The VMS Price Wars Have Begun

By: John Honovich, Published on Jan 11, 2011

Until 2010, the VMS market enjoyed peaceful growth. Now, with unprecedented price drops, the market faces great turbulence and changes. Users should gain from manufacturer's pain.

Out of nowhere, last summer, Milestone dropped the price of its entry level VMS by more than half and then released a new version for free. Their competitors were caught flat footed, most in denial or disbelief of Milestone's actions. After all, VMS prices for software supporting 3rd party IP cameras have been relatively stable for years. For the rest of 2010, the market was rather quiet. Last month, Milestone noted how their moves was accelerating traction in the market.

Now, Russia's most well known VMS supplier, Axxonsoft has not only matched Milestone's moves but doubled the scale of their free offering - providing an even cheaper and more expansive entry level offering than Milestone. We've tested Axxon's free offering and found it to be quite solid.

The move makes good sense for Axxon as Axxon is aggressively expanding into Western Europe and the US (strongholds of incumbents like Milestone and OnSSI). Giving away free VMS software allows them to build their user base quickly while attacking the profitability of their established competitors. 

Axxon won't be the last. Momentum is building. It's a vicious cycle for manufacturers. Each new one who drops their price forces the others to match or to suffer the consequences of being priced out of the market.

Projections

We project that by the end of 2011, the new price range for entry level VMS software, per camera, will be from free to $50 USD. This is a massive price drop from the beginning of 2010 when the price range was $100 - $150 USD.

We expect at least 6 more well known VMS providers to release free or heavily discounted VMS software by year's end.

This will put enormous pressure on VMS providers, of course, and will also hurt DVR providers and VSaaS (as they will be forced to match price decreases - these solutions are direct substitutes).

Whatever VMS companies do not match will essentially be waving the white flag and exiting the small to mid size market. Worse, they may hurt their ability in the large scale markets as well. Many integrators will become comfortable with the skills and experience they gain from using the free offerings and then prefer to simply upgrade to that supplier's premium/paid versions.

Get Notified of Video Surveillance Breaking News
Get Notified of Video Surveillance Breaking News

How Users Gain

For 10-20 cameras, you should expect to save $1,000 per project. In a small project, this could reduce the total cost of the job of 5-10% - a nice savings.

How This Makes Business Sense

Most VMS suppliers will make money by giving away basic VMS software and charging for more advanced features that are important for larger camera counts or complex security needs.

Because the Internet makes it cheaper to distribute software, this type of model - generally called freemium - is validated as profitable path that provides low cost marketing.

For more on VMS software and these fast changing trends review our in-depth reports on:

What Do You Think?

Vote in our poll:

3 reports cite this report:

Panasonic Free VMS Licenses Program on Apr 21, 2015
Looks like Tyco is a trendsetter. Weeks after Tyco starting giving free Exacq licenses, Digital Watchdog followed suit and now the biggest camera...
Winners and Losers Spring 2011 on Apr 12, 2011
Now that the dust has settled from the numerous new announcements of the last month, we can better understand the impact on the overall video...
Mobotix's 2011 Challenges and Future Plans Examined on Mar 20, 2011
While Mobotix's growth continued and accelerated at the end of 2010, we believe the company faces new challenges as competitors catch up to a...

Related Reports

Manufacturers Doing Better Than Expected Against Coronavirus on May 05, 2020
Coronavirus impacts are not hitting manufacturers as badly as they feared, and the situation is modestly improving for many, new IPVM survey...
Uniview / UNV Favorability Results 2019 on Feb 12, 2019
Uniview / UNV, the self-proclaimed #3 China manufacturer, while starting late, has been working to make inroads internationally. In IPVM's 2019...
What Is the Importance of Revenue vs Profitability for Integrators? Statistics on Mar 01, 2019
A company can be highly profitable but if it is small, they will still not make much money. By contrast, a company can generate lots revenue, but...
Axis Strong US Growth, Flat EMEA - Q3 2018 Financials on Oct 18, 2018
This spring, Axis had its best financials in many years (see Axis Strong Q2 2018 Results). However, over the summer, Axis had many products sold...
Axis Perimeter Defender Improves, Yet Worse Than Dahua and Wyze on Sep 19, 2019
While Axis Perimeter Defender analytics improved from our 2018 testing, the market has improved much faster, with much less expensive offerings...
Importance of Sales To Integrators - Statistics on Jun 23, 2017
One of the top trends in the industry over the past few years has been the rise of across-the-board sales (e.g.: Hikvision Sales, Dahua Sale,...
ShotSpotter IPOs, Facing Low Revenue and Losses on Jun 09, 2017
A rare event for North American security manufacturers has happened. ShotSpotter has IPOed on the NASDAQ, raising $30.8 million. US IPOs,...
Stats: Upgrading Cameras Far More Common Than Replacing Failed Cameras on May 30, 2018
The old saying "If It Ain't Broke, Don't Fix It" does not apply here. New IPVM statistics show that 60% of cameras that are replaced still work but...
IP Camera Browser Support: Who's Broken / Who Works on Dec 10, 2019
For many years, IP cameras depended on ActiveX control, whose security flaws have been known for more than a decade. The good news is that this is...
Integrators Rising Against Coronavirus on May 27, 2020
IPVM integrator statistics make it clear - Coronavirus's impact on business is lessening and many are anticipating even better news in weeks...

Most Recent Industry Reports

Startup Duranc Presents AI VSaaS on Jul 06, 2020
Duranc presented its system at the May 2020 IPVM Startups show. A 30-minute video from Duranc including IPVM Q&A Background on the...
Low Voltage Nation Wants to "Help You Carve Out A Fulfilling Career" Interviewed on Jul 06, 2020
It is difficult to make your way in this industry as there is little formal schooling. However, one person, Blake Urmos, the Founder of Low Voltage...
The Next Hot Fever Detection Trend - $100 Wall-Mounted Units on Jul 06, 2020
The first wave of the booming fever detecting market was $10,000+ cameras, now interest for ~$2,000 tablets is high and the next big thing may be...
Cisco Meraki Unlocks IP Cameras With RTSP Tested on Jul 06, 2020
Meraki opened up its cameras to 3rd party NVRs/VMSes by offering RTSP streaming because of "the need to solve a business problem". We tested...
Verkada: "IPVM Should Never Be Your Source of News" on Jul 02, 2020
Verkada was unhappy with IPVM's recent coverage declaring that reading IPVM is 'not a good look' and that 'IPVM should never be your source of...
Vintra Presents FulcrumAI Face Recognition on Jul 02, 2020
Vintra presented its FulcrumAI face recognition and mask detection offering at the May 2020 IPVM Startups show. Inside this report: A...
Uniview Wrist Temperature Reader Tested on Jul 02, 2020
Uniview is promoting measuring wrist temperatures whereas most others are just offering forehead or inner canthus measurements. But how well does...
Dahua USA Admits Thermal Solutions "Qualify As Medical Devices" on Jul 02, 2020
Dahua USA has issued a press release admitting a controversial point in the industry but an obvious one to the US FDA, that the thermal temperature...
Access Control Online Show - July 2020 - With 40+ Manufacturers - Register Now on Jul 01, 2020
IPVM is excited to announce our July 2020 Access Control Show. With 40+ companies presenting across 4 days, this is a unique opportunity to hear...