The turning point of IP video's tipping point

Technology advancements, improved analytics drive IP adoption beyond analog’s comfort zone

In September of 2005, a group of security editors from around the world sat in a conference room at the Lund, Sweden headquarters of Axis Communications and listened while Ray Mauritsson, the company’s CEO told us we had reached a 'tipping point' of market acceptance as analog CCTV systems start to give way to a new generation of IP-based security cameras.

And why shouldn’t he think that point had been reached? IP video camera sales at that time were growing at nearly 50 percent compared to the 10 percent growth of a still vibrant analog market. But IP failed to overtake the legacy analog systems as quickly as predicted in 2005.
Several factors slowed the pace of acceptance. The world economic downturn, a lack of IP infrastructure among non-enterprise size companies and just the general malaise the security industry has struggled with until recently all contributed.

However, it now seems the optimism Mauritsson expressed regarding the future of network-centric video has been validated, as IMS Research, part of IHS Inc., announced this week that revenues from network video products are expected to overtake analog for the first time in 2014. For Mauritsson, whose company is regarded as the pioneer of IP video, the realization of his “tipping point” has been an arduous journey.

“The early adopters of network cameras, which we invented in 1996, were typically end customers with a well-established IT infrastructure. Schools were and are a good example of that. IT infrastructure has been improving everywhere. The biggest infrastructure driver for network camera has been Power-over-Ethernet (PoE) deployment indirectly driven by IP telephony,” says Mauritsson.

He also states that some of the network issues have been resolved with IT partners in organizations deploying large IP-based video systems.

“In the early days of network video, the IT installers had limited knowledge about security cameras and the security installers were limited about the IT infrastructure. At Axis, we saw a need for education of the physical security market and have had a strong focus on that ever since,” Mauritsson continues. “Axis actively invests in educating the market about network video’s opportunities, as we have dedicated training programs supporting integrators, resellers and installers. Since 2005, we’ve had more than 30,000 partners participate in these trainings.”

Jon Cropley, principal analyst for video surveillance at IHS points out that while IP video cameras account for less than 20 percent of all camera sales worldwide, the higher price points is what enables it to overtake analog as far as revenue marketshare.

“The commoditization of analog equipment is meaning lower prices for that equipment. This in turn is meaning high volumes of products from the Far East that are rebranded (even the smaller distributors now sometimes have their “own brand” of equipment),” says Cropley, who also adds that while analog sales worldwide are essentially flat, IP is still growing at 20 percent.

“However, it is also means that the big, well-known, established brands in the video surveillance market are investing little in the development of analog products and focusing their efforts on developing, marketing and selling network products with more advanced features.”

Fredrik Nilsson, Axis Communication’s General Manager for North America, while agreeing with the research, prefers to keep a broad industry perspective.

“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 favor of IP. In mid-size systems, the choice of IP versus analog 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. “As IMS stated, by volume, IP is still only some 35 percent of the market. So while we’ve had a great start the last 16 years, the future opportunity is even better.”

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