Hikvision Slashes Prices to End 2015

By: John Honovich, Published on Dec 30, 2015

Evidently, Hikvision is not content with its already radically disruptive pricing.

They are slashing hard to end 2015.

Take a look:

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Comments (45)

Keefe Lovgren

IPVMU Certified | 12/30/15 02:02am

15% off of trendnet at adi as well fwiw...

John Honovich

IPVM | In reply to Keefe Lovgren | 12/30/15 02:07am

Here's the Trendnet ad, though Trendnet is not a major player:

Undisclosed #1

12/30/15 02:03am

If they can get dealers to stock up, as you suggest, then they absolutely hurt their competitors - which is a win to Hikvision.

Since I agree with you that market share seems to be their priority over profitability at this point.

I'm curious if anyone can convince a company NOT to buy from Hikvision at these prices.

John Honovich

IPVM | In reply to Undisclosed #1 | 12/30/15 02:20am

To what end? I agree this helps them get market share but how is that sustainable? And what does it matter to get a little more share at the expense of losses?

The best I can tell Hikvision corporate has set very aggressive revenue targets for Hikvision NA, so if that is correct, I can understand the tactic as a logical outcome of that.

But I still do not understand the focus overall on top line revenue growth. It's right now a wealth transfer from the Chinese government to the US consumer (thanks?) but what is the long term plan for Hikvision the business doing this?

Undisclosed Manufacturer #6

In reply to John Honovich | 12/30/15 04:28pm

To the end of their competition. When you don't need to make a profit, and you use [redacted] labor as your manufacturers, you will eventually run your competition into the ground. Then you slowly raise the price, and own the entire industry. Hik has a 1000 year plan.

John Honovich

IPVM | In reply to Undisclosed Manufacturer #6 | 12/30/15 04:41pm

There are definitely major issues with China's use of 'floating populations' and the Hokou system. Certainly, by Western standards, these people have very little rights / freedom / opportunity.

Note: I've removed your specific claim though which is inflammatory and hard to justify.

Undisclosed #2

In reply to Undisclosed Manufacturer #6 | 12/30/15 06:58pm

Then you slowly raise the price, and own the entire industry. Hik has a 1000 year plan.

This is a price hike vision.

Sal Visone

DWG | IPVMU Certified | 12/30/15 02:38am
I believe this doesn't apply to sale items and project registrations, which is basically the most popular and competively priced items. Same difference as their regular sales and project registration discounts, nothing crazy doing here for them, just status quo.

John Honovich

IPVM | In reply to Sal Visone | 12/30/15 04:55am

"Same difference as their regular sales and project registration discounts, nothing crazy doing here for them, just status quo."

You mean status quo for the industry or status quo for them? Looking at ADI and other sales, Hikvision is consistently the most aggressive.

Sal Visone

DWG | IPVMU Certified | In reply to John Honovich | 12/30/15 05:26am
for them.

Scott Sheldrake

12/30/15 06:09am

HIK's strategy is quite clever - lose money/break even for a few years in order to drive the competition out of business and gain market share in one fell swoop.

The hardest part of switching to a new brand is learning all the ins/outs and limitations of the product. Once you are comfortable with a product you will generally keep using it, unless lower price or better features compels you to switch. Once we're all using HIK comfortably, it will take a lot to switch to another unfamiliar brand with unknown features, UI, compatibility etc.

If you've got Axis and HIK, what else do you need? What possible reason would there ever be for me to try and get to know a Panasonic or Bosch camera at this point?

Undisclosed Manufacturer #8

In reply to Scott Sheldrake | 01/06/16 12:49pm

"HIK's strategy is quite clever"

Not sure how it's 'clever'. Surely it's the first and easiest thing you would think of or do.

Undercutting rather than taking on a fair fight is 'clever' now?

Undisclosed #2

12/30/15 07:17am

Hikvision prediction for 2016, aka Year of the Red Fire Monkey:

Hik will drop iVMS 5200 in North America after delaying its release 10 months for no apparent reason.

IMHO, Hik will attack the Pro VMS / Appliance market with the same gusto shown for cameras and low end recorders.

Hik has gilded the lily by saturating the market with its boxes, each camera they get out there now will make the VMS sale that much easier.

They have delayed so far because they did not want to slow the major VMS manufacturer's integration and support of their cameras.

But no longer... (Unless it sucks)

John Honovich

IPVM | In reply to Undisclosed #2 | 12/30/15 12:35pm

"Hik will drop iVMS 5200 in North America after delaying its release 10 months for no apparent reason."

There's been a reason. Hikvision NA is trying to minimize conflict with 3rd party VMSes.

"IMHO, Hik will attack the Pro VMS / Appliance market with the same gusto shown for cameras and low end recorders."

Is the 5200 really competitive with the pro VMSes like Exacq, Genetec, Milestone, etc.? I suppose they can extremely undercut on price but software features and functionality are far more of a differentiator than on cameras.

"They have delayed so far because they did not want to slow the major VMS manufacturer's integration and support of their cameras."

Source for this? And Hikvision generally works with ONVIF for 3rd parties so?

Undisclosed #2

In reply to John Honovich | 12/30/15 03:08pm

"They have delayed so far because they did not want to slow the major VMS manufacturer's integration and support of their cameras."

Source for this?

Predicative speculation.

Hikvision NA is trying to minimize conflict with 3rd party VMSes.

Source for this?

Why would they trying to minimize conflict?

John Honovich

IPVM | In reply to Undisclosed #2 | 12/30/15 03:41pm

"Why would they trying to minimize conflict?"

Hikvision wants to move up to the enterprise market, e.g., Hikvision Hires Pelco / G4S Exec.

In that market, there are some strong VMSes fairly entrenched. If Hikvision tries to compete against those VMSes with their own VMS, it is going to motivate them to sell against them and bring in Hikvision rivals (whether it is Dahua, Arecont, Samsung, etc.).

Also, my gut feel is that the 5200 is going to be a hard sell for most enterprise US accounts who tend to be more demanding on features.

Undisclosed #2

In reply to John Honovich | 01/10/16 05:57pm

"They have delayed so far because they did not want to slow the major VMS manufacturer's integration and support of their cameras."
Source for this?

Milestone Names Hikvision 'Elite Partner'

Undisclosed Integrator #3

12/30/15 08:03am

Agreed - VMS price slashing needs to happen next, whether by HIK or others. $100+ for a VMS license when HD IP cameras are sub $100? Insane.

John Honovich

IPVM | In reply to Undisclosed Integrator #3 | 12/30/15 12:57pm

"$100+ for a VMS license when HD IP cameras are sub $100? Insane."

That's an interesting point. I agree that as the price of IP cameras fall, it makes the price of VMS licenses relatively look more expensive.

On the other hand, the question remains does the VMS license pricing deliver commensurate value?

Just as important on the VMS side is how inexpensive Hikvision and Dahua are charging for their NVRs. An Exacq or Milestone NVR is the few thousands range for a 16 channel NVR while Hik/Dahua are typically under a thousand, which is a substantial amount for buyers with limited needs / desires.

Undisclosed #2

In reply to Undisclosed Integrator #3 | 12/30/15 08:13pm

Related: What Costs More Per Channel, Cameras Or Recorders?

Undisclosed Integrator #4

12/30/15 02:33pm

As so many integrators jump on the lowest-cost Chinese equipment, does anyone envision Chinese government or others in China looking at all the cameras? Surely there is a back door in all these cameras since the government is so involved. Guessing this has probably been discussed but....curious if anyone cares since profit and low-cost are our way of life!

That being said, Axis is really making it hard for an integrator to toy with the lower end market with its lowest priced outdoor cameras being so 'average' and still over $400.

Undisclosed Manufacturer #8

In reply to Undisclosed Integrator #4 | 01/06/16 12:55pm

"Chinese government or others in China looking at all the cameras? Surely there is a back door in all these cameras since the government is so involved."

I share these concerns massively.

Undisclosed Integrator #3

In reply to Undisclosed Manufacturer #8 | 01/06/16 04:07pm

My first instinct is to agree. But the first time HIKVision/Chinese government gets caught using the backdoor, you would think it will obliterate their business.

Then again, the USA is doing mass surveillance on the entire Internet, and I've yet to see an IP camera that encrypts a video stream by default, so basically all cameras of all brands have a "back door". Maybe nobody will care if the Chinese government and the USA government are both watching us. It would just be nice if we could get more bandwidth for when the worlds governments start watching us. Or if we could stream to a central server which would re-stream to various governments Netflix-style to take the burden off that poor $69 HIKVision dome camera doing all the work spying :)

Undisclosed Manufacturer #6

In reply to Undisclosed Integrator #3 | 01/06/16 04:32pm

But the first time HIKVision/Chinese government gets caught using the backdoor, you would think it will obliterate their business.

If that was true, Lenovo would be out of business.

http://thehackernews.com/2015/09/lenovo-laptop-virus.html

http://www.theverge.com/2013/7/30/4570780/lenovo-reportedly-banned-by-mi6-cia-over-chinese-hacking-fears

Undisclosed Distributor #5

12/30/15 03:03pm

I think that even if we calculate that -15% discount from ADI you anyway won't reach prices which we have here in Baltics :) So believe me Hikvision really has some reserves to cut the price. The same with iVMS5200.

As for "whats the point to keep such a low price" they see the point. First of all government is happy to see high educated people of Hangzhou working in Hikvisions factories. They are happy to pay higher salaries to simulate chinese internal consumption. So I would say Hikvision is more social project. Where they want to show their Hi-tech, power and social responsibility for their people. For HDD we have how many 2 global players? So I think Hikvision is going somewhere same direction to be one of 2 or 3 in globe. In any case it will be interesting to monitor these processes plus Uniview (UNV) have joined the club as well :)

John Honovich

IPVM | In reply to Undisclosed Distributor #5 | 12/30/15 03:32pm

"I think that even if we calculate that -15% discount from ADI you anyway won't reach prices which we have here in Baltics :)"

But the cost of selling, marketing and servicing in the Baltics is far lower than in the US. Those are real far higher costs that Hikvision needs to cover in the US.

Avatar

Mike Rose

12/30/15 04:48pm

Looks like an ADI event to me

considering the pricing structure maintained by ADI, this might not represent a significant saving on Hikvision equipment

John Honovich

IPVM | In reply to Mike Rose | 12/30/15 04:57pm

ADI's not eating a 15% discount. This comes from Hikvision.

And ADI is most likely the biggest NA distributor of Hikvision, so for the large number of dealers who buy from ADI, it's significant.

Dennis Widdows

12/30/15 05:56pm

Tried has the same 15 percent special running on all Hik...

Best to all

Sal Visone

DWG | IPVMU Certified | In reply to Dennis Widdows | 12/30/15 05:58pm
It's available through every Hikvision distributor. It's a Hikvision backed promotion.

John Honovich

IPVM | In reply to Sal Visone | 12/30/15 06:33pm

Good to know and good grief :)

Rodney Thayer

12/30/15 10:34pm

Why are you assuming they aren't making money (as I duck waiting for John to bring up some IPVM post I've failed to re-read.)

Also is it possible that volume flowing across the export delivery path might be their goal. Maybe they booked a dozen or two too many panamax carriers to bring product over.

John Honovich

IPVM | In reply to Rodney Thayer | 12/30/15 11:27pm

"volume flowing across the export delivery path might be their goal"

It seems that way but I fail to understand the logic here. Sure, anyone can sell a lot if they sell at a much lower price than their competitors. But at such price levels, how is that good business?

As for the not making money, to clarify I am saying that in North America. Their financials report that Hikvision overall has greater profitability percentage than Google. Chinese government statistics are not always the most accurate but, presuming the numbers are true, it would have to be because of the 75% of their business inside China is very profitable.

As for NA Hikvision not being profitable, it's a function of (1) their prices are lower than essentially everyone, including companies with similar Chinese cost structure, (2) yet their NA expenditures are as a high as any big Western brand. That is not a profitable combination.

Ironically, the 15% cut should help profitability modestly in 2015 since the sales, marketing, etc. expenses are already paid for and this will pull in some extra contribution margin but it's detrimental to 2016 profitability and revenue as it is going to pull Jan/Feb/March 2016 sales to today and tomorrow (at lower prices than they would have paid in the next few months).

For a company who is struggling, I get the big end of quarter discount because you are simply trying to make it to the next year and can (try to) deal with the damage later. But, for Hikvision, the price drop looks counterproductive and damaging to their own bottom line.

Undisclosed #2

In reply to John Honovich | 12/30/15 11:31pm

Jan/Feb/March 2016 sales to today and tomorrow (at lower prices than they would have paid in the next few months).

Don't count on it. ;)

John Honovich

IPVM | In reply to Undisclosed #2 | 12/30/15 11:49pm

Lol, seriously, even for Hikvision, there has to be an end to the price drops.

I am curious where that is. Does Hikvision really want to be spending millions on trade show booths and tens of millions on employees to sell $50 cameras to thousands of different integrators across the US? There's only so many surveillance cameras that can be sold and there's still a very fractured integrator channel that is costly to sell and support.

Undisclosed #2

In reply to John Honovich | 12/30/15 11:57pm

Some of it might be bluffery aimed at having an immediate effect by reducing competition, even if no one goes chapter 11.

Imagine you're IDIS trying to raise some cash for next year's booth... Try convincing bankers that Hik has bottomed.

Doesn't a race need to have two racers anyway? Maybe someone needs to tell them they won already...

John Honovich

IPVM | In reply to Undisclosed #2 | 12/31/15 12:06am

The reduce competition angle is the most believable to me and I think their price drops will reduce competition. Let's say Hikvision successfully pushes out half of the companies selling surveillance cameras. What does that leave? Another 50, 100, more?

Is there any reasonable time frame or scenario where Hikvision gets to only a few companies remaining, like Hikvision's Chairman predicts?

If you can get to the point where only a few remain, I can see Hikvision making a lot of profits at that point. But if you still have a few dozen companies remaining (which I think is inevitable due to the fractured channel internationally), what point is the price drops? Why incur so much losses / miss out on so much profit to get to that point?

Undisclosed #2

In reply to John Honovich | 12/31/15 03:36am

Let's take a look at what clues He gave us in the infamous 'Massive Bloodletting' redacted article:

“In five to six years, there won’t be that many manufacturers able to sustain their cost structures,” Mr. He predicts. “My goal is to make sure Hikvision is well positioned to survive.

  • Five year consolidation - not a short-term outlook
  • He stresses costs over revenue as the reason for their demise. Implication is that He believes that competitors they won't be able to make stuff cheap enough to compete.
  • His goal is just to SURVIVE TIL THEN!

Not prosper, not flourish, just survive...

He knows just where the sustainable cost structure line is, because he lives on it!

He can lose several pints a day because he get transfusions from his personal 'donor', for anybody without one, well...

Jim Rao

IPVMU Certified | 01/04/16 05:15pm

Can anyone comment on import duties and Tariffs on Chinese products into the US by Chinese Owned companies. Wouldn't US import tariffs affect their costs?

Undisclosed Integrator #7

01/05/16 03:32pm

Hi

I haven't read all the posts but many seem to think Hikvision is losing money. How do we know that? When a real PC able to run windows (the Intel PC on a stick) is priced at less than $150 why can't a camera (simpler by far) cost even less? Is Intel losing on the stick? Please go to Alibaba and look at the price of several items ... Are all these companies losing money?

Interesting point and one I am currently struggling with: When a good to very good camera cost <$100. How can you justify a $300 VMS license? We have recently tried the iVMS 4200 you tested earlier. For many customers that is all they need... If the iVMS5200 is true client-server and as good as advertised/presumed, there is a revolution in the making. We will see a whole slew of VMS stalwarts fade away.

This reminds me of the entry of Japanese car manufacturers in the US market. The old Guard kept on saying that it couldn't be done and that Japanese Cos were dumping .. Years later the big 3 had to adapt or disappear, they are striving now.

I sincerely believe the days of $300 VMS licenses are over or will be very soon ..maybe less than 3 years ... We better prepare ourselves for these times.

John Honovich

IPVM | In reply to Undisclosed Integrator #7 | 01/05/16 04:03pm

7, you made a similar point in another thread and I responded there.

As for the Intel PC on a stick, an IP camera is basically a PC with an imager and a lens and a PoE interface, etc. so yes if Intel is charging $100 for its stick, it is not surprising that IP cameras would generally go for even more.

As for Alibaba, people selling things off Alibaba are not comparable to what Hikvision or Avigilon or Axis or ACTi, etc. is doing. With a branded manufacturer (like Hik or the others), you get pre-sales and post-sales support, warranty (often extended, often advanced replacements), eliminates risk of counterfeit product, quicker turn around time / local inventory, etc.

If a company did not need to do anything like that, they surely could sell for a lot less.

Undisclosed Integrator #7

01/05/16 04:21pm

John

Fair enough. A question do you know Hikvision Cost Structure?

A few things:

  1. They have access to the manufacturers bed of the World? Every single company you can think of, has some or all of their stuff Made in China. My reference to Alibaba is that they can get these stuffs made at an incredibly low price. The same companies able to turn around and produce the Walmart Webcam sold in the US for $30 would be so pleased to have that kind of solid , stable customer.
  2. Hardware keeps on falling. For everyone mind you but for them see above.
  3. They have a large R&D Department. And they are not sitting on their laurels.
  4. I do understand that Support, Marketing and Sales are not cheap but what kind of numbers would you put on its % of their income? 10% look seriously large for me and it would be $150,000,000... more than most other manufacturer can dream of ( IIRC they had sales of 1.5 B$ or am I mistaken?)
  5. I don't see Hikvision advertising any differently from other manufacturers. I could be wrong.
  6. We seem to dismiss that they offer incredibly high value for the price and that drives sales via Words-of-mouth Internet style. It is very hard for me not to automatically look for Hik in any application/bid/project unless specified otherwise. Their offerings are seriously good to excellent.
  7. We can at the end say that it isn't fair since they are backed by the Chinese government and they have all the large contracts and they are bent on World Domination. That's an entirely different discussion...

John Honovich

IPVM | In reply to Undisclosed Integrator #7 | 01/05/16 04:29pm

"I don't see Hikvision advertising any differently from other manufacturers. I could be wrong."

In North America, Hikvision was the #1 video surveillance top spender on advertising and marketing in 2015 (based on my tracking of trade shows, trade mags, etc.). I know this varies by continent so you might have a different experience.

"They have access to the manufacturers bed of the World? Every single company you can think of, has some or all of their stuff Made in China."

There's lots of manufacturers in China, even the other Chinese manufacturers have privately contended that Hikvision is losing money on their NA sales.

"I do understand that Support, Marketing and Sales are not cheap but what kind of numbers would you put on its % of their income? 10% look seriously large for me and it would be $150,000,000..."

That percentage varies per region. 10% might look seriously large for you if you looked at just China. But break it out in different regions. In North America, 20%+ is probably more reasonable. Again, Hikvision HA is quite large (150, 200 people, the shows, the ads, etc., in US dollars for US employees, etc.).

I agree with you that can that many manufacturers can make a product for cheap but to distribute, warehouse, market, sell, support, etc. in expensive countries like the US, there's a lot more expense involved.

Avatar

Andrius Dapkevicius

IPVMU Certified | 01/06/16 06:22am

If you are discussing about prices on Aliabab or Aliexpress check this website: http://search.jd.com/Search?keyword=hikvision&enc=utf-8&wq=hikvision&pvid=otnif2ji.4jtzk8

If you are interested in EZVIZ (Hiks retail brand) you can also check here: http://search.jd.com/Search?keyword=Ezviz&enc=utf-8&wq=Ezviz&pvid=wsqif2ji.4jtzk8

EZVIZ C2 mini for USA should be 70USD including all taxes for Europe 100 Euro. But in China they offer 199RMB approx. 30 USD. So there are space even if to compare sales prices. I guess Hikvision is innovative enough (somtimes maybe even more than these mentioned brands like Avigilon, Axis or whatever) to reach good efficiency level and to have low costs.

For 2015 they have lot of new products in high resolution and many verticals so I guess we will keep discussing this "wtf Hikvision is doing" topic ;)

Avatar

Andrius Dapkevicius

IPVMU Certified | In reply to Andrius Dapkevicius | 01/06/16 06:24am

for 2016 they have lot of new products*

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