The VMS Price Wars Have Begun

Author: 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 Video Surveillance News In Your Inbox
Get Video Surveillance News In Your Inbox

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 on VMS

'Best In Show' Fails on Apr 19, 2018
ISC West's "Best In Show" has failed. For more than a decade, it has become increasingly irrelevant as the selections exhibit a cartoon level...
Worst Access Control 2018 on Apr 18, 2018
Three access control providers stood out as providing the most problems for integrators. In this report, we analyze the answers to: "In the...
Axis VMD4 Analytics Tested on Apr 17, 2018
Axis is now on its 4th generation of video motion detection (VMD), which Axis calls "a free video analytics application." In this generation, Axis...
Best and Worst ISC West 2018 on Apr 16, 2018
ISC West 2018 had strong attendance, modest overall new products, and a surge in Artificial Intelligence marketing. First, here are 20+...
Eocortex / Macroscop VMS Company Profile on Apr 09, 2018
Eocortex is the international brand of Russian VMS manufacturer Macroscop. Macroscop was founded in 2008, and the Eocortex name created in 2013. We...
Hanwha Mega ISC West Product Releases on Apr 05, 2018
While overall new product releases have been slowing over the past few years, Hanwha is releasing a slew of 6 new offerings for ISC West,...
VMS New Developments Spring 2018 (Avigilon, Exacqvision, Genetec, Hikvision, Milestone, Network Optix) on Apr 04, 2018
What's new with VMS software? In this report, we examine new features and releases for Spring 2018 to track different areas of potential...
Hikvision LPR Camera Tested on Mar 26, 2018
Hikvision has expanded into the LPR market, claiming up to 99% capture rates, 95% recognition rates at speeds up to 75mph  / 120kmh. We bought and...
Network Racks For Surveillance Guide on Mar 21, 2018
In this guide, we look at network rack infrastructure, one of the fundamentals of IP video surveillance. Inside, we cover: What is a rack unit...
Network Addressing for Video Surveillance Guide on Mar 14, 2018
The goal of this guide is to explain addressing devices on IP networks, focusing on how IP cameras and recorders are used in those networks. For...

Most Recent Industry Reports

Global Real-Time Video Surveillance - EarthNow on Apr 20, 2018
A new company, EarthNow, with backing from Bill Gates, Airbus and more, is claiming that: Users will be able to see places on Earth with a delay...
Dedicated Vs Converged Access Control Networks (Statistics) on Apr 20, 2018
Running one's access control system on a converged network, with one's computers and phones, can save money. On the other hand, hand, doing so can...
April 2018 IP Networking Course on Apr 19, 2018
This is the last chance to register for our IP Networking course. Register now. NEW - 2 sessions per class, 'day' and 'night' to give you double...
Rare Video Surveillance Fundraising - Verkada $15 Million on Apr 19, 2018
Fundraising in video surveillance (and the broader physical security market) has been poor recently. Highlights are few and far in between...
'Best In Show' Fails on Apr 19, 2018
ISC West's "Best In Show" has failed. For more than a decade, it has become increasingly irrelevant as the selections exhibit a cartoon level...
Security Camera Cleaning Frequency Statistics on Apr 18, 2018
150+ integrators told IPVM how often they clean cameras on customer's sites and why.  Inside we examine their answers and break down feedback...
Worst Access Control 2018 on Apr 18, 2018
Three access control providers stood out as providing the most problems for integrators. In this report, we analyze the answers to: "In the...
Axis VMD4 Analytics Tested on Apr 17, 2018
Axis is now on its 4th generation of video motion detection (VMD), which Axis calls "a free video analytics application." In this generation, Axis...
Arecont CEO And President Resign on Apr 17, 2018
This is good news for Arecont. Arecont's problems have been well known for years (e.g., most recently Worst Camera Manufacturers 2018 and starting...
Strong ISC West 2018, Says Manufacturers, GSX / ASIS Expected Weaker on Apr 17, 2018
Manufacturers say ISC West 2018 was strong, continuing the trend we have seen in 2017 results and 2016 results. However, those same 100...

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