Hikvision Slashes Prices to End 2015

"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.

"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?

"$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.

"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.

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.

"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.