Security Sales Forecast 2015

By John Honovich, Published Jan 05, 2015, 12:00am EST

The biggest surveillance manufacturer marketing push in 2014 was 4K.

And the pundits continue to say how the cloud will be the next big thing.

But these two were easily beat out by three less hyped but more valuable offerings.

Here are the key findings of the survey and our analysis:

  • 4K camera sales will disappoint. Though sales will be driven by manufacturer marketing push, customer interest will be low.
  • Cloud sales will remain inconsequential.
  • Analog HD sales will be strong, despite the lack of support by major manufacturers.
  • 'Regular' HD IP sales growth will decelerate, as increasing saturation / maturity and analog HD option reduce demand.
  • Analog SD sales will continue to decline, more sharply than previously forecast, due to IP camera pricing cuts, analog HD's emergence and more legacy systems reaching end of life.
  • Video analytic sales may increase notably, though the impact of the Avigilon / OV deal needs to be seen.
  • Access control sales will do better than expected, most notably driven by wireless locks.

4K Will Disappoint

The biggest bet of big brand manufacturers over the past year has been 4K, but it is going to meet significant buyer disinterest in 2015. Not a single integrator surveyed choose 4K as a technology they were going to sell more of, a disastrous outcome considering the level of marketing already spent promoting 4K.

The positive side is that sales growth will be extremely high, in percentage terms. This is a product of three factors:

  • 4K IP camera sales are starting at near zero, so any sales will statistically be a big jump.
  • Manufacturers are spending a lot of sales and marketing dollars behind this.
  • For most Western brands, who are ignoring analog HD, it will be their only / main new 'technology'.

4K proponents will be able to claim success as some market analyst will eventually tout 800%, etc. growth of 4K IP cameras.

The problem will be that the sales growth, relative to the manufacturing dollars invested will be poor. There's only so much selling manufacturers can do if buyers are not highly motivated.

Over time, buyers will (slowly) move from 720p/1080p HD to 4K but the market potential / impact will be far more muted than that of SD to HD.

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Cloud Remains Inconsequential

Cloud video surveillance sales will remain inconsequential due to a lack of both demand and supply. Integrators surveyed had no interest (only 1 vote total) and manufacturers / providers are doing little to develop or promote their offerings (e.g., Axis AVHS where have you gone?). The cloud may be the future (or present) of other areas of IT / technology but will remain a distinct niche in video surveillance.

More -> Analog HD

Though there was no universal consensus among integrators in what they will sell more, analog HD clearly got the most votes. Integrator commentary included:

  • "HDCVI 2.0 and AHD for different target market really. CVI 2.0 will be for the analog upgrade with beefier budget while AHD will be analog upgrade still on a budget."
  • "Dahua - because it ticks all the boxes at the right price."
  • "AHD cameras cost."
  • "Analog high-definition CCTV, low cost and easy retrofit."
  • "Tribrid video, better quality at a very good price"
  • "Costs are much more reasonable and the introduction of TVI gives us a major opportunity to upsell existing analog client base without major infrastructure changes."
  • "HD analog for customers with existing analog infrastructure. HD analog (Hikvision) is a compelling alternative and we will try to push that to existing analog customers since it is an easy upgrade choice."
  • "Its obvious that we are going more for camera mostly IP and the new coaxial HD HVI-TVI"
  • "Analog HD, specifically HDCVI. Since it is a new product, that will tend to increase sales naturally, but we see it as a replacement for SD analog in our product offerings."
  • "HD-CVI security cameras. This technology seems to be a value sale while providing a very decent image. If I can provide a good product at a very good value then everyone wins IMHO."

This is impressive given the lack of manufacturer marketing spent. However, analog HD growth will absolutely be restricted by this. None of the big Western or Japanese brands are supporting analog HD which means analog HD's growth will come primarily at the low end / fringes of the market in 2015.

Beyond lack of brand support for analog HD, the impending fight / battle between Dahua and Hikvision could undermine growth as well.

(Somewhat) More - IP / HD

A few years ago, the most common growth driver for video surveillance was the move to IP / HD. This is now trending down, simply a victim of its own success, as more and more people migrate to IP / HD. A few integrators still did cite this though: 

  • "IP Cameras. We are close to a full transition into IP cameras now."
  • "IP-based cameras and encoders to move analog based camera installations into the network."
  • "IP cameras systems are growing at faster rate than any other sector that we sell. The sheer improvement in image quality and flexibility of IP systems are a huge selling point once the customer can get over the sticker shock"

Nonetheless, it is clearly a decelerating sales growth driver.

Less -> Analog SD

On the downside, a strong consensus across integrators exists on what they are going to sell less of in 2015 - analog SD, with far more than half of all integrators selecting it:

  • "Analog video (standard PAL/NTSC resolution). It's stale technologies."
  • "Analog just doesn't cut it anymore. It will still have its purpose in installations requiring absolutely no latency, but once that is overcome it will completely die out."
  • "Analog cameras are in less demand. People are asking for better video quality."
  • "Analog CCTV - Decrease in cost of IP Based Systems"
  • "Analog video. Why? Because I can sell an entry level IP system for the same cost but have more than double the quality."
  • "I would say analog cameras way down if not non existent all together. Just old tech."
  • "Standard definition analog surveillance. Cost versus performance analog surveillance has needed improvement for a decade plus"
  • "Analog video as IP from Hikvision is cheaper than Analog from big brands."
  • "Analog cameras (standard resolution) Push towards IP / HD analog for better picture quality now that the price differential is not as high."
  • "SD analog will probably no longer be sold with the HD analog offerings available today."
  • "Analog security cameras which I believe are considerably inferior to HDCVI/HDTVI technology."

That analog is declining should come as no surprise to industry people. However, the important shift that is going to occur is a steep drop in analog SD sales.

On the low end, analog HD, with higher pixel count and similar pricing, makes it hard to justify analog SD. And on the higher end, the continued decrease of IP HD makes it easier to justify switching to IP. Finally, systems from the DVR boom of 2001 to 2005 are now at least 10 years old, making them increasingly hard to justify maintaining.

We expect this to hit 'premium' analog manufacturers like Pelco, Honeywell, Tyco/AD, etc. who lack an analog HD option to counter this drop. By contrast, Hikvision and Dahua should do well, switching analog SD to analog HD sales and taking some of their premium competitor sales on analog HD.

More -> Video Analytics

A fair number of integrators cited video analytics as a sales growth driver for 2015, with only more picking analog HD.

Integrator comments on analytics included:

  • "IP camera systems with VCA as our local market recognized its benefits and we have such a wide range of video analytics."
  • "We will be selling more cameras with embedded analytic features as this is a core portion of our business model."
  • "Replacing analog CCTV with IP coupled with analytics."
  • "IP video. Intelligent systems, video analytics Integrated security systems."
  • "Advanced Video Analytic's, IP Cameras."
  • "IP Video Surveillance Systems, due to higher resolution video and more effective analytics."

This survey took place days before the Avigilon / OV analytics patent deal, so it does not reflect that.

Minimally, we expect 2015 to be an excellent year for Avigilon's video analytic sales. The combination of their new low-cost analytic cameras, their aggressive sales tactics and now owning patents behind video analytics, sets them up for tremendous sales growth.

As for the rest of the industry, this will depend on what approach Avigilon takes on enforcement with rivals.

More -> Access Control

Access control had a decent showing amongst integrators, with many citing it as a sales growth area: 

  • "Access Control - we want to take a bite out of our competition. Currently, we focus on Cameras mainly."
  • "Access Control based on TCP/IP, with Electromagnetic lock from ABLOY."
  • "Cardless access control solutions. In the UAE users are trending towards card free biometric solutions, finger, iris, facial etc."
  • "We will be blending our VOIP and access control systems on larger projects utilizing recent system enhancements in Genetec. Also, we will do more IP access control modules like the Axis A1001."
  • "IP to the door access control systems, it future-proofs the installations from an infrastructure perspective."

In particular, a number called out wireless access control:

  • "Wireless interior door access control. It has become more reliable and integrated into access platforms."
  • "Wireless locksets expansion."
  • "Wireless Access Control Readers - Mercury PIM400-1501 Panel allows for easy integration to access control system up 16 AD wireless locks via 1 CAT5 cable."

Undoubtedly, wireless access control, as our stats show, is one of the top growing segments, not just in access but in all of physical security.

That said, we do not expect a spike in overall access control spending / deals, but with innovation in video surveillance falling, more of a shift back to access control appears to be a prudent play for many integrators.

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