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

Security Sales Course Summer 2018 on Jul 13, 2018
Based on member's interest, IPVM is offering a security sales course this summer. Register Now - IPVM Security Sales Course Summer 2018 This...
Eastern and SavvyTech Merge, Form ENS, Targets ADI on Jul 09, 2018
ADI, ENS is coming for you. Or, at least, they hope. Two US distributors, NY based EasternCCTV and California based SavvyTech have merged, to...
Arlo IPO Filing Reveals Key Financial and Competitive Details on Jul 09, 2018
Arlo is going to IPO at a projected valuation greater than Axis. Now, Arlo has released their 175-page Form S1 Registration Statement for its...
Drops Dahua, Fenner Becomes ISS CMO on Jul 09, 2018
Hired to improve Dahua's miserable marketing just last year, Janet Fenner has quit Dahua, joining VMS manufacturer ISS as Chief Marketing...
Pelco Is For Sale on Jun 27, 2018
Pelco is for sale, being shopped by an investment bank, IPVM has confirmed from multiple sources. The company, acquired by Schneider Electric in...
Snap Surveillance Profile on Jun 26, 2018
There are not a lot of video surveillance companies that survive 9 years with only one feature that makes their product stand out. In the case of...
Buy Arecont: Top Bid $10 Million Cash on May 22, 2018
Last year, Arecont had a deal for a purchase price of $170 million (see Failed Arecont China Acquisition). This year, Arecont has a deal for a...
Stealth / UCIT - Remote Video Monitoring Provider Profile on May 18, 2018
Can 2 remote video monitoring companies, Stealth Monitoring from the US and UCIT from Canada combine to impact the market and compete in a changing...
Worst Manufacturer Technical Support 2018 on May 16, 2018
5 manufacturers stood out as providing the worst technical support to 190+ integrators in new IPVM results. These integrators answered: In the...
March Networks Targets Cannabis Market on May 10, 2018
Will the next March Networks customer appreciation event be held a steakhouse or at a Taco Bell at 2 am? Can March sell the types of systems to the...

Most Recent Industry Reports

Security Sales Course Summer 2018 on Jul 13, 2018
Based on member's interest, IPVM is offering a security sales course this summer. Register Now - IPVM Security Sales Course Summer 2018 This...
US Tariffs Hit China Video Surveillance on Jul 13, 2018
Chinese video surveillance products avoided tariffs for the first two rounds. Now, in the third round, many video surveillance products will be...
Last Chance - July 2018 IP Networking Course on Jul 12, 2018
Registration ends today, Thursday. Register now. This is the only networking course designed specifically for video surveillance...
4 Most Difficult Camera Installs (Statistics) on Jul 12, 2018
Heavy housings, cumbersome brackets, heavy ladders required, and tricky field of view requirements will cause difficulties no matter the camera...
Axis Perimeter Defender Video Analytics Tested on Jul 12, 2018
Axis 'high security' video analytics offering is Perimeter Defender, OEMed / developed with Digital Barriers. But how good is Perimeter Defender?...
Hikvision Fights Ban - Claims 'Red Scare', Hires 14 Term Ex-Congressman on Jul 11, 2018
Hikvision is fighting back against the House Bill Ban of their products. Hikvision has hired one of the biggest lobbying firms, led by a 14 term...
Arecont Acquisition By Costar on Jul 11, 2018
Arecont Vision acquisition by Costar Technologies has been approved by the court, concluding the bankruptcy process triggered by Arecont's...
Amazon Ring Partners With Rapid Response For $10 Monitoring on Jul 10, 2018
Amazon's Ring alarm system is using Rapid Response for monitoring, IPVM has confirmed in our testing. Amazon is arguably the most feared new...
SIA Lobbyists Working On House Bill Ban of Dahua and Hikvision on Jul 10, 2018
While SIA is most known for ISC West, SIA maintains the industry's most significant lobbying organization to influence US government action. Last...
Eastern and SavvyTech Merge, Form ENS, Targets ADI on Jul 09, 2018
ADI, ENS is coming for you. Or, at least, they hope. Two US distributors, NY based EasternCCTV and California based SavvyTech have merged, to...

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