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?
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.
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.
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?
"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?
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.
"$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.
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.
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 :)
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 :)
"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.
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.
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?
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?
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.
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.
Fair enough. A question do you know Hikvision Cost Structure?
A few things:
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.
Hardware keeps on falling. For everyone mind you but for them see above.
They have a large R&D Department. And they are not sitting on their laurels.
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?)
I don't see Hikvision advertising any differently from other manufacturers. I could be wrong.
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.
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...
"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.
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 ;)