Fundamental Barriers to Surveillance Innovation

Author: 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 Video Surveillance News In Your Inbox
Get Video Surveillance News In Your Inbox

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. 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 : PRO Members only. Login. or Join.

Related Reports

Verint Victimized By Ransomware on Apr 18, 2019
Verint, which is best known in the physical security industry for video surveillance but has built a sizeable cybersecurity business as well, was...
The Fastest Growing Video Surveillance Sales Organization Ever - Verkada on Apr 17, 2019
Verkada has the fastest growing video surveillance sales organization ever. In less than 2 years, they already have more salespeople in the US...
Strong ISC West 2019 For Manufacturers But Concerns For 2020 March Move on Apr 16, 2019
ISC West 2019 was strong for manufacturers, according to new IPVM survey results of 100+ manufacturers, consistent with 2018 results. However,...
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?...
Alarm.com Favorability Results 2019 on Apr 15, 2019
The once dot com startup has evolved to become a core provider for home security and is now expanding into commercial. In their first entry in...
ISC West 2019 Report on Apr 12, 2019
The IPVM team has finished at the Sands looking at what companies are offering and how they are changing their positioning. See below for 50+...
UK Installer CCTV Aware - Flat Pricing, No Salespeople on Apr 10, 2019
This is a different kind of company. They do flat pricing, they do not have any salespeople and 50% of their sales are sold and booked...
Bosch AI Camera Trainer Released And Tested on Apr 09, 2019
Bosch is releasing a highly unusual new AI feature - 'Camera Trainer'. Now, coming as a standard feature in Bosch IVA/EVA analytics, one can train...
Spring 2019 50+ New Products Directory on Apr 08, 2019
We are compiling a list of new products for Spring 2019 and have over 50 already. Contrast to Fall 2018 New Products Directory and Spring 2018...
Startup iryx Launches, Led by Ex-Arecont and FLIR Executives on Apr 04, 2019
Suddenly, the video surveillance industry is witnessing a new wave of startups. Now launching is iryx, a startup led by veterans of 2 of the...

Most Recent Industry Reports

H.265 Usage Statistics on Apr 19, 2019
H.265 has been available in IP cameras for more than 5 years and, in the past few years, the number of manufacturers supporting this codec has...
ACRE Acquires RS2, Explains Acquisition Strategy on Apr 19, 2019
ACRE continues to buy, now acquiring RS2, just 5 months after buying Open Options. One is a small access control manufacturer from Texas, the...
Access Control Course Spring 2019 - Last Chance on Apr 19, 2019
Register for the Spring Access Control Course. IPVM offers the most comprehensive access control course in the industry. Unlike manufacturer...
Riser vs Plenum Cabling Explained on Apr 18, 2019
You could be spending twice as much for cable as you need. The difference between 'plenum' rated cable and 'riser' rated cable is subtle, but the...
Verint Victimized By Ransomware on Apr 18, 2019
Verint, which is best known in the physical security industry for video surveillance but has built a sizeable cybersecurity business as well, was...
Milestone Drops IFSEC on Apr 18, 2019
Milestone has dropped out of Europe's largest annual security trade show (IFSEC 2019), telling IPVM that they "have found that IFSEC in EMEA no...
The Fastest Growing Video Surveillance Sales Organization Ever - Verkada on Apr 17, 2019
Verkada has the fastest growing video surveillance sales organization ever. In less than 2 years, they already have more salespeople in the US...
Door Operators Access Control Tutorial on Apr 17, 2019
Doors equipped with door operators, specialty devices that automate opening and closing, tend to be quite complex. The mechanisms needed to...
Securadyne CEO: IPVM 'Entertaining For An Ignorant Few' on Apr 16, 2019
Securadyne's CEO Carey Boethel is unhappy with IPVM's report - Failed Integrator Rollup, Securadyne Sells to Guard Giant Allied. Indeed, he...
Dahua Repositionable IR Multi-Imager Camera Tested on Apr 16, 2019
Dahua has released their first repositionable multi-imager camera, the Multi-Flex 4x2MP, claiming integrated IR, true WDR, and flexible...

The world's leading video surveillance information source, IPVM provides the best reporting, testing and training for 10,000+ members globally. Dedicated to independent and objective information, we uniquely refuse any and all advertisements, sponsorship and consulting from manufacturers.

About | FAQ | Contact