Should You Use Software-Only Video Management Systems?

Author: John Honovich, Published on Oct 30, 2008

Software only has lots of the momentum. But should you use software only? While DVR/NVR appliances are increasingly viewed as antiquated, over 80% of end users still chose traditional appliances over software only.  Are those buyers wrong?

Here are the key advantages of software only:

  • Lower costs and more flexible for large camera counts (32+) within a high speed LAN (1Gb/s+)
  • Lower costs for all IP camera deployments

However, appliances have advantages for certain scenarios:
  • Less expensive for low camera counts (16 and under)
  • Simpler and cheaper setup for Distributed stores/branches (e.g., bank branches, restaurants, convenience stores, small box retailers)
  • Lower costs for Analog camera deployments

I project users choosing software only video management systems will increase from approximately 20% today to 50% in 2013.  However, a large segment of the industry will continue to use appliances as they provide better value for key applications.  I project that the use of appliances will only be eliminated when managed video matures.  However, managed video may not become dominant until the end of the next decade (i.e., 2020).

The most important elements in evaluating software only are:
  • Appliance vendor profiteering has made software only very attractive
  • IT does not require software only but they object to appliance vendor profiteering
  • Appliance offerings are improving, making the choice more competitive
  • Software ony setup is complex and time consuming (relative to appliances)
  • Software only generally requires the use of encoders to support analog cameras
  • Appliances do not block 3rd party software integration
  • For the next 5 years, appliances will be very attractive to almost 50% of the market
  • In the far future, software only will dominante with managed video

Appliance Vendor Profiteering

DVR vendors, as a whole, have screwed their customers for years with the sales of appliances.  The markups on hardware that manufacturs applied and then the further markups that the dealer applied resulted in $1500 USD PCs being sold for $12,000 USD. Now, of course, this includes the software licenses to manage the video but even with that factored in, if you built this yourself, you could literally cut the cost in half.  Even today, you see this with the major brands like Intellex where an extra 1.2 GBs of on-board storage costs an extra $2,000 - $,3000 more (when the cost is only 1/10 the price).

For deployments with a few hundred cameras, software only could reduce the cost by $50,000 to $100,000 USD.

Fundamentally, I do not believe appliances are bad. However, appliance vendors have tended to control their customers, giving customers incentive to move to software only vendors whose business model was more favorable.

IT Does Not Require Software Only

IT uses appliances all the time - router, switches, firewalls, cameras, video conferencing units, video encoders, etc., etc.  I do not believe IT fundamentally objects to appliances - what they were objecting to was the high cost, poor security and the poor design of DVR/NVR appliances.  Many DVR appliances in the past 5 years were simply software loaded on no-name hardware and marked up dramatically. 

Appliance Offerings Are Improving

Numerous DVR/NVR appliance manufacturers (especially newer entrants) realized these problems and set to fix them.  For instance:
  • March Network's appliances run on Linux, are puprosed built computers for video surveillance (e.g., built in battery back up, docking station for easy maintenance, etc.). They were also sold at significantly lower cost than traditional DVRs and ideal for 16 cameras or under.
  • Steelbox apliances are optimized for very large scale deployments (1000s of cameras).  Individual appliances can support up to 500 cameras at a cost of less than $70 per camera (hardware and software included). Read my review of Steelbox to learn more.
Because software only has been so successful, appliance vendors have to respond or face being wiped out. While some appliance vendors will fail, as a segment, the survivors will sell much more reliable products at much lower costs.

Software Only Setup is Time Consuming and Complex

DVR/NVR appliances are almost plug and play. Even if you know little or nothing about PC internals, OS setup or IP networking, you can set up an appliance in very little time and with very little trouble.

Despite being plug and play, appliances are rigorously tested and optimized to work for the specifications set.  A team of QA engineers constantly performs hundreds of tests to find any hardware incompatabilities or issues in scalability or load.

With software only, the on-site integrator needs to handle all of this by themselves.  This is not meant to be a scare tactic.  If you are a strong IT technician, you should be able to do this with moderate tuning and training.  However, this is a significantly most costly and risky process then using appliances.

Indeed, why do you imagine Cisco sells router appliance rather than simply router software?  Appliances do reduce risk and labor to do on-site optimization.

By contrast software only setup requires IT expertise.

Software Only Requires Encoders for Analog Cameras

If you are only using IP cameras, then this is not an issue.  And in the far future, when almost everyone is using IP cameras, this point does not apply.  However, today, when 80%+ of the cameras are analog, this is a significant issue of cost and complexity.

Encoders are more expensive than using built-in encoding cards that are part of the DVR appliance.  On a per channel basis, using external encoders with software only costs $200 - $400 USD.  By contrast, that cost is usually only $50 - $100 USD for built-in encoding cards.

Moreover, appliances need to be configured separately, assigned IP addresses and are another device that may fail.

As such, end users should be cautious about deploying encoders and factor in the extra cost and complexity of these devices.

Appliances Do Not Block 3rd Party Integation

A widely spread fear is that DVR/NVR appliances block integration with 3rd party systems (like access control or intrusion detection).

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For 3rd party integration, there is absolutely no technical difference between applainces and software only offerings.  One can just as easily use an API from an appliance as from software only.

The 'truth' in this fear is that a lot of appliance manufacturers have attempted to control and lock in their customers to only the 3rd party devices the appliance manufacturer favored (usually other devices made by the manufacturer).

End users should absolutely check vendors on this element but they should be scared into thinking that appliances do not support 3rd party software.

Appliances Will Continue to Be Attractive

For branches and distributed offices (like banks, convenience stores, restaurants, small box retailers, etc) with 16 cameras or less, appliances will continue to be very attractive and the dominant choice.  The easier setup and the lower cost will be the key factors. Appliances have also come down in price and their IT Security and reliability have greatly improved.  All of this will keep appliances very strong in these segments.

Appliances Will Only Be Eliminated in the Far Future

The reality is that deploying appliances and setting up software only servers both have risks and challenges.  The ideal future is one where end users do not have to store and manage video on their sites. However, this will require a massive decrease in the cost of WAN bandwidth which will only happen over a long time period. When this does, local video management systems will start to dissapear and be replaced by large-scale data center run by customized software running in server farms.

However, that day should not affect anyone's purchases for the next few years.


While the uptake of software only will continue to grow for large-scale camera counts, appliances will remain an important and favored choice for distributed facilities and small camera counts.

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