The Next Failure in Wireless Video Surveillance: $18 Million Funding

Wireless video surveillance is one of the most difficult niches in the industry.

Tens of millions have been wasted trying to build a wireless video surveillance winner. The most famous, of course, was Firetide, who failed, despite more than $50 million in funding.

Now, an Israeli company, Siklu, has taken in $18 million, aiming at the video surveillance market.

In this note, we examine the company's positioning and why this big bet is likely to be a big failure.

Siklu Overview

In the 2000s, the product push centered around mesh radios using unlicensed frequencies.

Unlike them, Siklu is focused on millimeter wave (60, 70 and 80 Ghz) point to point links.

Though the company just received $18 million funding [link no longer available], they have received well over $50 million total since founding in 2008. However, it has only been in the last year that the company has targeted the video surveillance market.

Problems With Siklu For Video Surveillance

There are 4 big problems with Siklu for video surveillance:

• Short range: Max distance is ~1km, which limits applicability.
• Unneeded bandwidth: Siklu is rated for gigabit throughput that is overkill for connecting to most cameras.
• Strict line of sight: These high frequencies mean no obstacles or barriers whatsoever.
• High price: The cost per link is ~$5,000, which is 20x more than what is most commonly used in surveillance, i.e., Ubiquiti.

Siklu simply does not solve any mainstream problem in surveillance (i.e., longer distance, going through / around obstructions, or lower pricing, etc.).

Management Misunderstanding and Obstinance

Worse, Siklu has demonstrated they do not understand the video surveillance market. Though they have brought on one experienced surveillance expert, Alex Doorduyn [link no longer available], their corporate people are clueless.

For example, Siklu's management is under the belief that unlicensed wireless video surveillance is not tenable; that the frequencies are so congested that it is not a viable option, despite the clear and ongoing successes with even $100 radios from Ubiquiti and others. They also brushed aside concerns over distance, suggesting to add more links, ignoring the already massive cost of their offering. Finally, they emphasized that bandwidth limitations were a barrier to incumbents, despite the fact that existing wireless video surveillance links can easily deliver the 10Mb/s or less that IP cameras need, and certainly at the short ranges that Siklu is confined.

We have seen this pattern time and again with new entrants that do poorly in the video surveillance market. When your fundamental understanding of the competitive landscape is dead wrong, your chances of success are minimal.

Niche Only

We do think there are some limited use cases for Siklu, such as backhauling many cameras over a short range or from one building to another or in very dense areas, where unlicensed frequency congestion could be an issue.

But, at their comparatively far higher price point, and their far shorter range, it is destined to be a fit for a very small part of an already small wireless video surveillance market.

Got Money

That said, investors have given them a sizeable amount of funding to expand. Certainly, in the short term, this will mean more marketing and sales efforts, until they realize the fundamental barriers they face.

And that is unfortunate because Siklu's offering has a role as a niche option, just not one that can justify such large VC investment.

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