Ubiquiti is Killing the Wireless Networking Market

Author: John Honovich, Published on Oct 13, 2011

Most surveillance people think first of Firetide when considering wireless but Firetide is, in reality, a fairly small player that gets attention primarily from their relentless, VC fueled, PR campaigns. However, the true emerging gorilla is Ubiquiti, a company with a heretical approach to marketing, who is IPOing today at a valuation of more than $1 Billion dollars - the same valuation range as global IP market sales leader Axis. In this note, we examine how and why Ubiquiti has been so disruptive and what further impact they may have as they expand into the core video surveillance market.

Financial Performance Overviewed

Let's start with a review of Ubiquiti's S1 financial filing that shows just how fast they got so big:

  • For the past year, Ubiquiti's revenue is ~$197 Million.
  • The company only started in 2005 and growth has been a rocket including doubling between 2009 and 2010 and 50% in the past year.
  • Sales, general and admistrative costs are less than 4% of revenue - a very low number (20%+ is more typical)
  • Gross margins are ~40%
  • Net margins (profitability) for the past 12 months are ~25% which is very good
  • Sales of their own branded AirMax line have exploded and is now $113 Million, 57% of revenue, up from $37 Million and 27% of revenue a year earlier.
  • The company has fairly even geographical distribution of sales with 31% in North America, 26% in South America, 35% in AMEA and 8% in Asia Pacific.

These results are all the more impressive given the relative challenges that the wireless market has experienced in the past few years.

Ubiquiti's big differentiator is that it is far cheaper than mainstream wireless offerings. In a market where devices routinely cost a $1,000 or more, Ubiqiuti's are typically closer to $100.

Killing the Wireless Market

We recently spoke to an executive at another wireless manufacturer who exclaimed that "Ubiquiti is killing the wireless equipment market". Interestingly, he did not say it as an insult or attack against a competitor. It was delivered with a mixture of awe and admiration. It's just so hard for incumbents to compete against that type of price differential. Yes, Ubiquiti is not as enterprise class as competitors and yes their support is far inferior but the cost savings are so significant, it is a net value for many many users of 'regular' deployments.

A Different Approach

What we find most interesting and what we think most incumbents should find scary is that Ubiquiti violates nearly all the rules of the old school marketing playbook. They are not big advertisers nor press releasers nor marketing ghostwriters nor show exhibitors. They have their own event but attendance is free (another 'crazy' practice for the old school).

It gets more interesting - They do not have their own sales team. As they proclaim in their S1, "We do not currently have a direct sales force, but instead rely on the Ubiquiti Community to drive market awareness and demand for our products and solutions. This community propagated viral marketing enables us to reach underserved and underpenetrated markets far more efficiently and cost effectively than is possible through traditional sales models."

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

They do well with a passionate base of installers and integrators who really like them. We hear about them a lot from integrators, much more than Firetide which is pretty shocking because Ubiquiti's never really spent any money marketing for surveillance applications while Firetide's spent millions.

Surveillance Application

We think this approach can work well in surveillance but has never really been tried before. While there are low cost providers (ACTi, Arecont, Vivotek), they all use a fairly traditional go to market approach (heavy marketing and PR, sales teams, etc.). 

We think the traditional market approach is wasteful and of declining value as the Internet enables cheaper, more direct communication and sales channels. If Ubiquiti, who is now moving into IP camera manufacturing with alarmingly low pricing, or others take this type of approach in surveillance, we think it has significant potential to be disruptive.

[Update 2012: Hurt by massive counterfeiting problems, Ubiquiti's growth has cooled considerably. While no one is replacing them, they have come down to a roughly market average growth rate]

1 report cite this report:

Top 5 Disruptive Surveillance Companies 2012 on Dec 15, 2011
What companies are driving changes in the video surveillance industry? What companies are the toughest competitors? In this new report, we answer...
Comments : PRO Members only. Login. or Join.

Related Reports

Imperial Capital Security Investor Conference 2018 Review - ADT, Resideo, Alarm.com, Arlo, Eagle Eye, ACRE, More on Dec 14, 2018
Imperial Capital Security Investor Conference is an event matching industry executives with financiers that frequently leads to future funding...
Foolish Strategy: OEMing Facial Recognition on Dec 13, 2018
Almost as 'hot' as face recognition marketing right now is OEMing facial recognition. Last year, they were a who's who of company's with...
AV Tech Company Profile on Dec 07, 2018
Taiwanese manufacturer AV Tech's revenue declined ~70% since 2012. Planning a comeback, AV Tech spoke to IPVM about their opportunities and...
Fullerton Returns, Joins OpenEye on Dec 04, 2018
Eric Fullerton became one of the most famous people in the industry as the Chief Sales and Marketing Officer of Milestone as Milestone became the...
SS&Si Claims To Be "The New Face of Security Distribution" on Dec 03, 2018
Can 27-year-old Jake Voll disrupt the security distribution giants? He has positioned his company SS&Si as the 'NEW FACE' of...
Longse USA Profile on Nov 30, 2018
In September 2017, Longse bought and opened their USA office. As one of the largest South China surveillance manufacturers, they have previously...
ADT Promotes DIFY - "Do It For You" on Nov 30, 2018
"Do It Yourself" (DIY) is a popular expression and has become such a common word that it has even made the Cambridge English dictionary. But why...
Cybersecurity Insurance For Security Integrators on Nov 29, 2018
Most security industry professionals carry insurance to cover themselves in the event of a general loss. However, most are not carrying cyber...
Security Sales Course 2019 on Nov 29, 2018
The next IPVM Security Sales Course starts in January 2019. This sales course is customized for the needs and challenges specific to...
Vintra "AI-Powered" Video Analytics Startup Profile on Nov 27, 2018
Vintra is a Silicon Valley startup focused on AI-based video analytics. They had booths at IACP and ISC West demonstrating their hosted or...

Most Recent Industry Reports

Imperial Capital Security Investor Conference 2018 Review - ADT, Resideo, Alarm.com, Arlo, Eagle Eye, ACRE, More on Dec 14, 2018
Imperial Capital Security Investor Conference is an event matching industry executives with financiers that frequently leads to future funding...
Cisco Meraki New Cameras and AI Analytics on Dec 14, 2018
Meraki has released their second generation of video surveillance with 3 new cameras, AI-based video analytics, and 2 cloud-based storage...
Foolish Strategy: OEMing Facial Recognition on Dec 13, 2018
Almost as 'hot' as face recognition marketing right now is OEMing facial recognition. Last year, they were a who's who of company's with...
DVR Examiner - Video Recovery from Recorder Hard Drives on Dec 13, 2018
Bypassing passwords and long download times on-site, DVR Examiner collects and organizes video evidence directly from a hard drive extracted from...
2019 Access Control Book Released on Dec 12, 2018
This is the best, most comprehensive access control book in the world, based on our unprecedented research and testing has been significantly...
Huawei Hisilicon Quietly Powering Tens of Millions of Western IoT Devices on Dec 12, 2018
Huawei Hisilicon chips are powering, at least, tens of millions of Western IoT devices, such as IP cameras and surveillance recorders, a fact that...
FLIR Launches Body Cameras Unified With VMS (TruWitness) on Dec 11, 2018
While FLIR is best known for their thermal cameras, now they have expanded into body cameras, launching TruWITNESS, a public safety focused body...
Startup Sunflower Labs' Autonomous Drone Security System on Dec 11, 2018
Startup Sunflower Labs is claiming a unique design on a home security system, combining autonomous drones and 'Sunflower' sensors. Imagine an...
The 2019 Video Surveillance Industry Guide on Dec 10, 2018
The 300 page, 2019 Video Surveillance Industry Guide, covers the key events and the future of the video surveillance market, is now available,...
Multi-Factor Access Control Authentication Guide on Dec 10, 2018
Can a stranger use your credentials? One of the oldest problems facing access control is making credentials as easy to use as keys, but restricting...

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