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

ACTi Refuses Race To The Bottom, Shifts To Solutions on Sep 23, 2016
The original low cost IP camera disruptor was ACTi. Back in the 2008 - 2010 time frame, Taiwanese manufacturer ACTi challenged the Western and...
Milestone Ends Development of "Enterprise" VMS on Sep 22, 2016
Milestone 'Enterprise' was one of the first enterprise video management software offerings, selected by many early adopters of IP video. However,...
History of Video Surveillance on Sep 22, 2016
This is a concise history of video surveillance covering the past decade.  The goal is to help professionals newer to the industry understand...
Axis Launches IP Speakers on Sep 21, 2016
First, Axis introduced an IP horn, then it was video intercoms, and now it is Networked Speakers? While IP-based Public Address systems are not...
FLIR and Geovision Join the Hikvision Price Cut Race on Sep 20, 2016
Hikvision's price cuts are clearly a trend setter. After numerous and increasingly large cuts, the destructive cycle is accelerating. Last month,...
Hikvision Big Hire - Ex Ingram Micro Exec on Sep 15, 2016
Hikvision has made another major hire. This time is it Tom Burns, previously VP at Pivot3 and, before that, GM of mega distributor Ingram...
How To Become an 'Expert' In An Hour on Sep 02, 2016
If you want to be perceived as an expert in your market, speak at every event possible... the math is simple: when someone stands in front of an...
Lenel Partners Angry, Lenel Does Not Care on Sep 01, 2016
Even more than Arecont, one manufacturer stands out for consistent complaints - Lenel. Over the past few years, no manufacturer has had more...
Axis Takes Over Canon Surveillance Sales and Marketing on Sep 01, 2016
The wasteful Axis / Canon conflict is ending. After more than a year of Canon's video surveillance group competing with Axis, Canon...
How Much Axis and Avigilon Pay For Sales And Marketing Per Camera on Sep 01, 2016
When you buy an Axis or Avigilon camera, how much of that goes to pay sales and marketing expenses? Is it trivial like $2 or $3? Or is it far...

Most Recent Industry Reports

Nest Cam Outdoor Tested on Sep 23, 2016
After years of claiming an outdoor model was "coming", addressing their biggest user demand, Nest has finally released their Outdoor Camera, an...
ACTi Refuses Race To The Bottom, Shifts To Solutions on Sep 23, 2016
The original low cost IP camera disruptor was ACTi. Back in the 2008 - 2010 time frame, Taiwanese manufacturer ACTi challenged the Western and...
You Get Robbed, Canary Will Pay You Up To $1,000 on Sep 22, 2016
Canary is trying to break the status quo in DIY security, first by raising over $40 million, and now a revamp of their monthly services package...
Milestone Ends Development of "Enterprise" VMS on Sep 22, 2016
Milestone 'Enterprise' was one of the first enterprise video management software offerings, selected by many early adopters of IP video. However,...
History of Video Surveillance on Sep 22, 2016
This is a concise history of video surveillance covering the past decade.  The goal is to help professionals newer to the industry understand...
Access Control Course Fall 2016 on Sep 22, 2016
IPVM offers the most comprehensive access control course in the industry. Unlike manufacturer training that focuses only on a small part of the...
Totally Wireless IP Camera (IPVideo Corp NomadHD) on Sep 21, 2016
Wireless battery powered cameras have been a surveillance pipe dream for years, limited by camera power consumption, battery technology, and...
Axis Launches IP Speakers on Sep 21, 2016
First, Axis introduced an IP horn, then it was video intercoms, and now it is Networked Speakers? While IP-based Public Address systems are not...
Tagged RFID Object Search Recorded Video on Sep 20, 2016
Video analytics has gotten fairly good at tagging people in video, but it does not solve the problem of finding items like specific merchandise or...
FLIR and Geovision Join the Hikvision Price Cut Race on Sep 20, 2016
Hikvision's price cuts are clearly a trend setter. After numerous and increasingly large cuts, the destructive cycle is accelerating. Last month,...

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