The Future of VMSBy: John Honovich, Published on Aug 19, 2012
10 years ago, video management software was a novelty. 5 years ago, it was a hot up and comer. Today, it is mainstream. In just a decade, VMS has made quite the transformation.
But what now? Where does it go from here? Some say it will wipe our DVRs and NVRs, leaving a VMS only world. However, just as VMS is gaining supremacy, the 'cloud' and the 'edge' are emerging as threats. Indeed, they both ranked in the top 3 'next big' surveillance technologies.
This raises key questions:
- What will happen to the growth of VMS software?
- How will VMS software develop?
- Can hosted video or edge storage impact VMS growth?
- Who are the biggest new competitive threats to VMS software providers?
While incremental enhancements are possible, VMS software is reaching maturity. There is not much for leading VMS providers to add that would significantly change their overall market positioning. That is not to stay VMS software is bad, just that it is reaching its full potential for what a client / server recording architecture can deliver. The most significant changes we see for VMS vendors is expanding command and control ('PSIM') capabilities and adding managed access (e.g., March cloud). The former will enhance VMS's already core strengths in large scale applications while the later will help defend against hosted video as a threat.
IP Camera Expands to Low / Mid Market
Even without major changes, VMS software will continue to benefit from the market's overall migration from analog to IP cameras. Every camera switched from analog to IP increases the benefit of using VMS software versus a DVR with built in encoder cards. Overall, VMS will benefit from that continued migration.
However, as IP cameras saturate the market towards the end of this decade so too will the strongest driver to switch to VMS software. At that point, even if no other substitutes emerge, the VMS market growth (today in the 20-30% range) will converge with the slower overall video surveillance market growth (5-10%).
More challenging, however, is that the growth in the IP camera market will increasingly come from smaller deployments. Since large scale / high camera count projects were early adopters of IP cameras, what's 'left' for new growth is disproportionately in smaller projects. This unfortunately, will increase the pain of a fundamental VMS limitation.
VMS Deployment Challenges
A fundamental constraint of client / server VMS is that software needs to be installed, configured and managed on PCs/servers. While VMS companies can somewhat simplify the process (through discover tools, wizards, etc.), an 'open' architecture fundamentally entails some level of complexity.
By manufacturer's own (painful) admission, many (most?) integrators struggle mightily to deliver VMS solutions - the complexity of integrating an 'open' platform of 3rd party cameras, 3rd party PC/servers and video management software. It can be time consuming and challenging even for experience technicians, not to mention those with minimal skills.
While this is a negative, it does not mean doom for VMS at all. Indeed, despite these issues, VMS has clearly grown robustly over the last 5 years. Equally importantly, the upside of VMS software, especially in large scale systems with dozens of cameras (or more) on a site is very strong. There is no true challenger and unlikely to be any developing in the future.
Mini Comeback for Appliances
For smaller camera count deployments, NVR appliances, allowing reduced complexity, will gain some ground against open VMS deployments on COTS hardware. While we do not foresee any major shift back to the old days of DVRs, appliances will regain some of their favor they lost over the last decade.
For appliances, Linux based VMS systems will have a clear advantage. While most VMS systems are resource intensive Windows applications (e.g., Genetec, Milestone), we expect systems that can run on NAS devices are native to Linux (e.g., Exacq) or ship primarily as appliances (e.g., NLSS), to have an advantage here. While this will not shift power, it will constrain the growth of Windows based VMSes. While these applications can run on appliances, they will likely require greater computing resources and higher cost hardware platforms, decreasing the competitive positioning of their offering.
Camera Manufacturers Become VMS Competitors
The biggest threat, though, is certainly camera manufacturers using edge storage to become VMS competitors. While this approach is weakest where VMSes are strongest (large scale applications), it is strongest where VMSes are weakest (small to mid sized camera count applications).
In a single swoop, camera manufacturers can wipe out VMS license fees and the need for a VMS server, cutting directly into VMS provider's main source of revenue and biggest weakness (headaches of setting up and maintaining a server). While doing this, camera manufacturers leverage their much larger brands and encourage their customers to buy more cameras.
Even with development, edge based camera manufacturer offerings will have many drawbacks, so it will never be able to drive VMS providers out of the market. Indeed, the best the camera manufacturers will likely do is take a significant share of smaller camera count applications that just want to watch video and do not need third party system integration, alarm monitoring, video walls, etc. [Note: If camera manufacturers get aggressive, direct to NAS storage could increase the scale of the threat to bigger systems.]
However, while camera manufacturer server based VMSes were a modest factor in the past, edge storage alternatives are certainly to increase the attractiveness of forgoing 'open' VMS software in favor of free and simpler camera edge storage .
Hosted is often talked about as the next big threat to VMS software but we do not think this will be significant. First, VMS providers can and we believe will disarm the threat by adding in managed video access (e.g., March cloud). Secondly, the structural cost barriers for hosted video (WAN bandwidth, cloud storage) will likely remain for a long time to come. We anticipate VMS providers will continue to experiment with hosted, run marketing campaigns around hosted concepts but even years from now will have minimal offerings or threat from hosted video.
The Outcome for VMS Software
Growth for VMS software vendors will become increasingly more difficult over the next 5 years, squeezed by camera competitors and increasing market saturation of IP cameras. However, the impact will differ across the market:
- The Mid to High End - For 50+ camera applications, VMS software has a firm grasp on the future. No credible threat is anywhere close to challenging VMS software. Indeed, in the largest applications, we expect VMS software to increasingly challenge access and PSIM vendors as the 'top box' in the command center.
- The 'Mass' Market - For smaller applications (<50), while an increasing use of IP cameras will help, this will be offset by greater appliance usage and expanding competitive edge offerings from camera manufacturers. This will make it harder to grow and as rival edge storage solutions mature may cause declines in VMS usage for this segment.
VMS software is not going away, not for a long long time. However, it is likely peaking and will first lose its momentum and later this decade start to see significant inroads by competitive technologies.