Desperate Moves: AVHS and HDcctv

By: John Honovich, Published on Sep 11, 2011

In the last year, quite a number of incumbent security providers have launched VSaaS using Axis's AVHS service or HDcctv cameras and recorders. Rationally, this is bizarre. The business case is weak and the products are far from being competitive with mainstream (analog or IP) options. So why is this happening?

Recently, I was speaking with an executive at a company rolling out an AVHS VSaaS service and we were discussing my concerns. He bluntly responded that this is a really difficult market and that he needs to do something to increase revenues. Then it hit me that this was basically a poorly though out, desperate move.

Many incumbents are in tough positions: While IP is growing, it is cannibalizing existing analog sales. Worse, much of IP's growth is going to outsiders so it is likely a net negative for incumbents.

However, rolling out AVHS or HDcctv stinks of desperation. Neither has much chance of short term major revenue boost or long term major market success. Let's examine each one:

AVHS Challenges

AVHS's channel model dooms it. While most successful SaaS providers develop and sell their services direct to end users, Axis's model continues to grow more complex. For example:

  • Axis sells AVHS software
  • EMC hosts the AVHS software and storage
  • National integrator buys this service from EMC
  • Regional dealer or integrator buys the service from national integrator
  • End user buys from regional dealer or integrator

This is a highly inefficient model that drives up cost and abandons one of the key value drivers of SaaS - the ability to use the Internet to cut out the middleman. Of course, it should be no surprise that AVHS partner end user pricing continues to be uncompetitive.

The second related problem for AVHS is lack of product development, made far worse by these layers of re-sellers and partners. Today, AVHS, compared to even Chinese DVRs, is essentially a toy - lacking dozens of fundamental features expected for years by surveillance customers. Axis seemingly expects partners/resellers to do their own development to rectify AVHS's shortcoming. Instead, we continuously see the same service with simply different logos. Of course, this should not be surprising as almost none of these partners have real software development teams (note: the one IT guy who writes excel scripts does not count).

VSaaS can ultimately be very successful but the current Axis model cannot. For instance, Axis could combine their AVHS powered IP cameras and AVHS enabled on-site iomega NASes, sell it from their own site and offer a free plan for using local NAS recording. This would be extremely attractive and spur selling far more Axis devices than the convoluted current channel model. Of course, the downside is that integrators and partners will revolt (as if Axis's current buy anywhere approach is not disliked enough).

Axis will go direct or others will do so. Either way, the winners in the VSaaS market will cut out the middlemen and maximize their product development without having to cut in numerous levels of partners.

Get Notified of Video Surveillance Breaking News
Get Notified of Video Surveillance Breaking News

HDcctv Challenges

HDcctv has many problems and barriers.

The most fundamental challenge is HDcctv's lack of interoperability with any existing system - DVR, NVR, VMS, etc. You want to use HDcctv, you have to change recording platforms. Huge barrier. Anytime you have a new product category that requires this, best case scenario is a long slow march, most likely scenario is collapse. This pattern is common and has equally impacted analytics and IP cameras. For more on this read our note on "Fundamental Barriers to Surveillance Innovation".

The upside of HDcctv is (1) no camera network configuration and (2) reuse of existing cabling (maybe/sometimes). These are certainly attractive. The big question is what are the downsides? Unfortunately, they are many:

  • Inflexible camera choice: One cannot mix and match analog and HDcctv inputs. For example, if you buy a 10 port DVR that has 8 analog and 2 HDcctv ports, you have to buy another recorder if you want to have more than 2 HDcctv cameras.
  • High pricing: HDcctv spokespeople continue to shift back the date when pricing will be competitive with IP cameras. Back in 2009, it was immediately, now it is sometime in the next few years.
  • Limited product availability, looming incompatibility among HDcctv / HD SDI products, no powerful leader, negative promotional campaigns, conflict of interest, etc. All this has been most recently addressed in our September 2011 HDcctv update.

We do believe that HDcctv (or at least HD SDI) can establish a niche position in the market. However, there are simply too many structural problems for it to become a major force in the surveillance market.

Conclusions

The best analogy for these two efforts is what happened with video analytics and ObjectVideo's partner program 6 - 8 years ago. Like analytics, VSaaS is now considered the next big thing and, understandably people do not want to be left out. Even worse, with deteriorating economic conditions, the urgency of 'doing something' increases. However, a careful consideration of the issues each of these offerings face should dissuade reasonable people from wasting their energy on such efforts.

2 reports cite this report:

Axis Guardian - Cloud VMS And Alarm Monitoring - Released on Jun 19, 2018
Axis has struggled to deliver a cloud-based managed service video platform....
Winners and Losers Fall 2011 on Sep 25, 2011
Now that the dust has settled from the new announcements of the last month,...
Comments : Members only. Login. or Join.

Related Reports

Coronavirus Hits Manufacturers, Standing Now, Worse To Come on Apr 06, 2020
Coronavirus is hitting security manufacturers, though overall modestly for...
ADT Slides Back, Disappointing Results, Poor Commercial Performance on Aug 06, 2020
While ADT had an incredible start to the week, driven by the Google...
Terrible Convergint Coronavirus Thermal Camera Recommendation on Apr 01, 2020
A week after Convergint disclosed falling revenue, pay and job cuts,...
AHJ / Authority Having Jurisdiction Tutorial on Aug 06, 2020
One of the most powerful yet often underappreciated characters in all...
Costar Technologies / Arecont H1 2020 Financials Examined on Sep 16, 2020
Costar's financial results have been hit by the coronavirus with the company...
VSaaS Will Hurt Integrators on Aug 06, 2020
VSaaS will hurt integrators, there is no question about that. How much...
The Booming Multi-Billion Coronavirus Fever Camera Market on Apr 21, 2020
The market for elevated body temperature detection cameras, aka 'coronavirus...
Hikvision Global Revenue Falls, Hit By Coronavirus on Apr 27, 2020
Hikvision's global revenue fell in the first quarter of 2020 due to the...
Pivot3 Mass Layoffs on Mar 27, 2020
Pivot3 has conducted mass layoffs, the culmination of grand hopes, a quarter...
The Problem With Fever Detecting Thermal Sunglasses on Apr 15, 2020
While the media has promoted using thermal sunglasses to detect fevers, this...
Fever Camera Sales From Integrators Surveyed on Jun 01, 2020
Fever cameras are the hottest trend in video surveillance currently but how...
Verkada Disruptive Embedded Live Help on Sep 24, 2020
Call up your integrator? Have someone come by the next day? Verkada is...
ADI Returns To Growth, Back To 'Pre-COVID Levels' on Aug 05, 2020
While ADI was hit hard in April, with revenue declining 21%, the company's...
Mobotix Thermal Detection Camera Tested on Jun 09, 2020
For years Mobotix has struggled but now sales are surging driven by Mobotix's...
Bottom: Integrators Start To Stand Vs Coronavirus on Apr 20, 2020
Good news - IPVM integrator statistics show that while coronavirus has hit...

Recent Reports

Hikvision Sues Over Brazilian Airport Loss on Sep 24, 2020
Hikvision was excluded from a Brazilian airport project because it is owned...
China General Chamber of Commerce Calls Out US Politics on Sep 24, 2020
While US-China relations at an all-time low, optimism about relations...
Verkada Disruptive Embedded Live Help on Sep 24, 2020
Call up your integrator? Have someone come by the next day? Verkada is...
IP Networking Course Fall 2020 - Last Chance - Register Now on Sep 23, 2020
Today is the last chance to register for the only IP networking course...
Drain Wire For Access Control Reader Tutorial on Sep 23, 2020
An easy-to-miss cabling specification plays a key role in access control, yet...
IPVM Camera Calculator User Manual / Guide on Sep 23, 2020
Learn how to use the IPVM Camera Calculator (updated for Version 3.1). The...
Installation Course Fall 2020 - Save $50 - Last Chance on Sep 22, 2020
Today is your last chance to save $50 on registration for the Fall 2020 Video...
SimpliSafe Business Security Launched Examined on Sep 22, 2020
SimpliSafe has launched "SimpliSafe Business Security" that the company...
FLIR CEO: Many New Fever Entrants "Making Claims That The Science Just Won't Support" on Sep 22, 2020
FLIR's CEO joins a growing number calling out risks with fever / screening...
China Bems Temperature Measurement Terminal Tested on Sep 22, 2020
Guangzhou Bems (brand Benshi) is the manufacturer behind temperature...
Axis Exports To China Police Criticized By Amnesty International on Sep 21, 2020
Axis Communications and other EU surveillance providers are under fire from...
Milestone XProtect on AWS Tested on Sep 21, 2020
Milestone finally launched multiple cloud solutions in 2020, taking a...
Mobile Access Control Usage Statistics 2020 on Sep 21, 2020
Most smartphones can be used as access control credentials, but how...
Axis Compares Fever Camera Sellers to 9/11 on Sep 18, 2020
Axis Communications, the West's largest surveillance camera manufacturer, has...