The first half of 2011 featured a number of important shifts within the video surveillance industry. In this report, we provide an overview of the key elements and share the 2011 Mid Year Video Surveillance Guide - a 265 page PDF report - with our Group members. This guide aggregates our industry leading coverage into a single report (see the Guide's Table of Contents for details) and is a companion to our 2011 Video Surveillance Guide released in December 2010.
First Half 2011 Video Surveillance Most Notable
Here are the most notable overall trends we found:
- IP Cameras Now Mainstream
- Axis Threatening Incumbents
- Analytics Under Attack
- IP Camera Standards Growing Pains
- Independent PSIM Dead
Let's review them one by one:
IP Cameras Now Mainstream
The fundamental debate over IP cameras has essentially ended. IP cameras are mainstream and the most common choice for new professional surveillance projects in the Western world. IP camera sales growth remains very robust with IP only providers generating 30%+ growth and analog incumbents now with very fast growing IP camera businesses. This is not to say that everyone is or should use IP (e.g., small applications, less developed countries, etc.). However, it is clear that IP has moved beyond the 'early adopter' or 'emerging' technology category. New product development remains robust, providing a good indicator of future gains.
Axis Threatening Incumbents
For the past decade, Axis has been the largest player in IP cameras. However, during that time, IP cameras were a niche so their dominance was balanced by the small size of the market segment. Now, IP cameras are a key component in mainstream projects and the size of the IP camera market is significantly over $1 Billion annually. Historically, in the surveillance market, the bulk of the industry catches up to early leaders returning the market to its highly fragmented state.
Against industry norms, Axis is accelerating its sales growth, product development and market dominance. For instance, see Axis's Q1 2011 sales results which are very strong, especially notable given Axis's already large presence in the market. On top of this, the number and significance of their new product releases over the last 6 months have been unmatched. To cite just a few: a 'super' low light IP camera, 5 low cost new products, an innovative low cost PTZ series (the Axis M50s), a panoramic camera and Hosted Integration for Iomega NAS appliances.
Axis is on pace to build an unprecedented level of industry power which should cause great concern to both their competitors and those of us, like ourselves, who worry about their highly questionable 'independent' research programs (e.g., the IP / analog 'study', the retail 'study', their VSaaS 'myths', etc.).
Analytics Under Attack
Just when we thought analytics were about to rebound from their long battering, ObjectVideo's lawsuit campaign created new problems and fears. Since OV's April declaration, debate and questions over the risk of ObjectVideo's campaign has been widespread.
We have seen significant evidence countering the validity of OV's evidence and Sony fighting back in court. What we do not know yet is whether this will result in a swift decision or a long drawn out court battle. The sooner this is resolved, the easier it will be for investors and developers to fund improved products and end users to choose analytics.
IP Camera Standards Growing Pains
In the past 6 months, it has become clear that (1) ONVIF has won for IP camera 'standards' and (2) ONVIF based integration has issues. More recently, using ONVIF in our camera testing program has improved with a lot less issues and more frequent 'plug and play'. We are seeing clear progress and do expect 'easy' integration to be common within the next 12 months.
Independent PSIM Dead
In April, the successive acquisitions of PSIM providers Proximex (by ADT) and Rontal (by Verint), created significant industry attention and debate. One common response was that these acquisitions proved the value of PSIM. We disagreed. PSIM has always been valuable to big companies (though often called a different name - 'command and control', 'C3', etc.). To us, this simply followed the trend of large integrators, defense contractors or manufacturers having their own top level security software.
What was really different about the crop of PSIM providers (such as Orsus, Proximex and Rontal) in the last few years is that these companies were independent. As an independent company, they could better provide best in class solutions for end users rather than being a pawn of big companies who want to push their own subsystems. Now, unfortunately, we are right back to that.
In the next 18 months, the big risk we see are the economic challenges building around the world. While the rebound from the 2008 / 2009 recession has been swift, macroeconomic problems remain around the world. A new recession or global economic crisis is certainly imaginable (though timing the occurrence is never easy).
If and when such an event happens, we believe the impact on the surveillance industry will be extremely negative. First, we learned from the last recession that surveillance is not immune to macroeconomic contractions. Secondly, unlike the last decade where terrorism fueled security product demand, globally we are moving into a period of less demand and funding for anti-terrorism solutions (though this could change depending on future events and attacks).
2011 Mid Year Video Surveillance Guide
For those looking for in-depth review and coverage of events and trends from the first half of 2011, our 265 page PDF document provides a concise way to understand the most recent developments. See the 2011 Mid Year Guide Table of Contents for details. The Guide is available for all Group level members.