Yes, Milestone, The Glory Days Are Over

Author: John Honovich, Published on Dec 20, 2016

Milestone challenges:

Are the glory days over? Or are we in a position as a Community to defy these ominous predictions and define the future ourselves?

Yes, Milestone, the glory days are indeed over. Your 'Community' can bang on drums at MIPS again to feel better but it will not change reality.

IP Glory Days

Undoubtedly, the video surveillance industry had 'glory days' that stretched from ~2001, with the rise of DVRs, and re-energized in ~2008 with the rise of MP cameras. But that is over now.

The market is saturated with digital / network recorders and MP cameras.

Even without the 'Chinese', the glory days would be gone.

Race To The Bottom

Of course, Hikvision and Dahua's race to the bottom has made things far worse for the industry. Indeed, Milestone giving away fully free VMS software and slashing prices on its mid tier VMS would not happen without that. $100 MP cameras, $300 NVRs, plus huge sales and marketing spend make it hard for the entire industry.

Not Glory for China

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While Hikvision and Dahua have certainly gained significant attention and even praise from the for-sale trade press, this is not glory days for China manufacturers either.

Hikvision and Dahua are really in a starvation contest with themselves and their South China rivals (see Hikvision's most recent 40% price cut on kits). They have been willing to accept the continued price cuts given the flood of money inside of China but they are clearly not happy to do so, to which their execs privately admit.

There is potential for 'glory' there but it only comes from bankrupting and forcing out most of their competitors, at which point the pressure to cut prices cease.

2 Problems

The industry faces two fundamental problems:

  • The 'West' has not delivered a next big technology. There is no major value creating offering that would spur broad industry growth. DVRs were great and MP were great but what now? Video analytics and cloud are still far more hype than mainstream offerings.
  • China has capitalized on that, making it difficult to grow in established areas, outside of the (unsustainable) flight to the enterprise that Axis, Milestone and most incumbent manufacturers are taking.

Solutions Available

The solutions are:

  • Develop robust video analytics that are easy to use. Does Milestone have that? No. And it's not a scalable solution to make each user figure it out and piece it together with Milestone partners. And does Milestone have any real cloud offering? No.
  • The China situation has no easy solution. China's economy may slow down enough that the Chinese manufactures change tactics or it may not and by the end of the decade most video surveillance manufacturers will be in ruins or gone, especially with the lack of innovation.

Raising The Problem Is Good

Milestone should be commended for at least raising the problem. Genetec too has been frank about this, recall Genetec: gutting of mid and low end players coming.

But contrast them to Axis, the largest and most powerful of that era's manufacturers, who loves to pretend everything is just super.

If one is to deal with problems, they first have to be publicly admitted. Milestone is right about 'end to end', and the losers, like Axis, greedily ripping each other apart for remaining shreds with 'solution' sales is not the solution. But the manufacturers need more than 'community', they need to develop real innovations.

1 report cite this report:

Milestone: "Easy Money Days Are Over" on Feb 17, 2017
Contrary to IPVM's criticisms, Milestone has reaffirmed that glory days remain. But they admit that they 'easy money days are over': Are the...
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