Dropcam Sales Surge and Amazon's Growing Power

By John Honovich, Published Jan 01, 2013, 07:00pm EST

VSaaS's weak ROI has caused considerable debate over the future of cloud based video surveillance. Now, one upstart, who recently received over $18 million in funding and released an HD version, is claiming surging 2012 sales. Is this finally a sign of VSaaS coming of age or does it better demonstrate other important growing forces in the industry?

Dropcam Sales Review

Dropcam claims the following:

  • 2011 revenue of 'well over $1 million' USD
  • 2012 revenue up 400% over 2011, i.e., ~$5 million
  • 60% buy hardware only but no ongoing services / recording

With a sales price of $150 per camera, this implies tens of thousands of cameras sold in 2012. Dropcam sells primarily through Amazon, with an option to buy direct from their website as well as some random small Internet retailers.

Second Generation Product

A major sales driver was certainly the introduction of their own HD camera line, replacing their first generation Axis OEM cube camera. This line improved key dimensions - higher resolution, better night time performance, and lower pricing. Plus, since it is their own cameras, the gross margins on hardware sales are far higher. This new line has produced far more and far higher consumer reviews on Amazon than their first gen.

However, as the company acknowledges, the clear majority do not buy a subscription plan (and that does not factor churn - how many will cancel or discontinue monitoring in the future). On the other hand, as many surveillance manufacturers have shown, it is quite possibly to build a high profit business on camera sales with a smaller recurring revenue stream as a bonus.

Amazon's Growing Power

Given that most buy hardware only, Dropcam's growth best demonstrates the power of Amazon as a sales channel. Without having to beg ADT or traditional distributors, Dropcam is well under way to building a respectable tens of millions of dollars business. This is despite being a software company with no established brand, virtually no sales force nor traditional marketing. 

However, looking at what is selling on Amazon, it is pretty clear that Dropcam is the most attractive purposely built consumer monitoring offering there. That's an attractive position because Amazon has massive sales volume. Overall electronic equipment sales are over $30 billion USD per year, the company's revenue growth is ~40% per year and monthly site traffic is estimated at 80 million in the US alone. Certainly, only a fraction of Amazon sales are within surveillance but even still that is easily a few hundred million dollars. Being the top rated, most purpose built product will give a product a disproportionate part of that sizeable sales flow.

What exactly happens with Dropcam depends on how they excute and what tactical decisions they make. Regardless, their progress to date shows a new path for surveillance manufacturer success, at least for the consumer market, divorced from the legacy dominance of traditional distribution.

Comments : Members only. Login. or Join.
Loading Related Reports