Recession Starts to Impact Video Surveillance

By John Honovich, Published on Aug 27, 2008

Companies are starting to downsize and reorganize.  Reports from a variety of companies indicate this growing trend.  The impact seems hardest amongst traditional DVR companies and video analytic startups and least for IP camera and IP video software companies.  Expect this trend to accelerate throughout the winter.

The Evidence

  • March Networks today announced an 8% workforce reduction and a net loss [link no longer available] for the quarter.
  • A prominent startup has started a search for a new CEO.
  • Multiple well known companies are significantly cutting costs.
  • D3Data, an IP Video software company, shut down.

This is the type of information that companies want to keep quiet.  The main reason March is so 'open' is that they are the only publicly traded North American company dedicated to video surveillance.  All other companies can either obscure or choose not to release such negative information.

Why Is It Happening Now?

The impact of recessions generally take time to spread.  Companies want to give their plans a chance to work.  Startups have cash in the bank.  However, over a few quarters, confidence and cash drain down.  Now, with a year in to the contraction, companies across the board are being forced to start tighetening. Investors are no longer doubting or wondering when or if it will happen.  The order of the day now becomes how to best contract.

Why is the Impact Different Across Segments?

Basically, the products that work well and are early in their adoption lifecycle (IP cameras especially) are doing well.  Their growth rates will contract but still generally be positive.

However, the products that are saturated (DVRs) or the products that have operational challenges (video analytics) are in a tough position. They neither have the revenue growth nor profit margins to provide insulation against a recession.

What's Next?

Expect this to get worse despite the excuses that companies will inevitably make.  Companies will generally frame this as a transition to enhance growth.  However, it is basically a restructuring to reconcile strategic errors in their business plans.

Get Notified of Video Surveillance Breaking News
Get Notified of Video Surveillance Breaking News

What about the IP video software startups?

While the demand for these products is healthy, the problem is that too many of them exists. D3Data is the first company I know to close but do not expect them to be the last.  In the long term, software markets cannot support dozens of providers.  Essentially, because the marginal cost of software is so slow, a huge incentive exists for scale.  Winners scale and the losers go out of business.

Why Should Security Managers or End Users Care?

Related Reports

NetPosa Revenue Plunges 90% on Nov 04, 2019
Revenue for China's long-time largest VMS provider NetPosa plunged 90% in the...
Huawei HiSilicon Production Shut Down on Sep 17, 2020
Huawei HiSilicon chips are no longer being manufactured or supplied to...
Huawei HiSilicon Shortage Impacts Surveillance Manufacturers on Aug 14, 2020
Huawei acknowledged problems and challenges for its HiSilicon chip business,...
Pivot3 Mass Layoffs on Mar 27, 2020
Pivot3 has conducted mass layoffs, the culmination of grand hopes, a quarter...
Milestone Drops IFSEC on Apr 18, 2019
Milestone has dropped out of Europe's largest annual security trade show...
Fever Camera Sales From Integrators Surveyed on Jun 01, 2020
Fever cameras are the hottest trend in video surveillance currently but how...
Vivotek Favorability Report 2019 on Jan 29, 2019
Taiwanese video surveillance manufacturers, even relatively large ones like...
Dumber Techs, Bad Box Movers, Says Australian Distributor on Jun 10, 2019
Techs today are "dumber" than they used to be, despite better education and...
Dahua Revenue Grows But Profits Down, Cause Unclear on Oct 20, 2020
While Dahua's overall revenue was up more than 12% in Q3 2020, a significant...
Axis and Genetec Drop IFSEC 2020 on Jan 23, 2020
Two of the best-known video surveillance manufacturers are dropping IFSEC...
Open vs End-to-End Systems: Integrator Statistics 2019 on Nov 11, 2019
Preference for open systems is on the decline, according to new IPVM...
XNOR.ai Terminates Wyze on Nov 27, 2019
Wyze has shocked the industry again - this time with a major setback. Just...
Nortek Security CEO Out, Company Pivoting on May 28, 2019
Nortek Security's CEO, Michael O'Neal is out, after 8 years leading the...
Bottom: Integrators Start To Stand Vs Coronavirus on Apr 20, 2020
Good news - IPVM integrator statistics show that while coronavirus has hit...
Hikvision USA Starts Layoffs on Sep 18, 2018
Hikvision USA has started layoffs, just weeks after the US government ban was...

Recent Reports

ISC Brasil Digital Experience 2020 Report on Oct 23, 2020
ISC Brasil 2020 rebranded itself to ISC Digital Experience and, like its...
Top Video Surveillance Service Call Problems 2020 on Oct 23, 2020
3 primary and 4 secondary issues stood out as causing the most problems when...
GDPR Impact On Temperature / Fever Screening Explained on Oct 22, 2020
What impact does GDPR have on temperature screening? Do you risk a GDPR fine...
Security And Safety Things (S&ST) Tested on Oct 22, 2020
S&ST, a Bosch spinout, is spending tens of millions of dollars aiming to...
Nokia Fever Screening Claims To "Advance Fight Against COVID-19" on Oct 22, 2020
First IBM, then briefly Clorox, and now Nokia becomes the latest Fortune 500...
Deceptive Meridian Temperature Tablets Endanger Public Safety on Oct 21, 2020
IPVM's testing of and investigation into Meridian Kiosk's temperature...
Honeywell 30 Series and Vivotek NVRs Tested on Oct 21, 2020
The NDAA ban has driven many users to look for low-cost NVRs not made by...
Ubiquiti Access Control Tested on Oct 21, 2020
Ubiquiti has become one of the most widely used wireless and switch providers...
Avigilon Aggressive Trade-In Program Takes Aim At Competitors on Oct 20, 2020
Avigilon has launched one of the most aggressive trade-in programs the video...
Mexico Video Surveillance Market Overview 2020 on Oct 20, 2020
Despite being neighbors, there are key differences between the U.S. and...
Dahua Revenue Grows But Profits Down, Cause Unclear on Oct 20, 2020
While Dahua's overall revenue was up more than 12% in Q3 2020, a significant...
Illegal Hikvision Fever Screening Touted In Australia, Government Investigating, Temperature References Deleted on Oct 20, 2020
The Australian government told IPVM that they are investigating a Hikvision...
Panasonic Presents i-PRO Cameras and Video Analytics on Oct 19, 2020
Panasonic i-PRO presented its X-Series cameras and AI video analytics at the...
Augmented Reality (AR) Cameras From Hikvision and Dahua Examined on Oct 19, 2020
Hikvision, Dahua, and other China companies are marketing augmented reality...
18 TB Video Surveillance Drives (WD and Seagate) on Oct 19, 2020
Both Seagate and Western Digital recently announced 18TB hard drives...