Global revenues from IP video products are expected to overtake analogue in 2014, with IHS saying analogue cameras are still expected to continue outselling network cameras in terms of shipments through 2017. But these numbers don’t stack up across the board in Australia.
LAST month IHS said that a high proportion of large and enterprise projects already use network video surveillance instead of analogue and that IP is increasingly being selected for smaller projects as well. In addition, price competition for analogue cameras and digital video recorders is intense and a degree of commoditization is taking place for some product types.
“Network cameras are generally higher-priced cameras with more advanced features,” said Jon Cropley, principal analyst for video surveillance at IHS. “Therefore, even though less than 20 per cent of all cameras shipped in 2012 were network cameras, the size of the market for them in terms of revenue was almost as large as that for analogue cameras.”
But locally things aren’t so clear cut. In SEN’s case studies in the past 12 months there has been no new analogue components installed we can recall and in a number of cases, the systems being removed where early VGA IP solutions being swapped out for 1080p HD.
Obviously, there’s a bias is these observations because generally SEN’s case studies are larger solutions – 50 cameras and higher. But a conclusion can be drawn that at the top end of the market, IP is winning in a landslide.
To get a feel for how things are in the Australian market, we chatted with a number of distributors about the percentages of sales they were doing in analogue and IP and their replies make for interesting reading.
The niche distributors seem to be much stronger in IP, while the larger companies are shifting more analogue – in some cases more than 60 per cent of their business drives on coax.
Sony has a strong offering of both IP cameras and analogue cameras but sales don’t seem to reflect the prevailing view that analogue is hanging on at the bottom of the market. According to Sony’s Steve Charles, the current figures suggest IP is utterly dominant.
“Right now it would be 95-96 per cent IP – it would be that significant,” he says. “IP is just huge. It’s really high and given the trends if we went month on month from this point into the future, it might be as high as 98 per cent IP. The only analogue we see is upgrades to existing analogue systems – not new installations.”
Sony’s Mark Franklin agrees.
“The way it works from our point of view is that the run of products being sold is almost all IP and just occasionally you’ll get a project that calls for analogue as part of an upgrade of a legacy project but all the major projects are IP,” he says.
Of course, Sony is a quality manufacturer and you could argue that anyone drawn to Sony’s quality analogue cameras on the basis of their superior performance is going to have fallen in love with HD years ago. This observation begs the question whether or not analogue is all about price.
Certainly things are closer to the IHS numbers at Q Security Systems, where Cliff Simons says that in terms of revenue the company sells 65 per cent analogue and 35 per cent IP. Interestingly, QSS only sells a few encoders a month now with encoder sales having dropped right off.
While the ratio of sales comparing analogue DVRs and hybrid (analogue/IP) DVRs is 10:1, QSS actually sells a considerable number of end-to-end IP solutions systems as a percentage of your total sales – around 30 per cent. This suggests that when the QSS team makes an IP sale, it’s for a complete IP solution – comparatively few installers are opting for IP /analogue hybrid applications. Instead the techs are IP-capable or not.
It goes without saying that in an environment like this, IP-based training courses for installers are vital and QSS runs free courses for installers introducing them to NUUO, American Dynamnics Videoedge, Verint Nextiva, and the QVS Independence solution.
Meanwhile, over at Video Security Products, Zaki Wazir is experiencing a complete reversal of the QVS numbers.
“Around 70 per cent of the cameras which we sell are IP now,” he says. “The IP portion includes both our Sony and Kobi IP camera ranges. And I’d say that just about all of our systems would be end-to-end, be it a Kobi Easy IP or a Sony/Milestone type solution.
"And while our IP sales represent 70 per cent of our system sales, due to the size of some of the IP systems we put together this represents significantly more than 70 per cent of our revenue.
“When we talk end-to-end, for us this includes everything from cameras, to servers and switches, Milestone software, and racks, etc,” Wazir says. “In many cases an end-to-end sale also includes staging and pre configuration prior to dispatch and documentation to go along with it.”
So while 30 per cent of sales are analogue, analogue revenue represents a lower per centage?
“That’s right – only around 30 per cent of our sales are analogue now – this is system sales, not revenue,” he says. “We do sell around 500 channels of encoders per annum. This is made up of Sony encoders but the majority of our analogue encoding is using Stretch Add-in cards directly into the server, so they are very low cost.
“We also, when we can, try and convince clients away from spending money encoding analogue cameras which quite often are many years old,” Wazir explains. “We try and convince customers to spend a little more money and go IP over the existing coax using the Sony Hybrid range.”
“Around 70 per cent of the cameras which we sell are IP and I’d say that just about all of our systems would be end-to-end, be it Kobi Easy IP or a bigger Sony/Milestone solution”
What about DVRs? How many analogue DVRs and how many hybrid?
“We don’t sell hybrid recorders,” Wazir says. “Personally I think they are too expensive to so call future-proof the site. It’s much more cost effective to use an analogue DVR if the client only wants analogue now and to then install an NVR or server when they make the jump to IP. In our experience, DVR sales are generally declining.”
VSP is also involved in IP-based training courses for installers.
“We conduct IP training courses together with Milestone and we also conduct IP courses together with Sony,” Wazir explains. “Outside of these courses, we spend one-on-one time with installers as required.
CSD is probably the largest distributor which is seeing dominance in IP sales. According to Ilya Malkin, the proportion of people installing analogue and installing IP has changed completely.
“Perhaps it’s 80 per cent IP and 20 per cent analogue,” he says. “When you think about CSD as a distributor, I think we have an unprecedented product mix in both areas, so it’s not as if we carry no quality, affordable analogue gear. We have Samsung Lumina in analogue, which is great stuff.
“Obviously, our IP range is strong, too. We have Hikvision, exacqVision as the VMS software for the entry and mid-range stuff, we’ve got Mobotix, which covers you from bottom to top. One Mobotix camera can support a retail store or these cameras can be incorporated into larger systems. Then you have the Avigilon range on the top.”
But according to Malkin, although integrators are buying more IP, there’s still a market for analogue surveillance equipment.
“Integrators have not stopped buying analogue – they know how it works,” he says. “And end users still have analogue systems that function. Psychologically people have trouble shifting to something they do not know. There are barriers in the mind, the economy, the abilities of a company’s staff – so you do what you know. We cater for both.”
In terms of global figures, IHS estimates that the world market for video surveillance equipment grew by more than 10 percent between 2011 and 2012. Growth was predominantly driven by sales of network equipment in many countries where analogue declined. An exception, however, was China, one of the countries where the analogue market continued to grow.
“The transition from analog to network video is continuing in 2013,” IHS’ Jon Cropley said. “This year the global analog space will be broadly flat while the network market will grow by more than 20 per cent.”
Commenting on the IHS projections, Fredrik Nilsson, Axis Communication’s general manager for North America, favoured a general outlook and his observations are good news for a local industry that could use a sales spike.
“While IHS is correct that the tipping point is coming near, there are a few important things to remember. First, when it comes to large systems, the scales have already tipped far in favour of IP,” Nilsson said. “In mid-size systems, the choice of IP versus analogue typically comes down to customer need and infrastructure, however IP is making strides.
“But so far, IP video has seen very little traction in small systems – the 16 cameras or less market. Reasons for this are perceptions of high cost, complex installation and usage. This is quickly changing with new IP innovations,” Nilsson says.
Perhaps the important point Nilsson made was this.
“As IMS stated, by volume, IP is still only some 35 per cent of the market. So while we’ve had a great start the last 16 years, the future opportunity is even better.”
