Revenue Decline Continues in 2010

As the market shift to IP cameras continues, incumbent DVR leader Dedicated Micros struggles lengthen. Significant revenue declines in 2008/2009 have extended into 2010. According to UK Government Records, Dedicated Micros revenue continued to shrink in the most recent reported period concluding June 30, 2010. Compared to 2008/2009, revenue was down 11.6% to 54.4 Million GBP (roughly $85 Million USD at today's exchange rates), down from 61.5 Million GBP. Prior to 2008, revenue was above 70 Million GBP.

By territory, revenue in the UK was only down about 6% to 23 Million GBP but in the rest of Europe revenue plummeted nearly 50% to 4.2 Million GBP.

Headcount decreased from 611 employees to 523 (a reduction of ~14%) with notable reduction in both sales and technical divisions.

In the report, DM argues that it "has successfully traded through what is widely recognised as the worst economic crash of all time." This is obviously an overstatement (in general) and given that the video surveillance industry (and especially the IP segment) did significantly better than the overall economy in the period. On the other hand, their revenue declines is consistent with many other analog focused businesses during the similar time frame.

In the report, DM positioned Closed IPTV [link no longer available] as their most notable new innovation and a key driver for future growth. It's undoubtedly a daring bet that no one else is making. If they are right, they will define a new niche with little competition and strong growth. If they are wrong, they could be betting the future of their company.

We remained skeptical of the incremental value that Closed IPTV will provide over 'regular' IP solutions, especially on their security claims.