Ubiquiti is Killing the Wireless Networking Market

By: 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 Notified of Video Surveillance Breaking News
Get Notified of Video Surveillance Breaking News

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 : Members only. Login. or Join.

Related Reports

The Fastest Growing Video Surveillance Sales Organization Ever - Verkada on Apr 17, 2019
Verkada has the fastest growing video surveillance sales organization ever. In less than 2 years, they already have more salespeople in the US...
ADT Stock Drops After Announcing Loss And Amazon Delay on Mar 12, 2019
ADT's stock price dropped significantly after reporting heavy losses and delays in its Amazon partnership, as seen in the screenshot below: In...
Verkada Gets Half Billion Dollar Valuation on Apr 26, 2019
Last week, when we profiled Verkada (The Fastest Growing Video Surveillance Sales Organization Ever - Verkada), we predicted they would raise $40...
Knightscope Adds Just 2 Total Customers In Past Year, Yet Raising Money at $300 Million Valuation on May 02, 2019
This is no longer funny. While Knightscope has laughed it up promoting robot selfies, joking about a 'suicidal robot', the man who attacked a...
OpenALPR Doubles Prices on Jun 06, 2019
There is no 'race to the bottom' in cloud / AI video surveillance. In May, Verkada increased their prices. Now, OpenALPR is doing the same with a...
Avigilon President Henderson Is Out on Jul 09, 2019
Avigilon's President and COO James Henderson is out, abruptly, after a remarkable ascension over the past 8 years, Motorola VP Jack Molloy has...
Fujifilm Expanding Into Video Surveillance on Jul 26, 2019
While Sony continues to fade out of the video surveillance market and Canon continues to make huge investments into acquiring video surveillance...
Resideo Stock Plunges 37%, CFO Ousted on Oct 23, 2019
The horrible year for the ADI / Honeywell Home spinout, Resideo, just got worse, with their stock plunging another 37% today. Not even a year...
Resideo CEO To Step Down on Dec 03, 2019
Resideo's CEO, Mike Nefkins, is stepping down, just 18 months after being brought in to lead the now plagued spin-out. Inside this note, we...
Wesco Wins Anixter on Jan 13, 2020
Despite Anixter earlier arguing that Wesco's bid was inferior to CD&R's by nearly 10%, Anixter confirmed that they are taking Wesco's 3.1%...

Most Recent Industry Reports

Hazardous & Explosion Proof Access Control Tutorial on Feb 27, 2020
Controlling access to hazardous environments requires equipment meeting specific ratings that certify they will not start fires or will not...
Motorola / Avigilon Drops ISC West on Feb 26, 2020
Motorola Solutions has pulled out of ISC West 2020 effective immediately, because of coronavirus concerns, IPVM has learned. This is done amidst...
Cancel or Not? Industry Split Over ISC West on Feb 26, 2020
The industry is split, polarized, over whether ISC West 2020 should run or be canceled. New IPVM survey results of 400+ respondents show heated...
Coronavirus Hits Sony, Bosch Says Switch on Feb 26, 2020
Sony's fall in video surveillance has been severe over the past decade. Now, they may be done. In this note, we examine Bosch's new...
Video Surveillance Cameras 101 on Feb 25, 2020
Cameras come in many shapes, sizes and specifications. This 101 examines the basics of cameras and features used in 2020. In this report, we...
Favorite Video Analytic Manufacturers 2020 on Feb 25, 2020
Video analytics is now as hot as ever, driven by the excitement of advancing deep learning offers. But what are actually integrator's...
Latest London Police Facial Recognition Suffers Serious Issues on Feb 24, 2020
On February 20, IPVM visited another live face rec deployment by London police, but this time the system was thwarted by technical problems and...
Masks Cause Major Facial Recognition Problems on Feb 24, 2020
Coronavirus is spurring an increase in the use of medical masks, which new IPVM test results show cause major problems for facial recognition...
Every VMS Will Become a VSaaS on Feb 21, 2020
VMS is ending. Soon every VMS will be a VSaaS. Competitive dynamics will be redrawn. What does this mean? VMS Historically...
Video Surveillance 101 Course - Last Chance on Feb 20, 2020
This is the last chance to join IPVM's first Video Surveillance 101 course, designed to help those new to the industry to quickly understand the...