Hikvision Growth Rate and Profits Falling Q4 2015

By: John Honovich, Published on Feb 24, 2016

Many, including us, were surprised by Hikvision's desperate price slashing on the final days of 2015.

Now, it makes a lot more sense.

Hikvision's 2015 financial letter (in Chinese) sheds new light on the increasing troubles of the company trying hard to wipe out its competitors.

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International ******?

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Comments (4)

We had long waits for product at the end of 2015 for IP cameras. I wonder if the inability of Hikvision to manufacture and provide product at the end of the year in the US was the cause of their Q4 results.

Jeffrey, interesting feedback.

US only represents ~10% of Hikvision's revenue so probably not a big factor in their overall numbers.

They are having another 10% off promo going on right now...

Anyone familiar with the Asian market and the history of the last 40 years will find nothing unusual as history repeats itself. The thought process is one whereby marketing is accomplished from that part of the world by continually dropping prices to steal the business from others until there is no margin left and all has been commoditized. While there is no rationale for the ultimate results it is just a part of the culture. If one drops prices others will follow from that part of the world. So other than reducing margins for all they accomplish nothing. Whoever unrealistically thinks we capture market share and then raise prices it has never happened and never will. The even more catastrophic aspect of this type of approach is prices are falling faster than market growth. There is a point of saturation and what is the likelihood people have gone from analog to IP and now going to migrate to AHD or upgrade to even higher megapixel unless there is a reasonable benefit. We are in the CCTV space not consumer electronics where the market is 1000x greater.

The Asian market does not value software because of the history of knock-offs and piracy so no future is seen for them from that regard. Cameras are low tech as seen by the cottage business in the Shenzhen and other market places. Going higher and higher in megapixel really isn't a game changer. Analytics and other add ons have made little to no impact.

Ultimately, we are going to see in 2-3 years from now if not alot sooner 3MP and 5MP cameras with varifocal lenses for $25 - $35 with 16 channel NVRs for under $50. It doesn't take one to be clairvoyant to see the future, just one who has lived the last 30-40 years in the consumer and electronics business.

Anyone can do the math - historical year over year CCTV camera sales v. price erosion. Thinking someone can maintain top line revenue growth is an impossibility unless they have found the scientific answer to the laws of gravity.

Bookmark and visit this page Christmas 2017!

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