Examining the Growth Rate for Megapixel Cameras
In this note, we examine the future growth rate and transition towards megapixel cameras. Based on value and cost differential estimations, we project future adoption.
As background, an August 2010 IMS report claimed that megapixel cameras would be more than 50% of network cameras shipped in 2014.
In 2009, we estimate megapixel cameras were a small minority of total IP cameras shipped - with perhaps $150-200 Million sales compared to IP camera total sales of $1 - $1.5 Billion.
If megapixel market share is to increase so sharply, what factors will cause the drive?
We believe that the value of megapixel relative to standard definition IP cameras is well defined and will not change radically over the next 5 years. Even the lowest resolution megapixel camera (720p or 1280 x 720 pixel) provides an obvious visual advantage over SD that IP SD never delivered relative to analog SD. This visual advantage provides material benefits in capturing details and/or covering broader areas.
Already today in 2010, nearly ever camera manufacturer offers megapixel cameras (most often 720p, 1.3MP or 1080p offerings). The availability will continue to grow with more form factors and ubiqutious H.264 support over the next 5 years.
We believe the most important aspect is the cost differential between megapixel and SD IP cameras. Currently, we project the premium between 720/1080p HD cameras and SD IP to be about $200 - $250 per camera. This video, excerpted from our megapixel training course explains the variance:
In the next 5 years, we expect the premium to drop in half driven by continuous drops in storage and computer costs. We also believe it is likely that the current product premium (about $100 for 720/1080 over SD IP) will decline as well as sales volume and product maturity increases.
In the near future, at a total premium of $100 per camera and with obvious visual benefits over IP SD, most users will find this to be a simple choice (given that $100 will represent a small cost increase on the total per camera cost).
The best analogy for this migration is likely the move from B&W to Color surveillance cameras about a decade ago. At first, concerns over product price and storage requirement increases were prominent. However, as the price premium became relatively inconsequential, it became a 'no-brainer' to choose color.
While estimating exact market share depends on many difficult assumptions, the general trend is clear - megapixel's growth over the next 5 years will be extremely strong.