Hikvision Direct Mega Deals Start

Author: John Honovich, Published on Nov 30, 2015

Merry Christmas... from China.

Earlier this month, IPVM exposed how Hikvision had tried to hide its new direct end user sales offering / 'company'. Now, Hikvision has slashed pricing to new record levels, as first raised in a member's discussion over the weekend.

In this note, we examine the offering, its impact and explain how this illustrates a radical different strategic approach for Hikvision compared to every other mega video surveillance manufacturer.

***** *********... **** *****.

******* **** *****, **** ******* ************ *** ***** ** **** *** *** ****** *** **** sales ******** / '*******'. ***, ********* *** ******* ******* ** *** ****** ******, ******* ****** ** * ******'* ********** **** *** *******.

** **** ****, ** ******* *** ********, *** ****** *** explain *** **** *********** * ******* ********* ********* ******** *** Hikvision ******** ** ***** ***** **** ***** ************ ************.

[***************]

**********

**********, ***** *** *********'* ***** **** *** *** ******** ***** offering. ***, ********* *** ******* '***** ***', * ****** ***** ********** **** ***** ****** ** *** users ******* **** ********** ******* ** '********** ********', ***** ****** the ********** ******* *** *** ** ***** ********* / ****** communication.

********* ******* ********* ****, * ******* ***********, *** *** **% ***** ***** ($** ******* of $***) *** **** *** ***** **** ** ***** ******* free.

** *************

"* ***-$*** ** ****** ** *********** ******* ** **** *** look ** *** ******* ********* *** ********** *** ****** *****; most **** ** ***** $***, ** *** $*** ** ****."

** ******, **** *** *** *********** *** ******* *** *** even **** **** ***** ** **** *********, *** *****'* ******* surveillance ******* ****** ** ******* ********** *******.

Slashing ******

***, ********* ** ******** ****** ** ****** ****** ***, ***** ******** ****:

****** ** *********** ** *** **** $*** ***:

 

******:

***, **'* **** ~$*** ** ***'* ****:

*** ********* *** ******* **** **** $** ** ****:

****'* ** ********** ***** **** ***** ****** ********** *** ***** for * ****** ***** ****, **** ** ****, ** ******* ******. Now, *********'* * ****** *** ** *** **** ***** ** a ****** **** *** / *******.

** ********, ***'* *********** ******* * ******* ***** ****** ** ***, ****** **** **** 3 *******, *** **** *****, ** $***:

Price ** * ******

****** ********* ****** ***** ** ****** ** ********** / ********** provider ***** ***** ***** ******** ** **** ** ******** ** thousands ** *******, ** **** *** *** **** ***** ********** / **** *** *************. ********* **** ****, *****, *****, ****, etc. *** ****** ** *** ******* *** ***** **** ** be *** ****** **** ********. *** *******, **** ****** **** clearly **** ** ** ***** ****** ** **** ***** ***** providers ** *** *** ** *** ******, **** *** ****** reluctant ** *** ***** *************.

*********, ** ********, ******* ***** ***** ****. ******* ** ** selling ****** ** **** *** ******* *******, ********* ******** **** slashing ****** **** ** * ******** *********** ********* **** ****. Large *********** ****** ** ***** *** ***** *********** ****, ****** rather **** *****, ** ****** *** ** **********. ******* *** a ****** *** *** ******, ***, *** ***, **** *** build ****** ***** *************** ***** **** *** ******* ******** ** dollars ***** ** ******* ****** *****.

*** ** ********* *** ***** ********** ** ***** *********, ***** are ** **** ****** ** *** **** **** **** **, what **** **** **** *** *** *** * ***** **** will *****. ** ****, ** ****** ***** ** ******** ** cut ******* *** ** ****** ********* ********.

Comments (26)

It does not make sense to enter in a price war for Axis and other Western manufacturers. At the same time, the technology and quality levels of Chinese manufacturers are growing. What can "Axis" do?

I think Axis and the other big brand manufacturers need to get their pricing closer. Instead of being 50% to 100% more than equivalent Hikvision, get in the range of 15-20%. Most buyers trust Axis more than Hikvision but the delta is too much for most to justify.

If they don't fight back, they are going to quickly end up in situation where they lose the majority of their dealers to Hikvision and others willing to match Hikvision's price trajectory (our 2014 results show that trend and our 2015 results, to be published this Wednesday, show this trend even further).

Assuming Axis understands this risk, perhaps they hope Hikvision will blow themselves up or retreat at some point (Chinese economy tanks, Hivision realizes they need to make profits, etc.). But if that does not happen soon, Axis will shrink into a niche provider. Sony, Panasonic, Pelco are all already far down that path.

I think Axis and the other big brand manufacturers need to get their pricing closer. Instead of being 50% to 100% more than equivalent Hikvision, get in the range of 15-20%.

John, is it possible at all? They will need to cut their costs and for sure it will affect R&D that will mean the same failure in a long run.

It's a revenue / total profit vs gross margin percentage issue.

For sure, if they cut their prices, presuming their product costs stays the same, their gross margin percentage declines. That's not good.

On the other hand, by doing so, surely they will sell more units. What is hard to figure out is: Would the increased volume of units sold make up for it in terms of total revenue and total profits?

The bigger risk I see is that each Hikvision defection is an opportunity for Hikvision to upsell former Axis dealers into Hikvision's higher end products damaging Axis' core, e.g., 'I see you are having great success selling TurboHD analog kits for $299, that's great. I also notice the local hospital is one of your customers. Do you know that we have great high end super low light and WDR cameras that are just as good as Axis and half the price? etc., etc."

depends which price you are saying they need to get close to... the Gray or the local models

I agree that I can't see Axis/other Western's being able to touch the China price, people in the West want to drive BMW's, be paid enough to afford Mansions etc..

Security Cam stuff is not really it's own field anymore, it's getting pushed into General Electrical/IT/Computers... and in that field everything gets cheap fast.

The future is that it's just another thing that gets plugged into the network, so brand isn't important, Hik are already all over the 4k

Are you sure they're not making profits? There has been a recent round of recruiting going on for local sales engineers in the US. This has to be backed up by capital coming from somewhere. Their volume of product sold must have to be insanely high at these prices.

"This has to be backed up by capital coming from somewhere."

Oh, there's capital coming from somewhere. China.

According to their own financial statements, they are absolutely printing money from their domestic Chinese operations (i.e., Chinese government infrastructure projects, Chinese 'safe city' projects, etc.).

Their volume of product sold must have to be insanely high at these prices.

The old "sell at a loss, make it up in volume" joke applies.

making profits?

I bet they are... bet the price to make these things is atleast 50% less than they sell them for... Tech ain't worth crap these days, and the king of making tech for nothing is China.

in my views Tech sold from elsewhere costs a motsa due to the sellers bundling in RnD costs + massive markup into everything, look at the Mobile phone teardowns... amazing how cheap it all is

Tech sold from elsewhere costs a motsa due to the sellers bundling in RnD costs + massive markup into everything...

What exactly is one supposed to do with R&D costs?

R&D costs?

I was under the impression that the whole China game was copy other's stuff so there are very little RnD costs :)

"bet the price to make these things is at least 50% less than they sell them for..."

You'd lose that bet. Hikvision is a publicly traded company and their reported gross margin is ~40%.

"due to the sellers bundling in RnD costs"

This certainly helps and I agree. Because Hikvision sells millions of cameras inside China, their overhead can be spread out over a lot larger base, meaning that they can profit with lower margins / prices.

"Tech ain't worth crap these days"

However, local sales, marketing, support, engineering, etc. costs a lot and this a very costly area where they have no advantage.

gross margin is ~40%.

I'm referring to cost to make the hardware alone.

However, local sales, marketing, support, engineering, etc.

of which atleast in the rest of the world, I suspect Hik have very little. wonder what Hik's non hardware costs are like compared to others...

Gross profit IS the sum of the direct costs of the production of goods.

It does not include sales or marketing.

direct costs of the production of goods.

Do you believe them?

Do you believe them?

Public companies are under pressure to make themselves look as profitable as possible.

Accounts of such companies pulling out all the stops maintain the appearance of profitability, including deceptive reporting, are numerous.

I am not aware of any public company that has been accused of putting in all the stops and intentionally under reporting profit as a long term strategy.

So, while I may not believe their GP is 40% I see no reason to believe it is higher than that.

Fair enough, I just doubt how much it costs for all this stuff, when I've tested 3mp board cam's that I've bought sub $50 and are essentially the same thing that is in the Hik's...

I dont know what to think...199 for a recorder and 4 cameras...the harddrive itself is ~$50... is the system/equip any good?

It seems like the camera industry is setting itself up for failure like the banks did before the recession. Question is, when will it crash, and what do you think will happen?

"Question is, when will it crash, and what do you think will happen?"

It's a good question. I don't know because it entirely depends on how long Hikvision can continue doing what it's doing.

If Hikvision does, I think most of the smaller cctv camera manufacturers will exit the industry, go bankrupt or collapse to dramatically smaller levels. And the bigger brands, assuming they have some products with some differentiation, will shrink to become more niche premium providers.

But I do not know how long Hikvision can do this. Eventually, they will want to make profits or even have to make profits (if there are real disruptions inside China).

Update: Despite only being available for the past few weeks, EZVIZ cameras and kits have found their way into features in Amazon's Security 101 guide next to Nest and Canary.

We'll be tracking these to see if they reach the top sellers in Amazon's security and surveillance category, which has been dominated by Dropcam and Nest for some time despite plummeting user ratings.

Also, under video quality, Amazon is recommending the 16 channel Hikvision Ezviz kit:

Proves you cant trust these guys...

The key thing will be in 3 years time when we see how well Hikvision lasts. We get a lot of out the box faults, image sensor issues, reseting back to default issues we don't see with other manufactures. Sure we jumped on the Hik bandwagon, we are about to jump off, when you factor in revisits due to problems you might as well have installed a quality brand in the first place.

The channel is fragmented with grey imports and clones, this is just another fragment which will further confuse the brand.

Overall, we are not seeing notable quality problems for Hikvision products. This is based even on our most recent integrator survey, overall member comments and speaking with distributors. Indeed, the general consensus so far is that Hikvision is on the same level of camera hardware quality as the big Western brands.

we are not seeing notable quality problems for Hikvision products

You know what, we are getting better support from the Hik Sellers in China than the local channel

no questions asked returns, way... and I mean weeks faster returns than local suppliers, we had Geovision take two months to get something back (Went back to local supplier, then local supplier sent it to Taiwan or whatever)

Michael, thanks. Interestingly, the two of you are from outside North America, so that could be a factor. Inside NA, as we discussed recently, Hikivision has built up a formidable, and quite expensive, sales and support machine.

Update:

Now, it's also $199 at Sam's Club:

Samsung, time to lower your prices and up your resolution:

Login to read this IPVM report.
Why do I need to log in?
IPVM conducts unique testing and research funded by member's payments enabling us to offer the most independent, accurate and in-depth information.

Related Reports

Eagle Eye Favorability Results 2019 on Mar 21, 2019
Eagle Eye has been the biggest spender in the cloud VMS market including (via their owner) acquiring Brivo for $50 million and CameraManager from...
Top Metrics For Ensuring Integrator Profitability - Statistics on Mar 20, 2019
How do integrators ensure the profitability of their projects? As part of our profitability study, 100+ integrators answered the following...
Retired Mercury President Returns As Open Options President on Mar 18, 2019
Open Options experienced major changes in 2018, including being acquired by ACRE and losing its President and General Manager, John Berman who...
Hikvision Favorability Results 2019 on Mar 18, 2019
Hikvision favorability results declined significantly in IPVM's 2019 study of 200+ integrators. While in 2017 Hikvision's favorability was...
Hikvision Chairman Warns Of AI New Entrants Victimizing Customers on Mar 12, 2019
Hikvision chairman Chen Zongnian has warned that customers will become “victims” of AI hype from new industry entrants, even saying such newcomers...
Network Optix Favorability Results 2019 on Mar 11, 2019
Network Optix is arguably the last new VMS. Founded in 2010, more than a decade after most client/server VMS offerings, the company has become a...
BCDVideo Expansion And Switch From HP To Dell Examined on Mar 11, 2019
BCDVideo says they have more than tripled revenue in the past 5 years and are continuing to grow, powered most recently by switching their lead...
Congressional Letter Calls Out US Companies Supporting Dahua and Hikvision on Mar 11, 2019
A bipartisan Congressional Letter has called out US companies that 'support' or have 'commercial ties' to Hikvision and Dahua and how they are...
Start Up Safe Zone $150 Gunfire Detector Profile on Mar 06, 2019
While gunfire detectors have been around for years, typically they are limited to enterprise level or municipal deployments. Startup AVidea, makers...
Axis Brags About "Whiskey Tasting" With Independent Consultants on Mar 06, 2019
Last weekend, Axis paid for a group of 100+ of the most powerful people in the industry, supposedly independent consultants / AEs that specify many...

Most Recent Industry Reports

Eagle Eye Favorability Results 2019 on Mar 21, 2019
Eagle Eye has been the biggest spender in the cloud VMS market including (via their owner) acquiring Brivo for $50 million and CameraManager from...
Large Hospital Security End User Interview on Mar 21, 2019
This large single-state healthcare system consists of many hospitals, and hundreds of health parks, private practices, urgent care facilities, and...
Silicon Valley Cybersecurity Insurance Startup Coalition Profile on Mar 20, 2019
Many industry people believe cybersecurity insurance is not worth it, as the voting and debate in our Cybersecurity Insurance For Security...
Covert IP Camera Shootout - Axis, Hanwha, Hikvision, March, Vivotek on Mar 20, 2019
Covert cameras were one of the last holdout areas for analog cameras. However, in the past few years, IP / HD covert cameras have become...
Top Metrics For Ensuring Integrator Profitability - Statistics on Mar 20, 2019
How do integrators ensure the profitability of their projects? As part of our profitability study, 100+ integrators answered the following...
Avigilon Launches 'Renewed Products Program' on Mar 19, 2019
There are lots of 'pre-owned' cars but pre-owned IP cameras? While such programs are common in other industries, in video surveillance, they are...
Hanwha Tax Evasion Probe, Camera Division Implicated on Mar 19, 2019
A Hanwha group subsidiary was raided as part of a tax evasion probe. While a Korean news media report listed the raided entity as 'Hanwha...
Genetec Security Center 5.8 Tested on Mar 19, 2019
Genetec has released Version 5.8. This comes after a wait of more than a year that caused frustrations for many Genetec partners. Our previous...
Retired Mercury President Returns As Open Options President on Mar 18, 2019
Open Options experienced major changes in 2018, including being acquired by ACRE and losing its President and General Manager, John Berman who...
Large US University End-User Video Surveillance Interview on Mar 18, 2019
Schools have become targets in modern days of active shooters and terrorist fears. The need for video and access security is high. Universities...

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