Surveillance Trends at Milestone Conference 2012
Each year, the Milestone Partner conference provides an opportunity for Milestone and their manufacturer partners such as Axis to share their projections. SSI Magazine has done a good job of recapping detailed claims made at the conference [link no longer available]. In this note, we examine the key ones made including Milestone's revenue growth and market segment breakdown plus the future of thermal cameras, video analytics, patent trolls and VSaaS.
Milestone Revenue Growth Slowing
This time last year, Milestone was trumpeting a monstrous [link no longer available] 56% growth rate for 2010. Now, they have been much quieter. However, SSI notes Milestone 2011 revenue at ~$50 Million USD. By contrast, Milestone's 2010 revenue was ~$42 Million USD (from official Danish records), implying a much cooler growth rate of ~19%.
We suspect that Europe is the main drag on Milestone's revenue growth. The SSI articles cites Milestone growth in the US last year at 33% and Latin America at 150%. With such high growth in the Americas and much lower overall growth, the most likely culprit is European weakness - a trend we are seeing with Axis and Mobotix as well.
Mobotix Market Segment Breakdown
SSI shares [link no longer available] a breakdown of Milestone's revenue by market segment. Education is, by far, their leading market with nearly a third of all Milestone's business (29%). This is much higher than education's share of the overall surveillance market. We see this as more of an indicator of education's embrace of IP video rather than specific advantages Milestone has compared to other VMS software providers.
Video Analytics and Patent Trolls
Kudos to Axis's founder who, according to SSI spoke at the conference, lamenting the slow development of the analytics market and worries that 'patent trolls may block the industry'. Unfortunately, this is ironic as Axis was one of the first companies to cave to the troll even before OV started their global litigation campaign (see our analysis of this).
It is too bad that Axis refuses to use its growing market power to take a stand against the troll.
Future of Thermal Cameras
Axis's founder also projects thermal camera usage to grow from .025% of IP cameras to 2% of IP cameras in the future. Certainly, thermal camera use will go up, if only because it is so incredibly low. For instance, Axis says 1 out of every 400 IP cameras sold is thermal today. Assuming 2 million cameras sold, that means 5,000 thermal cameras total - a trivial total.
However, despite thermal cameras no longer being insanely expensive, they are now just ridiculously expensive. The cheapest fixed thermal cameras can now be had for about $3,000 to $4,000 - still 3 to 4 times the cost of top of the line D/N IP cameras cost. Plus, the video quality is much worse all day long and only really benefits for niche applications like extremely dark, long range imaging.
Axis continued to promote VSaaS. One fascinating quote was a comment Axis shared from an integrator: "We can do five installs a day with hosted video surveillance versus just one or two full-blown systems."
We agree that speed of installation is clearly an advantage for VSaaS. Without having to setup a server on site and with cameras 'phoning home' to the service provider, there's not a lot left to do outside of physical labor. To that end, reducing installation time by 60-80% is certainly feasible.
Leaving aside VSaaS's weak business case, I doubt this is good news to professional integrators like Milestone partners. This now means that a truck slammer, a telco or a guy off the street can much more easily take the job away for a lower price.
Sony Pushing Hybrid
The Sony spokesperson emphasized, "cameras that support both analog and IP that enable end users to transition at their own pace with hybrid solutions." This is misleading and might be misrepesenting what Sony is pitching.
Their upcoming new product line is an IP camera series but one that supports direct interface with coaxial cable. We think this is a very nice design that will likely be attractive to people who want to re-use old coax cable. See our review of Sony's hybrid IP camera line.