The IP Video Financial Threat

Author: John Honovich, Published on Sep 01, 2010

Investors examining the video surveillance market must properly distinguish between secular and cyclical trends. This issue is nicely demonstrated in an investor's analysis of Vicon, one of the elder CCTV incumbents. The investor argues that video surveillance is heavily dependent on new construction and the overall macroeconomic environment. He concludes that given Vicon's low valuation metrics, Vicon may be a good investment opportunity as the economy recovers.

His analysis focuses on the cyclical aspect while missing the key secular issue. Specifically, the migration to IP has increased risk to all incumbents (Vicon, Pelco, Honeywell, Dedicated Micros, Tyco Security, etc.) that their businesses while never recover to previously revenue or profit levels. IP migration may shift financial power to new entrants, increasing the risk that incumbents are marginalized or forced out of the market. When looking at the chart of Vicon's 15 year revenue levels, another interpretation is that Vicon never recovered from its pre-Bubble 1.0 peak because it was already losing ground to digital and that coming out of this recession, its future peak may be significantly lower than during the last expansion.

While the fate of each CCTV incumbent is clearly impacted by their own strategic decisions, the risks and financial pressure on all of them must factor in the probability that they do not meet the challenge in migrating to IP.

Comments : PRO Members only. Login. or Join.

Most Recent Industry Reports

The IP Camera Lock-In Trend: Meraki and Verkada on Jan 18, 2019
Open systems and interoperability have not only been big buzzwords over the past decade, but they have also become core features of video...
NYPD Refutes False SCMP Hikvision Story on Jan 18, 2019
The NYPD has refuted the SCMP Hikvision story, the Voice of America has reported. On January 11, 2018, the SCMP reported that the NYPD was using...
Mobile Surveillance Trailers Guide on Jan 17, 2019
Putting cameras in a place for temporary surveillance where power and communications are not readily available can be complicated and expensive....
Exacq Favorability Results 2019 on Jan 17, 2019
Exacq favorability amongst integrators has declined sharply, in new IPVM statistics, compared to 2017 IPVM statistics for Exacq. Now, over 5 since...
Testing Bandwidth Vs. Low Light on Jan 16, 2019
Nighttime bandwidth spikes are a major concern in video surveillance. Many calculate bandwidth as a single 24/7 number, but bit rates vary...
Access Control Records Maintenance Guide on Jan 16, 2019
Weeding out old entries, turning off unused credentials, and updating who carries which credentials is as important as to maintaining security as...
UK Fines Security Firms For Illegal Direct Marketing on Jan 16, 2019
Two UK security firms have paid over $200,000 in fines for illegally making hundreds of thousands of calls to people registered on a government...
Access Control Cabling Tutorial on Jan 15, 2019
Access Control is only as reliable as its cables. While this aspect lacks the sexiness of other components, it remains a vital part of every...
Avigilon Favorability Results 2019 on Jan 15, 2019
Since IPVM's 2017 Avigilon favorability results, the company was acquired by Motorola and has shifted from being an aggressive startup to a more...
Gorilla Technology AI Provider, Raises $15 Million, Profiled on Jan 15, 2019
Gorilla Technology is a Taiwanese video analytics manufacturer that recently announced a $15 million investment from SBI Group, saying this...

The world's leading video surveillance information source, IPVM provides the best reporting, testing and training for 10,000+ members globally. Dedicated to independent and objective information, we uniquely refuse any and all advertisements, sponsorship and consulting from manufacturers.

About | FAQ | Contact