Surveillance Manufacturer Trends 2010

Published Oct 25, 2010 00:00 AM
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Trends and strategies in the video surveillance market are shifting. In this report, we examine the top trends and the most interesting moves by surveillance manufacturers.

Market Trends

Starting with the 'big picture', we see 4 key trends coming out of the fall trade shows:

  • Declining Megapixel Camera Prices
  • Cisco Product Expansion
  • Increasing IP Camera Standard Support
  • VMS Software Moves Up-Market

Notably missing are video analytics where new product development has almost ground to a halt. There, it's less of a trend than a coma.

What Do You think?

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Manufacturers on the Move

Inside the premium section, we provide extensive commentary on each of the following manufacturers who made notable moves this Fall:

  • ACTi
  • American Dynamics
  • Arecont Vision
  • Avigilon
  • Axis
  • Cisco
  • DVTel
  • Genetec
  • GVI
  • Intransa
  • IQinVision
  • Milestone
  • Mobotix
  • OnSSI
  • Pelco
  • Pivot3
  • Scallop Imaging
  • VideoIQ
  • In the last quarter, we believe the most important market shift is the widespread adoption of IP camera standards by numerous production products. First, this demonstrates near certainty that IP camera standards will become a reality in 2011 field deployments. Secondly, adoption patterns show standards drawing in many new entrants to open VMS systems. We see this both from proprietary focused incumbents (e.g., Avigilon, March, Vicon) and from outsiders getting into IP cameras (e.g. smaller Asian manufacturers).

Expanded choice is the obvious immediate consequence which means access to a greater diversity of products (form factors, feature sets, etc.). The more interesting aspect will be how this impacts camera cost. IP cameras are a highly profitable and fast growing product category. More choices should mean some new entrants are willing and able to sell at lower margins, reducing selling prices. That being said, this will take time to validate in the market.

Declining Megapixel Camera Prices

Even without seeing the full impact of future camera standard adoption, it is clear that the number of low cost megapixel camera options are expanding rapidly. Just this Fall, we saw this with multiple new releases from Arecont as well as new products from Avigilon, Toshiba and IQinVIsion. These cameras averaged about 10-15% lower price (about $100) than their predecessors providing notable cost savings. We think these price drops further strengthen the business case of going to IP/MP and reduce the premium of making the migration. This places further pressure on sticking with analog for new projects and increases the difficulty of considering HDcctv.

Cisco Product Expansion

Since the Cisco / Pelco partnership a year ago, Cisco has been relatively quiet. That was preceded by widespread criticism of Cisco's ambitious plans failing to meet expectations (especially after Cisco did not exhibit at ISC West 2009 due to 'limited marketing dollars').

In October 2010, Cisco significantly expanded its product offering, introducing both a 'PSIM' offering and video analytics embedded in their 4500 series cameras (as well as SD IP PTZ). On the one hand, this eliminated a number of obvious gaps in their product portfolio providing a more complete end to end offering. We expect this to be an asset as they continue to target high end / large scale end users already using Cisco networks.

However, what innovation or differentiation Cisco brings to the market is questionable. Cameras from Pelco, analytics from Object Video, PSIM from Proximex -- what value does Cisco truly add? We understand, as Cisco has admitted themselves, that this is a channel play to upsell their massive customer base. Nonetheless, it's difficult to understand how Cisco is providing better solutions or enhancing physical security beyond packaging others products and taxing their locked in customer base.

Major Manufacturer Moves

This fall, in addition to Cisco, the following companies made movies that made us rethink our view of them.

  • ACTi: In the last 2 years, ACTi has gone from being one of the hottest companies in the market to one of the most disappointing and puzzling. Their new product development has sank dramatically and their big announcement of Fall 2010 (4MP cameras) is not scheduled for release until April 2011. It's more common to hear industry people talk about what the ACTi 'booth babes' are wearing than what ACTI is releasing - never a good sign in technology. In this period, an avalanche of new megapixel cameras have been released with numerous companies now offering broader MP portfolios than ACTi.  ACTi claims that they are focusing on higher quality, expanded functionality products. However, they obviously have to release them (which they have not). Secondly, they seem to be surrendering the core advantage they originally brought to market - basic IP cameras at low prices.
  • Arecont Vision: By contrast, Arecont has become a key force in the market for low cost IP cameras. Their Fall 2010 new product releases of lower cost H.264 box cameras, bullet cameras and a much improved 8MP multi-imager dome all demonstrate that. These announcement are consistent with their historical patterns. The pace/amount of new product announcements is what is most impressive here. Of them, we believe that the new 8MP multi-imager dome is the most innovative/interesting. Adding D/N functionality and an integrated IP66 housing at a lower price than its predecessor makes this a more mature solution to replace multiple cameras and cover fairly large areas at a relatively low cost.
  • Avigilon: While Avigilon has clearly grown fast, their cameras's two clearest deficiencies have been no H.264 and no third party VMS support. Avigilon rectified both in their Fall 2010 announcement with attractively priced cameras and a nice premium feature (built in optical zoom lens). We think this is a major move for Avigilon that will expand the use of their products and let them compete head to head against Axis and Arecont in projects using other VMS systems.
  • Milestone: With bold moves in the low end (Essential and Go) and at the high end (Corporate 4.0), Milestone has been the most aggressive surveillance manufacturer over the last quarter, if not the whole year. While we think GO is little more than a clever demo, Essential is quite attractive for the budget market and Corporate 4.0 is an increasingly solid high end offering. Questions remain: Can Milestone profitably support such low priced offerings? Will their channel support giving away free or really inexpensive software? Can Milestone continue to expand at both ends of the market? Over the next year, it will be interesting to see how Milestone's positioning evolves.

Modest Manufacturer Moves

The following manufacturers made moves that modestly impacted our views and outlook on the company's positioning:

  • American Dynamics: While American Dynamics heavily marketed their proudly named "Victor" we fear that AD is too little too late to win the IP Video "game". Undoubtedly, AD needs a single client that can integrate and view their diverse product offerings. However, the release does more to fix a long standing clear error than build a competitive advantage. Combine this with AD's move earlier this year to re-sell/ OEM/ incorporate ExacqVision in their hybrid DVR offering and it's hard to see how AD is doing anything beyond minimizing the bloodletting. Without some massive and hard to believe advances, AD's dominance in the DVR world seems to be lost in the migration to IP.
  • Axis: After almost 2 years of rapid new product releases, Axis was relatively quiet in Fall 2010 with only a 3MP dome and expanded thermal offerings announced. The other interesting element was Axis increasing their marketing for AVHS, their VSaaS offering. Over the next 6 months, it will be interesting to see how much resources and how central AVHS becomes to Axis's company positioning. We remain skeptical of the AVHS value proposition, centrally because of the uncompetitive price point ($20-$40 per camera per month subscription fees).
  • DvTel: Their 3D HD showcase at ASIS 2010 raises a number of questions about DVTel's timing and positioning in the market. While Milestone aggressively released new offerings (both at the high and low end) and Genetec improved their small camera count offerings, DVTel showcased an R&D project that is not scheduled for release until "sometime in 2011." It would appear that DVTel is willing to concede the low end and the distributed small camera site market. DVTel's 3D technology has the potential to improve video analytics and and real time monitoring. However, this may be over-kill even for many large organizations (e.g. schools, corporations). We think the best case scenario for DVTel is that the 3D offering helps provide them a competitive advantage for critical infrastructure (such as military, Anti-Terrorism/Force Protection, Homeland Security, etc.). However, it's hard to be confident until actual products and pricing are announced.
  • GVI: With the launch of the Razberi 'all in one' NVR, GVI is demonstrating a commitment to making IP video easier to use for the low end market and the traditional installer. We think this is an interesting and underserved market segment.  We find this first release of to be fairly expensive and moderately constrained ($4800 MSRP for a 16 channel appliance with only 8 PoE ports). While it may attract those 'afraid' of IP video, we think many will find a DIY more attractive. That being said, if GVI can iterate and improve in future appliance releases, this could develop into an important offering that has broad appeal.
  • Intransa: With the launch of 3 new software features, Intransa showed important differentiation from both their main rival (Pivot3) and COTS PCs. We think it's key for Intransa to prove their additional value as numerous COTS hardware offerings exist, almost all of which are substantially less expensive than Intransa. Contrasting Intransa's move to Pivot3's hosted announcement, we believe Intransa's new announcement much better serves the core market of video surveillance users.
  • Mobotix:  Mobotix continues its contrarian market strategy. Rather than embrace H.264 and standards like most of the market, Mobotix is pushing ahead into the access control / video intercom markets. From what we have seen of the new T24 door station, we think it's pricing and features are quite competitive to traditional intercom systems. On the other hand, it seems that Mobotix has conceded the mass market of megapixel in open systems to others (e.g., Axis, Sony, Arecont have all rapidly expanded offerings in the last year). Mobotix may continue to grow and be profitable, however it is likely that they become an even more specialized, niche solution.
  • Scallop Imaging: We are disappointed and somewhat concerned with Scallop Imaging's analog panoramic camera. While Scallop is one of the few promising new entrants in the surveillance camera market, development of an analog camera is puzzling. It's expensive ($1195 MSRP) and the video feed output is 640 x 480, really limiting the benefits of the 6.5 MP imagers inside. While it could become a niche play for legacy systems that want to reduce camera count, we think Scallop is forgoing a much bigger growth area and delaying its maturation into a mature MP offering that can be widely supported by 3rd party VMS systems.
  • VideoIQ: The only video analytics company with a meaningful new product announcement, VideoIQ's new HD camera taps into the strongest overall trend: megapixel cameras. If its claim of very wide analytic coverage is accurate, it could provide a unique product to cover wide areas (Sightlogix also claims wide area coverage but at 400% the price). For analytic applications, we see VideoIQ as a strong contender. On the other hand we remain skeptical about its on board storage, specifically about is integration with 3rd party VMS systems for long term storage (e.g., Milestone announced edge storage support but only for backup and only starting with Sony).

Minimal Manufacturer Moves

The final list reviews manufacturers who made moves this Fall but were consistent with previous positioning. While we find them interesting, we do not see them as a shift.

  • Genetec: With the SV-16 compact NVR,  Genetec added a super small form factor NVR appliance. While it is a solid complement to its existing product offering, given the relative high price and the unit's restrictions (e.g., small on-board storage, no analog encoding), it's neither designed nor will it be a force in entry level/budget applications. The best case scenario is that the unit will help Genetec in large scale, multi-site small camera count applications. At the same time, Milestone is pushing Genetec both at the low and high end. Genetec's next major release will be Security Center 5.0. It will be interesting to see how Genetec maintains or expands its advantage against Milestone. We expect Genetec to deliver even tighter integration amongst security systems and, while they may not market as such, for Genetec to become a force in PSIM.
  • IQinVision: IQinVision continues to slowly transition to H.264 with the addition of the Alliance MX series. The challenge though is that the industry is or has already caught up with most of their product offerings (with the Sentinel the clear exception). Just a few years ago, Axis had extremely limited megapixel offering and most agreed that IQ was ahead of Arecont. Now, Arecont is almost certainly ahead (both in the breadth of the product offering, H.264 support and market share) and Axis has a full line of their own. Our understanding is that IQ plans to add H.264 cameras for the remainder of the line in the next year. However, the bigger question remains for IQ: what is the company's competitive advantage going forward?
  • OnSSI: OnSSI needs to find its own identity. Its release of Ocularis 1.1 (re-announcing Briefcam integration and adding federation similar to Genetec and Milestone Corporate) did little to define that. Still extremely dependent on Milestone's VMS systems (re-sold as NetDVMS and NetEVS), OnSSI wants to be a PSIM but is not (e.g., no 3rd party VMS support after claiming for 2 years that this was imminent). Worse, OnSSI's feature set is lacking compared to both Milestone Corporate 4.0 and Genetec Omnicast Enterprise, both companies who only claim to be VMS systems. Undoubtedly, making the transition from product re- seller to product developer in their own right is difficult. OnSSI still has work and large questions to answer.
  • Pelco: Pelco continues to take steps to transition from analog incumbent to first rate IP video provider. To that end, they released both a MP PTZ as well as improvements to their VMS software. By now, there's many MP PTZs on the market so this is not groundbreaking. On the other hand, Pelco's strong reputation for PTZs will certainly help attract interest. The changes to the VMS offering do not innovate but do rectify some basic problems/limitations. As Pelco made clear earlier in the year with their all HD ISC West booth, they are aggressively going after IP. This falls actions, therefore, continue the trend established earlier this year.
  • Pivot3: While Pivot3 has extensive funding and strong marketing, we continue to be disappointed in their offering. This fall's announcement, a hosted offering, continues this trend. The announcement appears more fluff than real product advance for mainstream security applications. This is especially clear when contrasted to Intransa's 3 new features that address core surveillance problems. We've noticed in the last 2 years that Pivot3 tends to follow Intransa's announcements 6 months later so perhaps Pivot3 will mirror Intransa's offerings in the Spring 2011.