Fundamental Barriers to Surveillance Innovation

By: John Honovich, Published on May 23, 2011

Projecting the rate of new technology adoption is critical for determining what products should be developed and sold. In the surveillance market, significant skepticism about adoption is common. You often hear people criticize H.264 uptake ("it's been around forever but only now being used in surveillance"), video analytics use ("it's just a feature") and IP cameras ("over a decade and still only used by a distinct minority"), etc.

Because surveillance depends on integrating systems, the introduction of any new component faces fundamental barriers, regardless of performance.

It is criticial to distinguish between 2 types of barriers to innovation:

  • Performance: This is the most common metric cited - how accurate, how reliable, how cost effective, etc. is the technology?
  • Integration: This is infrequently emphasized but more challenging: Even if the technology performs well, how difficult is it to add the technology to existing deployments?

Integration barriers will hold back any new component that requires changes to an overall surveillance system (both IP and HDcctv cameras are good examples of this). This is essential as most users already have surveillance systems in place and make decisions based on the relative cost and complexity of modifying those systems to utilize the newer technology.

Example - Video Analytics 

While video analytics faced both barriers, appreciating the impact of each is important:

  • Undoubtedly, analytics have had performance problems - false alerts and difficulty in setting up are commonly cited. Buyers are understandably reluctant to purchase products with such problems. However ....
  • Analytics also have an integration problem. How do you add analytics to an existing system? Only a very small minority of DVRs or cameras support loading analytics. Most users are required to buy new cameras, encoders, servers or DVRs. Even if performance is great and users see the value, such major steps hold back buyers.

When a sales pitch results in a customer being excited about a new technology, the reality that kills most deals is being able to integrate it with their existing systems. We've seen this countless numbers of times when a user responds to an analytics pitch saying, "This is great. Can I run this on my Intellex, Pelco DX8100, Bosch DVR, etc.?" Once you tell them you need to buy a new DVR or another server, most of them cannot justify the purchase. 

Integration barriers constrain the maximum growth rate but do not doom a new technology. Some will find the money or be at the right place in their upgrade cycle. However, most will not. This drags out the cycle.

IP Cameras

One of the most interesting argument against IP cameras is "Buyers have clearly shown with their purchases that they do not want IP cameras. Analog camera sales continue to dominate." In economics, this is called 'revealed preference theory', i.e., listen to what people do rather than what they say. Despite this, it remains clear that IP camera sales growth remains robust. The question, then, is given that IP cameras have been around for more than a decade why has it taken so long?

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

The answer for IP camera uptake is certainly a mix of performance and integration barriers. For most of the last decade, IP cameras could not compete with the image quality of analog cameras. As such, regardless of the cost or ability to integrate with existing systems, most buyers had little interest. However, in the last few years, the situation has flipped - IP cameras generally offer better (or at least equal) image quality. The main performance barrier is now price / competitive cost effectiveness.

The problem that still remains for IP cameras is integrating with existing systems. IP cameras are not backwards compatible with legacy DVRs. Since those DVRs are the majority of systems in use around the world today, IP cameras are mostly shut out of those systems. Unless and until those users decide to do a major upgrade, analog cameras will remain the product of choice regardless of the user's interest in IP cameras.

After a decade, integration barriers are finally reducing. The rise of hybrid DVRs and VMS software make it simple to add in IP cameras. Each year, as more systems go through their upgrade cycles, the barriers diminish. However, it will still certainly take most of this decade to finish 'cycling' through.

HDcctv

HDcctv is an interesting example because it is the newest surveillance technology offering.

From a performance perspective, HDcctv risks are relatively minor. Since they are using fairly mature sensors and internal components, image quality is likely to be strong (unlike early IP cameras). As with all new technologies, some performance issues will exist but these will be straightforward to address - the availability of products, pricing of products, etc. While it is not assured that they can overcome them, it is certainly feasible if executed properly.

The big problem for HDcctv is integration barriers. Currently, 0% of existing surveillance systems support HDcctv cameras. Anyone who wants to use an HDcctv camera needs to make a major investment in additional products beyond HDcctv cameras. HDcctv spokespeople say, "All you need to do is change the camera and recorder and you are done."

Requiring users to change their recorder is a huge barrier for HDcctv. This will be the same barrier for HDcctv as it was (and continues to be) for analytics and IP cameras. HDcctv salesmen will make their pitch, users will respond, "Wow, that's great video quality. Can I use this with my existing Intellex, Pelco or Bosch DVR?" Interest will drop as prospects realize that they need to buy new recorders. This is not a HDcctv issue. It is a system integration / switching cost barrier.

Compounding the barrier will be that Hybrid DVRs supporting both IP and analog cameras are already so common and more flexible. For the small number of users each year doing major upgrades or greenfield purchases, HDcctv needs to compete with a more mature substitute - Hybrid DVRs. Unlike HDcctv that requires fixed inputs for each HDcctv or analog camera, Hybrid DVRs can generally mix and match analog or IP camera feeds.

Hockey stick growth rates are simply not feasible for new technology in the surveillance market. Below are sales projections from the HDcctv Alliance [link no longer available]. The steeper / green line is the Alliance's own projection:

The HDcctv Alliance is projecting a 650% growth rate from 2011 to 2012 ($81 Million to $528 Million from their 3rd to 4th year in existence). Such massive jumps in percentage and total value (the global market is less than $10 Billion) is simply impossible. Barriers in performance improvements and integration constraints do not allow any technology in the surveillance market to ramp up that quickly. 

Conclusion

While many argue that surveillance is a conservative market, we think a more important factor is the need to integrate new technologies with existing surveillance systems. This might make the market appear conservative but it is a rational response to challenges in adding in new components. We believe this has slowed all major new surveillance techologies and will continue to do so for new ones.

Comments : Members only. Login. or Join.

Related Reports

Video Surveillance History on May 06, 2020
The video surveillance market has changed significantly since 2000, going from VCRs to an emerging AI cloud era. The goal of this history is...
Cisco Video Surveillance Is Dead, Long Live Cisco Meraki Video Surveillance on Feb 11, 2020
A dozen years ago much of the industry thought that Cisco was destined to dominate video surveillance. They stumbled repeatedly, failing. Now it is...
Top 2020 Trend - AI Analytics on Nov 22, 2019
170+ Integrators answered: What do you think will be the top industry trend in 2020? Why? For the 4th year in a row, AI/video analytics was...
Axis HD Analog Encoder Tested on Oct 11, 2019
Two years after declaring "Everything is IP", Axis has released their first HD analog encoder, the P7304, with support for AHD, CVI, TVI, and SD...
AI Video Surveillance (Finally) Goes Mainstream In 2020 on Sep 03, 2019
While video surveillance analytics has been promoted, hyped and lamented for nearly 20 years, next year, 2020, will be the year that it finally...
Online Video Surveillance Sales Comparison - Amazon, B&H, CDW, LTS, Super Circuits, More on Jul 31, 2019
IPVM has uncovered the key trends and top options being offered across commonly used surveillance sellers. How has the market shifted since we...
HD Analog vs IP Guide on Jul 16, 2019
For years, HD resolution and single cable signal/power were IP camera advantages, with analog cameras limited to much lower resolution and...
'CCTV' Is the Past, Cloud Video Surveillance Is the Future on Jul 08, 2019
A fundamental shift is happening. For decades, video surveillance was overwhelmingly 'closed' and off the Internet. This is changing. More and more...
The Embarrassing Story of ISC West's Best New IP Camera on Apr 24, 2019
A sad but simple situation: Only 2 companies paid SIA the thousands of dollars required to compete for the best new 'cameras IP' The judges...
Axis Supports HD Analog on Apr 15, 2019
In 2017, Axis declared 'Everything is IP': Now, in 2019, Axis has released support for HD analog, with their new encoders. Why the change?...

Most Recent Industry Reports

Wyze Raises $10 Million And Seeks Services Expansion on May 27, 2020
Wyze has raised $10 million, the company's first disclosed raise since the $20 million announced at the beginning of 2019. Inside this note,...
Startup Videoloft Presents Cloud Storage on May 27, 2020
Videoloft presented offsite cloud storage at the May 2020 IPVM Startups show. A 30-minute video from Videoloft including IPVM...
Directory of 250+ Fever Camera News Reports Globally on May 27, 2020
This global directory tracks 250+ articles about thermal cameras used to detect fevers in response to the coronavirus pandemic. Articles are...
Integrators Rising Against Coronavirus on May 27, 2020
IPVM integrator statistics make it clear - Coronavirus's impact on business is lessening and many are anticipating even better news in weeks...
Netposa Stock Surges 46% After US Human Rights Abuse Sanctions on May 27, 2020
Last Friday, the US government announced it would sanction PRC video management provider NetPosa for being "complicit in human rights violations...
LILIN Presents NDAA-Compliant P2 Cameras on May 26, 2020
Merit LILIN presented its NDAA-compliant P2 camera series at the April 2020 IPVM New Products show. Inside this report: A 30-minute video...
ZKTeco Body Temperature and Mask Detection Reader Tested on May 26, 2020
While dedicated fever cameras emerged first, now tablet/kiosk fever detectors are ramping up. China's ZKTeco has been aggressively promoting such...
IDIS Presents 12MP IR Panoramic Fisheye on May 26, 2020
IDIS presented its 12MP IR panoramic fisheye camera at the April 2020 IPVM New Products show. Inside this report: A 30-minute video from...
FDA Defines Correct Operation of "Fever Cameras" on May 26, 2020
The US FDA has now defined the correct operation of "Thermal Imaging Systems", colloquially known as "fever cameras". Many in video...
OnSSI Founders Return, Start Corsight on May 25, 2020
The OnSSI founders are back, less than 2 years after selling OnSSI to Qognify, they have returned to Corsight, a spin-out of an Israeli AI...