MP vs SD Cameras

With the surveillance industry shifting to IP cameras, important decisions still remain. Perhaps the most important is whether to use Standard Definition IP cameras or Megapixel IP cameras (such as 720p, 1080p HD, 3MP, 5MP, etc.). In the consumer market for TVs and digital cameras, this is an easy decision because very few, if any, SD products are even being offered. However, the surveillance market historically moves slower and more conservatively than the consumer market.

Two fundamental questions exist:

• How many SD IP vs MP IP camears are actually being deployed today?
• Should you be using SD IP or MP IP cameras in your application?

In this report, we dig into and answer each of these questions.

Finding Answers

To do so, we have examined them from 3 different angles:

• What do integrators use and why do they do so? As part of our Integrator Insight series we asked integrators around the world whether they are deploying more SD IP or MP IP.
• What are manufacturers and distributors selling more of? SD IP or MP IP?
• Based on our technology shootouts between SD IP and MP, what should you be using when?

Bottom Line

If you are deploying new IP cameras today, then statistically you are likely to be using MP IP cameras. Moreover, from a performance standpoint, this is overwhelmingly the right choice.

Here are the key points to take away from this analysis:

• Nearly 3 our of 4 integators surveyed are now deploying more MP IP than SD IP cameras driven by price declines, customer demands for superior image quality and much better value proposition over SD IP.
• The overwhelming majority of manufacturers are now reporting MP IP sales significantly greater than SD IP sales with a sharp shift over the past 2 years to MP IP. We expect MP to be 70% of total network cameras shipped by Q4 2012, far faster than market analyst projections.
• Save for niche applications like monitoring extremely dark areas, very small FoVs or very constrained budgets, deploying MP IP makes more sense than SD IP. Just like B&W only cameras continue in a niche role in a color dominated market, so too will SD IP cameras.

Integrator Survey Results

Let's start by digging into the integator's response to our survey question:

Clearly, a strong preference exists for using MP IP vs SD IP cameras. [It is important to note that this means 74% deploy a majority of MP IP cameras not that they are deploying 74% of MP IP cameras specifically. In the Winter 2012 survey series, we will do a follow up asking for the specific percentage of cameras deployed.]

First, let's start with the minority who are still deploying more SD than MP IP.

A few emphasized that their applications / markets where not really a good fit for megapixel.

• "The main problem is bandwidth, because we install videosurveillance system for municipality and we use hiperlan to connect camera to data center."
• "No benefit perceived by transits operators"
• "Most of our installations in the UK consist of extensions to existing CCTV systems. As a result, the new cameras and systems tend to be SD"

However, the majority of those deploying mostly SD IP cited cost. Here are key excerpts:

• "Most of our Customers are migrating to IP slowly and therefore price and direct correlation to existing analog cameras is what they want."
• "budget restriction"
• "storage costs and camera prices"
• "customers often choose 20% Megapixel, for instance the entrance of a shop."
• "this is changing, however, as pricing for MP becomes cheaper"
• "MP cameras are still more costly than SD. Our future projects (to be deployed) already have MP cameras."

Even amongst the integrators objecting to cost, 2 of those integrators make clear that this situation is changing.

Now, let's turn to the overwhelming majority who are deploying a majority of MP IP. Many of them emphasize how the cost has come down and is now very close to SD IP pricing:

• "The cost difference between SD and MP is not that great and the benefits out weigh the cost. We can always change the resolution of the MP if the bandwidth is top great"
• "Prices getting cheaper, tend to stay around 720P"
• "Driven by camera mfg. The cost gap between SD and entry megapixel has become much smaller. price has come down"
• "The cost of HD cameras has come down to the point where we can be competitive with them and we know the customer will be happy with the image."
• "I for one haven't seen much of a price difference between SD and 1.3MP cameras, so why go SD when it's not much of a cost difference."
• "With the cost difference between a Megapixel and SD IP camera here in NZ being little and with the image quality being vastly improved on a Megapixel camera, the client has always gone for the Megapixel option."
• "Price difference isn't much but we have more pixels and better quality"

While lower cost has made MP IP more feasible, the main driver integrators cited was customer demand for greater image quality:

• "Greater viewing of scene and greater chance of using video for evidence"
• "For better image quality"
• "Once customers have seen examples, they often ask for Megapixel."
• "Customer requirements and the amount of detailing the customer needs on the image for post analysys"
• "The quality of the HD cameras has proven to be superior both in the aspect ratio and color rendering"
• "We need all the pixels we can get from a camera to meet the demand for clearer pictures"
• "High resolution demands from customers."
• "People want that HD/megapixel quality they see on their cell phones/TVs. Everything I have quoted for this calender year has been megapixel."
• "Show them the difference. Visual use of the product is a dynamic selling tool for us."
• "Our customers demand higher image quality"
• "We educate our clients and let them make the choice. They choose higher resolution equipment."
• "Its easy to sell based on increased picture quality."
• "Customers want better image quality then they currently have with their analog system."

Indeed, not only is megapixel attractive to integrators and end users, integrators made it clear over and over again that Megapixel is the key driver for IP adoption:

• "We don't install any SD IP cameras. I don't see any point in doing that in this day and age."
• "Is there any other reason to switch to IP if I dont provide superior quality?"
• "Megapixel has been the key differentiator from competition"
• "The need for SD resolution for IP cameras are not worth the extra cost over the analog version."
• "There is no point going to IP cameras if you are going SD resolution"
• "If they are going to pay the additional cost for IP they might as well be Mega Pixel. The cost of the MP cameras is either the same or just slightly more than their D1 resolution counterpart."
• "If I'm selling IP cameras why would I give them SD cameras when I can give them megapixel cameras for almost the same price. If I'm going to quote SD, I'd rather do analog instead." [Quotes are very similar but from two integrators in two different countries]
• "Megapixel is the biggest up sell to IP Systems."
• "Megapixel is a key advantage to IP in our opinion especially since we do mainly small systems where the scalability of IP is not an advantage over analogue."

This feedback from integrators is particularly important because it shows how much the mindset of the market has changed in the past 3 years. While IP cameras have existed for more than a decade, only recently, with the broad release of H.264 Megapixel IP cameras has IP found its 'killer app'.

This is critical in re-assesing (1) sales forecasts and (2) market projections. In the past few years, IP and specifically MP IP sales have exceeded historical expectations. Indeed, we believe this will continue.

Manufacturer Sales Results

Manufacturer sales results are in line with what integrators are telling us.

The best public audited reference is from Vivotek's IPO documents earlier in 2011. Here's a chart demonstrating the shift towards Megapixel IP sales:

Even 9 months ago, MP IP represented nearly 2/3rds of Vivotek's sales. Equally importantly, the chart demonstrates the acceleration of MP IP sales growing robustly from less than half of 2010 sales. We have every reason to believe the shift towards MP IP continued in 2011 and Vivotek's sales are likely over 70% MP IP now.

Privately, we have heard the same trends from numerous big manufacturers including CCTV incumbents and traditional non megapixel providers (e.g., ACTi discontinuing most of its SD IP line, Sony moving to almost all MP IP cameras, etc.). Combine that with the megapixel focused companies who have been growing robustly (like Arecont, Avigilon and Mobotix) and it's no surprise that MP IP sales are clearly more than 50% and increasingly significantly each quarter. There's hardly any prominent manufacturer who has not refocused around MP - the only notable we can think of is Pixim who has really lost positioning in the market with strong WDR MP cameras becoming available from Sony, Panasonic, Pelco and soon Axis.

For a lively debate about MP IP market share, see the comments of our low cost IP camera comparison where we debated MP vs SD cameras sales.

Unit sales of MP IP cameras are easily 50% of total network cameras sold and may be closer to 60%. We expect that the transition in 2012 will continue, approaching 70% of units sold. By comparison, just last month IMS projected that it would take to 2015 for MP IP to reach 70%. This is far too conservative and reflective of many in the industry who have missed the sharp shift to MP IP in the past 2 years.

Comparative Testing / Performance Analyzed

We believe the market is overwhelmingly making the right choice in moving to Megapixel IP. While there is definitely myths and potential misapplication ('replacing' PTZs, over dependence on super megapixel cameras, etc.), by large the practical benefits of Megapixel IP over SD IP are clear and pronounced.

The two key advantages we find in Megapixel IP over SD IP are:

• Wider and Deeper Field of Views: Our tests show repeatedly that with a FoV of more than 10 feet / 3 meters, MP IP delivers material enhances quality captured over SD IP. Equally important, megapixel cameras typically can 'see farther', often 30 feet farther than SD IP cameras for capturing facial or license plate details (for an average 60 degree FoV). Given that the overwhelming majority of cameras need to cover such wide or far areas, MP IP delivers practical advantages over SD IP.
• Better WDR: More pixels consistently improves image quality in harsh / bright lighting. Equally important, a number of WDR optimized MP cameras exist delivering far better quality than SD IP alternatives.

Combine these advantages with a broad array of megapixel product options from nearly every manufacturer in nearly every form factor and there's not much in terms of limitations.

The most notable limitations are:

• Product price: At most, MP cameras are ~$100 more than than a manufacturer's SD version (specifically HD 720p / 1.3 MP cameras versus SD IP). Sometimes it's the same price as the newer MP camera is priced nearly equal to the older SD version. Product price is not a significant barrier.
• Storage costs: While H.264 allowed megapixel to become mainstream, a MP camera will clearly consume more storage. While this varies depending on a number of factors, we estimate the additional cost to be in the $50 - $100 range. Integrators have noted that they often record at lower frame rates with MP to help offset/decrease storage costs. That noted, the additional storage cost is not that much more.
• Low light sensitivity: A gap in low light performance between leading SD IP cameras and MP IP cameras certainly exists but is not extreme (excepting the new Axis Q1602 SD which is an expensive specialist camera). The real problem with MP low light performance is from the 3MP+ cameras which are dramatically worse in low light performance.

Overall, we see the main factor / application constraining megapixel adoption is low light sensitive applications. However, just like with black and white only cameras (used to improve low light performance), we see this as niche.

For the modest overall cost increase of moving to MP IP, there's very little reason not to move to MP IP except for the limitations noted above. Indeed, to the extent that buyers are very motivated by price, we do not see them sticking with SD IP, we see them sticking with analog as once one can justify IP, justifying the modest premium to MP IP is easy.