How Competitive is Megapixel Against Analog Cameras?By: John Honovich, Published on Nov 19, 2010
If analog is to be replaced, IP must provide superior value across the market. Historically, that has not been the case. While most believe that higher resolution is the key driver from analog to IP, megapixel's price premium has been quite substantial.
In this note, we look at the current competitiveness of megapixel vs HD and how that has changed since 2008. In less 3 years, the competitive positioning has changed dramatically. The value of megapixel is surging due to declining product and system costs plus improved offerings.
Let's start with 2008 where megapixel, beyond niche applications, was hard to justify. In our July 2008 article on the Top 5 Problems of IP Cameras, we noted how even SD IP cameras were twice as expensive as analog and how megapixel storage was a significant problem (only MJPEG at that time). With MJPEG, storage costs could easily run $300-$500 more per camera. Equally concerning, megapixel cameras at that time where even more expensive with a price range of $700 - $900 or higher (online pricing). Finally, with only a dozen or so manufacturers, megapixel camera supply was quite constrained.
In 2008, the megapixel premium over analog was about $600 - $1000 per camera. That's a huge amount of money that is hard to justify unless you (a) really needed to replace multiple cameras in a single location or (b) were extremely demanding on your image quality needs. Both of these were niche applications. This was reflected in a relatively small global market size of about $100 Million USD.
Now, in 2010, the market is likely 400% larger than it was in 2008 - doubling each of the past two years.
Megapixel's improved competitiveness in less than 3 years is nothing short of staggering:
- H.264 is the norm now (with MJPEG only cameras becoming rare)
- $300 - $500 online pricing for megapixel cameras is becoming quite common. There are now 50 megapixel cameras listed for under $500 in our Camera Finder.
- The number of suppliers has at least quadrupled with literally every camera manufacturer around the world now offering megapixel
- Storage prices dropped in half or more; Though expected, still a benefit to megapixel
Because of these changes, the premium of megapixel over analog is now about $150 - $200 per camera. Here's a straightforward example:
Sony's recently introduced 1.3MP box camera (the SNC-CH120) has an online price of about $460 (including lens). The equivalent form factor/imaging from Sony's analog lineup is the SSCE453 which has an online price of about $150 (add a lens for $50) - total price about $200. With analog, encoding must be done separately. Using the most cost effective option, a DVR, the cost will be about $125 per camera (the premium of a DVR with an analog encoder card over an NVR appliance). 1.3MP runs $460 vs SD analog at $325, a premium for megapixel of $135. Add in the additional cost of storage (about $50 given H.264 and lower hard drive costs today) and the total premium is under $200.
Optionally, if you choose to use a NAS like QNAP or Synology or Milestone Essential at $50 per channel plus a COTS PC, the premium of megapixel over analog would drop further (under $100 per camera).
The economics will work similarly with many of the other sub $500 megapixel cameras. The competitiveness is accelerating as many of the Fall 2010 releases feature low cost cameras - such as the Arecont H.264 compact cameras, the Avigilon H.264 ONVIF cameras, HD domes from Grandstream, GVI and Vivotek, etc.
We've gone from a $600+ MP over analog premium in 2008 to a sub $200 premium of MP over analog in 2010.
First, this should make it easy to understand why megapixel adoption has surged. It is not primarily better education or more informed end users -- the products are simply much more competitive.
Second, we are reaching the point where justifying HD over analog gets pretty easy. When the total cost of a project nearly doubles (as it did in 2008), the market is fairly limited. When the total cost goes up only 20%, that's much easier especially when the visual benefits are dramatic in the overwhelming majority of applications. In a 16 camera job, if you eliminate 2 or 3 cameras, megapixel pays for itself. Even if you eliminate no cameras, the significantly higher captured details are likely to help solve a number of cases that analog quality would have missed (clearer images of suspect faces, license plates, etc.).
Undoubtedly, analog will be around in significant quantities for many years, primarily driven by the long lifecycles of CCTV systems (repairs, small expansions, etc.). However, for new deployments, the competitiveness of analog CCTV is collapsing due to the surge in low cost, widely available megapixel cameras.
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