Wireless Surveillance Market Size and Growth

Published Feb 06, 2012 05:00 AM
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Our recent wireless surveillance usage statistics demonstrated that an extremely low percentage of cameras used wireless networks. This was surprising to many, even somewhat to ourselves, given the level of marketing expenditure and promotion that wireless companies have spent in the last decade. To that end, a member asked, "Does this mean that companies like fluidmesh, firetide, etc are wasting their time marketing to this industry?" This is an interesting question that taps into the overall health and size of the wireless surveillance market.

The Market's Size

We estimate that the market for wireless equipment used in surveillance applications is between $75 and $150 million. Here we are only measuring the wireless nodes themselves, not the cameras being transmitted wirelessly. Measuring it precisely is very difficult because it is quite hard to determine the specific applications wireless equipment is being used in. However, given the small size of the wireless vendors marketing to surveillance and the small percentage of cameras using wireless (in our survey, between 2 and 3%), it is not feasible that the market is much bigger than that range. As a sense of comparison, the market for video surveillance overall is typically estimated in the $10 Billion range making wireless equipment about 1% of the overall market.

Firetide, Fluidmesh, etc.

A market of $100 million is not huge but it is certainly plenty big for companies making appropriate investments. The big challenge is spending too much. Firetide is the poster child for this, having raised over $50 million in VC funding. Raising tens of millions is fine if you can generate revenue of hundreds of millions. Raising $50 million in VC funding and then doing annual revenue in the few tens of millions is not viable to justify investment and specifically the valuation necessary to generate appropriate returns. To that end, Firetide has made clear that they are targeting other markets outside of surveillance, a move we see as necessary to generate the appropriate levels to meet their valuation/investment.

The Ubiquiti Effect

Outside of the market being small, the other problem for the few mainstream wireless video surveillance equipment providers has become Ubiquiti. As we have examined previously, Ubiquiti has crashed wireless prices, which has been great (and profitable) for them but is killing the incumbent wireless market. On the plus side, Ubiquiti has become the clear wireless favorite of surveillance integrators and is helping to grow the small market of wireless surveillance.

Wireless Use Constraints

Ultimately, this begs the question: "Why aren't people using more wireless?" If people used more of it, say on 25% of their cameras, the market could increase by 10x creating a billion dollar market.

The challenges are:

  • Wireless is a lot harder to set up than wired networks, taking significantly more time and skill for the same length 'run'. Most importantly, the challenge in dealing with obstacles to wireless transmissions.
  • Wireless is a lot less reliable than wired networks, creates more service calls and system downtime. [Note: I am assuming unlicensed commercial links which is what is overwhelmingly used.] Here's a list of common wireless field problems.

Indeed, in the last few years, neither of these issues has substantially improved. Only two material improvements have occured: Bandwidth availability has increased to the point where it has become more than enough for surveillance and Ubiquiti has dropped the price point from $1,000+ per link to $200 per link.

The low price point is a significant market shift and it does remove one of the traditional barriers. However, the other two, installation difficulty and reliability issues, will not be solved any time soon (note: whitespace wireless surveillance is really interesting but is a high end niche space).

Market Growth

The good news is that the use of wireless will grow moderately as IP cameras make it easier to use and lower cost options make it more economical. The bad news is that major barriers remain and incumbent vendors will continue to be pressured and marginalized into niche projects by super low cost vendors like Ubiquiti.