt to make a weak market look stronger or there is some compelling theory about why wireless growth rates are going to steadily accelerate throughout the decade.

Wireless Growth Drivers?

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The report cites Asia as the growth driver noting the "lack of any existing wired surveillance infrastructure, combined with the low cost of wireless and the booming demand for security." Surveillance sales are clearly growing in Asia, but no one believes that they are accelerating at the rate assumed in these projections. Plus, given that Western sales are likely to remain below the global average, this means China would have to increase wireless surveillance purchases by 40%+ each year to deliver the 2016 or 2017 projections.

The same problems for wireless in the West will likely harm Asia. Wireless is far harder to deploy than wired networks and much more likely to fail. Can we presume that technicians in Asia will be much better at designing and deploying wireless systems than those in the West? This is necessary to justify the prediction.

No Wireless Surveillance Product Improvements

Wireless surveillance product improvements have ground to a halt. There is little, if any difference between today's products and those from three years ago. Investment in the space is non existent. The biggest wireless surveillance champion, Firetide, has rapidly retreated and is barely even heard from anymore. It is unreasonable to assume accelerating growth for a product category with historical flawed performance unless the technology is improving; But it is not.

Wireless Shift Last Few Years

The biggest shift in wireless surveillance in the last few years has been the emergence of the sub $100 wireless node market, pioneered by Ubiquiti. Prior to that, wireless surveillance offerings were typically 5x or more expensive. This really helped expand wireless surveillance use, and now Ubiquiti is by far the most commonly used offering in IPVM integrator survey of wireless surveillance. Though Ubiquiti has been embroiled in a massive counterfeiting problem, their product approach continues and is becoming the norm for point to point wireless connections.

Ironically, the IHS report lists Cisco as the top vendor in the wireless surveillance market. This might be but only because the rankings are done on pure revenue and Cisco per unit cost is ~10x that of Ubiquiti. However, on a unit basis, it is no contest. Moreover, identifying what percentage of Cisco or Ubiquiti nodes are used for surveillance is very hard considering their use in various applications without any clear delineation.

Wireless Future

Wireless should match the pattern of IP camera growth as IP is an enabler of wireless. Plus, sub $100 wireless nodes will expand use, if not overall revenue generation.

However, the big shift we see in the next 5 years is cellular plus edge storage. Both technologies are improving rapidly and naturally complement each other. Cellular eliminates the cost, complexity and risk of building one's own wireless network while edge storage eliminates the bandwidth demands for constant full streaming. While short, simple links will still benefit from using sub $100 wireless nodes and high security applications will want to build their own private wireless networks, cellular plus edge storage will arise as a critical alternative for projects in the middle.

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