VideoIQ Funding, CEO Change and Progress ExaminedBy: John Honovich, Published on Sep 12, 2011
In September 2011, VideoIQ had two major events: raising $7.5 Million USD [link no longer available] in new funding and hiring a new CEO [link no longer available] just a few months after announcing very high sales growth [link no longer available]. This in contrast to yet another dim year for the analytics market scarred by ObjectVideo's international legal campaign, Cernium's layoffs and Keeneo's meager acquisition.
In this note, we examine where VideoIQ stands today, what impact the funding and CEO change might bring and long term challenges that VideoIQ may face.
Let's start with a review of what's new with VideoIQ:
- The $7.5 Million round is being labeled their Series C but this is the 4th funding event for the company (review the previous 3 from 2010, 2008 and 2007). This funding was after the company was sold to GE and then spun out in the middle of the past decade.
- Sources indicate that VideoIQ revenue is ~$10 Million USD and growing quickly.
- The new CEO [link no longer available] has a background in the computer networking/data center market but no previous physical security/surveillance experience. At his previous company, he was CEO when the business was sold to power management company Eaton. At the company before that, 2 years after he left, the company IPO'ed.
Relative to the video analytics market, VideoIQ is in very good shape:
- The company's revenue, while modest by camera manufacturer standards, is exceptional for video analytic manufacturers. By comparison, most analytic providers are in the $1 Million to $3 Million range. We believe VideoIQ is significantly larger than almost all other analytics providers (even after accounting for differences in product offerings and pricing).
- VideoIQ has proven to work well in real surveillance environments and be relatively simple to use. Normally that does not say much but for the video analytics market that is a real accomplishment. Our VideoIQ test and use by various integrators we trust confirms this.
- VideoIQ is the most commonly cited analytic used by independent integrators. We believe the product is gaining traction based on real world successful use, not simply channel power or marketing spend.
- There are few other legitimate analytic solutions that are commercially viable. ioimage smart cameras are the next closest. Agent Vi + 3rd party cameras are another choice. Beyond that, most analytics are either very expensive (e.g., Sightlogix) or likely work poorly (e.g., Sony DEPA, Via-sys).
Bottom line, VideoIQ has and will continue to benefit from being an attractive choice in a poor field. We expect the company to continue to grow.
The bigger question is long term. We see a number of areas for potential concern:
- Major concern: VideoIQ positions itself not just as a video analytic but as a full system that (uniquely) embeds a hard drive inside their smart cameras.
- Modest concern: Because of the embedded hard drives, VideoIQ's cameras are large and often raise aesthetic concerns (see sample picture of their fixed dome [link no longer available]).
- Minor concern: VideoIQ recently discontinued their box camera line [link no longer available] and is now the world's only camera manufacturer without a box offering.
Eventually, other camera manufacturers will develop strong competitive options for smart cameras (though we so no imminent sign of this from new product announcements). However, when that does happen, if VideoIQ's product portfolio fundamentally remains the same, we see a significant risk. VideoIQ's embedded hard drives increases cost and size while decreases physical attractiveness of the form factor. We do not believe embedding hard drives in cameras will ever be more than a niche market (see our debate on on-board storage). That noted, the day when this becomes a practical competitive issue is likely some time away. It will be interesting though to see if VideoIQ continues down the full system route or if they focus more on optimizing analytics only.