Pelco's All-HD Gambit: Who Wins? Who Losses?

In a much publicized move, Pelco's booth at ISC West was 'all-HD': HD fixed camera, HD PTZs, HD monitors, HD NVR appliances, etc.

Even in an industry where nearly all the incumbents are now marketing IP heavily, this move stood out for it's 'bet the farm' approach. [As background, review Pelco's admission of heavy sales declines in 2009].

Who Loses?

The clear loser here is analog CCTV sales, both for Pelco and for other incumbents. Such marketing reinforces that analog video is antiquated and not worth buying (whether it's true or false). The message has more impact because Pelco is arguing against it's own interests. Pelco's size and marketing size is large enough to have a material impact, especially in North America.

Who Wins?

By contrast, IP video sales clearly benefit from this.

In November 2009, we estimated that IP video sales would increase 200% between 2010-2012. We see this move as an important driver in reinforcing high growth rates. As we argued at that time, the incumbents would play a major role in accelerating growth levels. Regardless of how successful Pelco ultimately is in IP video, their current plan will accelerate IP video growth in 2010 (both for themselves and their competitors).

What about Pelco and its competitors?

We think this is a risky approach for Pelco. While we believe their IP portfolio can be competitive against other analog incumbents (Tyco Security, DM, Honeywell, Samsung, Bosch, etc.) who have limited IP options, they still have an uphill battle against the pure IP players (whether it's Axis or ArecontVision on the H.264 megapixel side or Genetec, Milestone, etc. on the VMS side).

Take Pelco's Sarix cameras. They are expensive (2MP are $1100 or more on-line pricing), have (at best) modest third party support and are only available in a few form factors (box, indoor and outdoor dome). Contrast this to Arecont where they lose on price, 3rd party support and breadth of product options (e.g., 180 and 360 models). Contrast this to Axis where Pelco is close on price but far behind on 3rd party support and Axis's massive range of product options (including lower cost and premium offerings).

Maybe this is the right move for Pelco at the right time. We do not know enough about Pelco's internal workings to make an informed claim here. However, it's clear that Pelco's all HD marketing effort is a boon to Pelco's IP competitors with superior strength in H.264 HD.