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

Free Trip To China - CCTV.Net / Univew on Mar 15, 2018
Pack your bags? 'Closer than you think'? Well, a non-stop flight from NYC to Shanghai is 15 hours plus another 100 miles to Hangzhou...
Panasonic Selling Off Security Camera Factory on Mar 14, 2018
Panasonic is OEMing cameras from Dahua, as IPVM testing confirmed in 2017. Now, Panasonic is selling their security camera factory, according to...
Favorite Camera Manufacturers 2018 on Mar 12, 2018
A number of major moves in integrator's favorite camera rankings for 2018: Two manufacturers make major moves up One major manufacturer moves...
Avigilon Breaks $400 Million Revenue, Quadruples Profit, Weakens Competitiveness on Mar 07, 2018
The last annual Avigilon financials are here. With the imminent Motorola acquisition completion, Avigilon will cease to be an independent publicly...
Hanwha Techwin Spins Out Security Business on Mar 06, 2018
In an era of security acquisitions and mergers, with most recently Avigilon being acquired by Motorola and Bosch merging its security businesses,...
ADT: "Hate That Company" Loses Billion On Amazon Ring Deal on Mar 02, 2018
It has not been a good 2018 for ADT. And this week has been even worse. In the aftermath of Amazon acquiring Ring for a billion plus, ADT's...
Avigilon Admits Contacting 70 Bidders on Mar 01, 2018
A new Avigilon financial disclosure shows that Avigilon, via its banker, had contacted 70 bidders in a formal 'sales process' conducted in late...
Favorite Integrator Sales Quote Software (Statistics) on Feb 23, 2018
What application do integrators use the most to issue sales quotes? Nothing? Spreadsheet? MS Project? Online software? Of the many offerings out...
Aruba Networks Profile on Feb 22, 2018
Aruba Networks' presence in the video surveillance market has historically been limited. With a company focus on Wi-Fi first and switching...
Arlo, Bigger Than Avigilon, More Valuable Than Axis on Feb 08, 2018
Arlo, the wireless IP camera offering that Netgear bought ~5 years ago for a few tens of millions is now doing more revenue than Avigilon and...

Most Recent Industry Reports

Hikvision RSM Professional Misconduct on Mar 19, 2018
A Hikvision RSM engaged in professional misconduct of a US State's licensing law, involving continuing education held at an ADI branch. In this...
Thank You - Today, IPVM Turns 10 Years Old on Mar 19, 2018
IPVM turns 10 years old today. 10 years ago, IPVM was an experiment. Today, it is the largest and most read publication in our industry. I wanted...
Integrator Help Desk Software Usage (Statistics) on Mar 19, 2018
Maintaining accounts and customer satisfaction often depends on the effectiveness of responding to issues. Keeping an integrator's support...
April 2018 IP Networking Course on Mar 18, 2018
Save $50 ends this Thursday, March 22nd. Register now and save. Lots of generic network training exists but none of it really explains how it...
May 2018 Camera Course on Mar 16, 2018
Our next course starts on May 8th. Register now for the Spring 2018 Camera Course This is the only independent surveillance camera course, based...
ADT Hammered Again, Loses Another Billion In Market Cap on Mar 16, 2018
ADT's CEO told investors that, 'in baseball terms', ADT was batting 5 for 5. But investors told ADT's CEO, 'in baseball terms', that he was...
Camera Form Factor Guide on Mar 16, 2018
When selecting surveillance cameras, users may choose from a number of different form factors, each with its own unique strengths and weaknesses,...
Free Trip To China - CCTV.Net / Univew on Mar 15, 2018
Pack your bags? 'Closer than you think'? Well, a non-stop flight from NYC to Shanghai is 15 hours plus another 100 miles to Hangzhou...
Access Control - Restricted Keys Guide on Mar 15, 2018
Not all doors, even in larger facilities, can justify using electronic access control. And even for doors that do have electronic access control,...
Rack Mounting NVRs Tutorial on Mar 14, 2018
Rack mounting recorders is common in professional systems, but manufacturers are making it difficult, with simple design failures causing multiple...

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