Why The Market Has Already Tipped to IP

Author: John Honovich, Published on Aug 07, 2011

One of the most heated video surveillance debates is when the market will 'tip' to IP cameras, typically defined as the first year when IP camera revenue exceeds analog camera revenue. However, this debate and metric misses the more important shift that has occurred.

Already Tipped Right Under Our Noses

In the past year, the market has already tipped to IP cameras in the most relevant and important metric to integrators and end users - new project deployments in the most developed countries. This report will explain what is happening, why it is happening and why this tip is so important to today's video surveillance decisions.

The Surveillance System Sales Cycle

To appreciate why the 'real' tip has already occurred, we need to understand the sales cycle of surveillance systems. Most importantly, one needs to appreciate the role system compatibility has in shaping sales now and in the future.

Surveillance systems - combinations of recorders, cameras, monitors, etc. - are deployed and used over many years (typically 5 - 10) before wholesale replacements are done. The original architecture selected at the beginning of the cycle shapes what is purchased for nearly a decade.

Even up to a few years ago, 95%+ of new systems were based on a classic DVR architecture. Classic DVRs are only compatible with analog cameras - not USB cameras, not HDcctv cameras and not IP cameras. Once you selected a classic DVR, all you could use, without major structural changes, was analog cameras. As such, almost everyone only used analog cameras.

Often, critics of IP cameras would point to much higher sales of analog over IP and draw a conclusion that users were essentially 'voting' for analog cameras. In reality, users were 'voting' first and foremost for compatibility with their sizable existing investment into analog only DVRs.

Segmenting Surveillance Camera Sales

To recognize trends, it is important to break down surveillance camera sales into 2 distinct groups - (1) Extension Sales and (2) New Project sales.

Get Video Surveillance News In Your Inbox
Get Video Surveillance News In Your Inbox

Extension sales include:

  • Multi-year roll-out of a large scale surveillance systems across sites
  • Adding facilities for a user with an existing surveillance system
  • Replacing broken equipment

New project sales have 2 types:

  • Greenfield deployments where a user has no video surveillance (e.g., new construction)
  • Major System Swapout - every 5-10 years, users will decide their architecture is simply too old and out of date and will look for a completely new platform

Today's Surveillance Camera Sales

Unsurprisingly, analog heavily outsells IP for extension sales. In these cases, the architecture (heavily analog) is already in place and the user simply gets more of the same (i.e., analog).

However, in the last year, for new projects in the US and Europe, it has become clear that IP camera sales are outpacing analog sales. Among enterprise projects, IP's predominance is almost shocking with more than 75% of new projects going with IP. [For background, see our IP Camera Sales report.]

Various independent evidence points to this critical shift in new project sales. We see this in surveys of integrators, in reviews of RFPs and in discussions with both incumbent analog and newer entrant IP providers.

Why New Project Sales are Key

Once a surveillance technology dominates new project sales, the rest of the market is a foregone conclusion. Just like users with analog only DVRs spent years buying more analog cameras, today's new projects deploying software only VMS systems will focus their extension purchases on IP cameras over the rest of the decade. This has a compounding or snowballing effect. The more people choose IP for new projects, the less analog platforms are in place, the lower both new and extension sales are for analog.

Why Have New Projects Tipped to IP?

New projects are tipping to IP now because IP cameras have made dramatic progress in the past 3 years. Remember, in 2008, the market had:

Today, just 3 years later,

  • Nearly 100 manufacturers are offering Megapixel IP
  • H.264 Megapixel is ubiquitous
  • Various form factors, size and product options are available for megapixel IP
  • $300 - $500 pricing for MP IP is common

H.264 megapixel cameras tipped the market to IP. The advantages over analog were obvious and compelling. This was certainly not the only advantage that IP cameras / VMS software offered but was the most powerful and recent one. As we examined in a report, justifying megapixel vs SD has become fairly easy.

The Many Definitions of Tipping

We focus on new project sales because this has the most practical impact on real world decisions. However, there is no absolute 'right' metric for defining a market's tipping. For example, if the metric selected was the year when more cameras deployed in the field were IP than analog, the tipping point might not be until 2020 or 2025 as it will take years to cycle out all the existing legacy analog cameras. You could then argue that IP will not be a significant force for more than a decade. However, that would be ridiculous as it completely misses the shift in new buying and selling decisions.

4 reports cite this report:

SD Analog is Finally Dead on Oct 19, 2015
Good news. For years, industry people have hoped for the demise of NTSC and PAL analog cameras. Now that day has come and, after years of steady...
ADI is the Axis Distributor of the Year? on Jan 08, 2012
Security distributor ADI had been named Axis US distributor of the year for 2011 which surprised us and likely many others. In this update, we...
PSA Security Market Metrics on Nov 15, 2011
PSA Security, a US based cooperative for security integrators, has released an interesting video that touches on market trends that they are seeing...
IP Camera Advantages and Disadvantages on May 13, 2008
IP cameras have become accepted by the security industry. Yet most cameras are still analog and most video management systems are still DVRs. When...

Related Reports

Artificial Intelligence Robot Assistant (ACTi) on Feb 23, 2017
Has artificial intelligence come to the video surveillance industry? ACTi has released 'SARA' which it bills as an 'AI assistant that brings...
Uniview (UNV) IP Cameras Tested on Feb 22, 2017
"We're #3," in China says Uniview (UNV). While the company significantly trails Hikvision and Dahua in total sales, one notable difference is that...
The Hot RMR Company - Electric Guard Dog on Feb 22, 2017
The financiers at the Barnes Buchanan conference praised a company named 'Electric Guard Dog'. While the name sounds fairly low tech, the money and...
Hikvision Leads Multi-Manufacturer Sales Promo on Feb 21, 2017
Earlier this month, Hikvision launched new 'super value' kits, with 40% discounts, and now Hikvision is offering another promo, but this time they...
Hikvision Hiring 50, Direct Out of College, Sales People on Feb 20, 2017
Hikvision is hiring 50, direct out of college, field sales people across the country. This is the next major expansion for the Chinese...
Hikvision Silicon Valley and Canada R&D Expansion on Feb 15, 2017
After massive growth in their sales team, Hikvision is now planning to add two new R&D centers in North America. In this report we examine...
Integrator's Top Selling Cameras 2017 on Feb 13, 2017
8 manufacturers accounted for 80% of the top selling camera lines for ~150 integrator responses. This report demonstrates which brands integrators...
Hitachi Taking On Security Industry on Feb 09, 2017
Hitachi, bigger than Sony and Panasonic overall, with $89 billion USD 2016 total revenue, is expanding into the security industry. They are...
Dahua USA To Triple To 200 Employees on Feb 08, 2017
Months ago, Dahua USA reported 65 employees. Now, by the end of 2017, the company plans to triple to 200 employees, becoming one of the largest...
Axis Favorability Results on Feb 03, 2017
For many years, Axis sold the most IP cameras but, with the rise of Hikvision and Dahua, that has changed. How would that impact Axis...

Most Recent Industry Reports

Honeywell Sues Alarm.com For Violating Anti-Trust Laws on Feb 24, 2017
Is Alarm.com about to dominate the smart home software market? That is what Honeywell alleges in its new lawsuit, first reported by...
Axis: "Everything is IP" - False on Feb 24, 2017
Axis is congratulating itself, with executive Fredrick Nilsson declaring: "Now the conversion is all done and everything is IP and analog is...
Advertising Like Avigilon at the ISC West Airport on Feb 24, 2017
Avigilon has grabbed a lot of attention over the last few years advertising at the Las Vegas airport when attendees fly in. But how does that...
Artificial Intelligence Robot Assistant (ACTi) on Feb 23, 2017
Has artificial intelligence come to the video surveillance industry? ACTi has released 'SARA' which it bills as an 'AI assistant that brings...
Cutting Costs 70% Using Milestone With HD Analog on Feb 23, 2017
HD analog and enterprise VMSes are often thought of as being on opposite sides of the spectrum, with HD analog best for small jobs due to its low...
Dahua 4K HD Analog Cameras Announced on Feb 23, 2017
HD analog has been gaining popularity (even if Axis hopes otherwise). Last year, HD analog's max resolution doubled from 1080p to 4MP (see our 4MP...
Uniview (UNV) IP Cameras Tested on Feb 22, 2017
"We're #3," in China says Uniview (UNV). While the company significantly trails Hikvision and Dahua in total sales, one notable difference is that...
Glass Doors and Access Control Tutorial on Feb 22, 2017
The biggest challenge for many access control systems are glass doors. Here's what happens when a maglock is improperly installed to an existing...
Exacq Favorability Results on Feb 22, 2017
For years, Exacq has been one of the most frequently favored VMSes in IPVM integrator statistics (e.g., see Favorite VMS Manufacturers...
The Hot RMR Company - Electric Guard Dog on Feb 22, 2017
The financiers at the Barnes Buchanan conference praised a company named 'Electric Guard Dog'. While the name sounds fairly low tech, the money and...

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