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

SIA Plays Dumb On OEMs And Hikua Ban on Sep 20, 2018
OEMs widely pretend to be 'manufacturers', deceiving their customers and putting them at risk for cybersecurity attacks and, soon, violation of US...
25% China Tariffs Finalized For 2019, 10% Start Now, Includes Select Video Surveillance on Sep 18, 2018
A surprise move: In July, when the most recent tariff round was first announced, the tariffs were only scheduled for 10%. However, now, the US...
Hikvision USA Starts Layoffs on Sep 18, 2018
Hikvision USA has started layoffs, just weeks after the US government ban was passed into law. Inside this note, we examine: The important...
Chinese Government Praises Hikvision For Following Xi Jinping on Sep 17, 2018
The Chinese government council responsible for managing China's state-owned companies praised Hikvision’s obedience to China’s authoritarian leader...
Favorite Intercom Manufacturers 2018 on Sep 14, 2018
Intercoms are certainly increasing in popularity, driven by the integration of video and IP networking. But who is the favorite? On the one side,...
VMS Export Shootout - Avigilon, Dahua, Exacq, Genetec, Hikvision, Milestone on Sep 13, 2018
When crimes, accidents or problems occur, exporting video from one's video surveillance system is critical to proving incidents. But who does it...
Australia and French National TV Investigate Hikvision, Australia Military To Remove Hikvision Cameras on Sep 12, 2018
An Australian National TV investigation on Chinese video surveillance has put a spotlight on Hikvision, including a promise from Australia's...
Trump Administration Considers Sanctions Against Dahua and Hikvision on Sep 11, 2018
The Trump administration is considering sanctions against Dahua and Hikvision for their involvement in human rights abuses against minorities...
Ambarella on Computer Vision and US Hikua Ban on Sep 10, 2018
Ambarella, a widely-used video surveillance component supplier, is betting on the rise of computer vision and is already seeing a sales impact from...
China "Largest Threat To US National Security", Declares FBI And Counterintelligence Heads on Sep 07, 2018
China is 'bar none', the 'largest threat to [US] national security' plus China has declared 'economic war' on the US, according to William Evanina,...

Most Recent Industry Reports

Alexa Guard Expands Amazon's Security Offerings, Boosts ADT's Stock on Sep 21, 2018
Amazon is expanding their security offerings yet again, this time with Alexa Guard that delivers security audio analytics and a virtual "Fake...
UTC, Owner of Lenel, Acquires S2 on Sep 20, 2018
UTC now owns two of the biggest access control providers, one of integrator's most hated access control platforms, Lenel, and one of their...
BluePoint Aims To Bring Life-Safety Mind-Set To Police Pull Stations on Sep 20, 2018
Fire alarm pull stations are commonplace but police ones are not. A self-funded startup, BluePoint Alert Solutions is aiming to make police pull...
SIA Plays Dumb On OEMs And Hikua Ban on Sep 20, 2018
OEMs widely pretend to be 'manufacturers', deceiving their customers and putting them at risk for cybersecurity attacks and, soon, violation of US...
Axis Vs. Hikvision IR PTZ Shootout on Sep 20, 2018
Hikvision has their high-end dual-sensor DarkfighterX. Axis has their high-end concealed IR Q6125-LE. Which is better? We bought both and tested...
Avigilon Announces AI-Powered H5 Camera Development on Sep 19, 2018
Avigilon will be showcasing "next-generation AI" at next week's ASIS GSX. In an atypical move, the company is not actually releasing these...
Favorite Request-to-Exit (RTE) Manufacturers 2018 on Sep 19, 2018
Request To Exit devices like motion sensors and lock releasing push-buttons are a part of almost every access install, but who makes the equipment...
25% China Tariffs Finalized For 2019, 10% Start Now, Includes Select Video Surveillance on Sep 18, 2018
A surprise move: In July, when the most recent tariff round was first announced, the tariffs were only scheduled for 10%. However, now, the US...
Central Stations Face Off Against NFPA On Fire Monitoring on Sep 18, 2018
Central stations are facing off against the NFPA over what they call anti-competitive language in NFPA 72, the standard that covers fire alarms....
Hikvision USA Starts Layoffs on Sep 18, 2018
Hikvision USA has started layoffs, just weeks after the US government ban was passed into law. Inside this note, we examine: The important...

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