The turning point of IP video's tipping point

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.”

Frank De Fina, Senior Vice President of Sales & Marketing for Samsung Techwin America, looks at the shifting market landscape saying that he sees more and more residential and small business communities migrating to the business-to-business channel.

“This has broadly expanded the low end of the pyramid and manufactures have made note of it. Many manufacturers are repositioning product to attract customers that have migrated up from residential or down from mid level businesses. The market has impacted the sales of analog manufacturing introducing lower prices since amortized the R&D cost of analog, hence low cost analog is easy to produce,” says De Fina, who believes improved IP infrastructure has spurred growth, but still leaves room for new and legacy analog.

“Manufacturers, including Samsung, have come to realization that there is a lot of analog infrastructure and as such we have reconfigured our product development to reflect that trend. Although the trend remains strong in IP for network systems the market is selling a significant amount of analog because of the infrastructure.”

The rapid pace of camera technology development is a key to widening the base of IP video adopters says Scott Schafer, Arecont Vision Executive Vice President. He states that the gap between IP and analog technologies will continue to widen as cameras evolve.

“Megapixel camera technology provides real value and measurable ROI both to end users and to the channel, as the superior image quality, better overall system performance and cost-efficiency of megapixel IP systems can help close sales. For example, megapixel cameras provide added value by enabling systems with fewer components (including fewer cameras) to deliver high performance for less cost,” Schafer points out. “Megapixel cameras also have fewer moving parts than pan-tilt-zoom (PTZ) devices, which can be a source of problems over the life of a system. As a result, megapixel cameras have a lower total cost of ownership (TCO) than conventional IP cameras.”

The technical hurdles – namely bandwidth and storage -- that initially stymied video on the corporate network among some early adopters have virtually been eliminated thanks to the convergence of both IP and physical technologies and staff. Schafer also credits the development of H.264 video compression as the turning point of the tipping point.

“It has eliminated bandwidth and storage concerns. The use of H.264 image compression reduces file sizes to minimize storage space requirements and to make video streams, particularly megapixel video, manageable on the network. There is also a common myth about the ‘hidden cost’ of H.264, an erroneous belief that because the computational complexity of the H.264 encoder is high, the required decoder resources must also be high,” he says.

“In reality, the opposite is true. H.264 streams can actually require less computational power to decompress. Knowledgeable VARs can easily debunk these misconceptions for end users. It is safe to predict that H.264 will become the de facto compression standard for the security and surveillance market, especially for megapixel IP cameras where the benefits are even further multiplied.”

Perhaps the most important benefit – and stumbling block – for the implementation of IP video surveillance is the vast amount of information the end user receives. The ability of technology to deliver this “Big Data” at our doorstep also requires sophisticated analytics to interpret it.

“The market has seen the introduction of many software solutions to provide the tools to manage tremendous amounts of video surveillance mine the data and then provides actionable and measurable information to the customer. The reality is most surveillance video goes unwatched. With current CPU processing power available, NVRs can analyze video content to interpret the activity or behaviors that security and law-enforcement are looking out for with greater accuracy,” explains Jammy DeSousa, Product Manager for Tyco Security Products.

“As a result, this video analytics data can then be presented in easy-to-read dashboards and reports, or trigger alarm at the exact moment an incident occurs for someone's immediate attention. In addition, unified operations provide the ability to mine multiple databases simultaneously and not just provide video related information but coincide it with data from access control, intrusion, fire, point-of-sale and so on, to provide a more specific targeted results.”

DeSousa and his peers maintain that superior capability of IP-based video to integrate into other security platforms and supply security personnel with actionable metrics will continue to promote adoption.

“Today, VMS systems offer a wide range of capabilities and exceptional video quality. IP-based systems with analytics and unification into other security systems are increasing system effectiveness. Unifying these systems during the early development of a system allows all of the sensors in a security system to deeply tie together and increase the power of the entire system. For the near and not so near future, video analytics will be used as a tool assisting the operator with managing and executing the daily security tasks,” says DeSousa. 

“Absolutely,” agrees Mauritsson. “Network cameras are intelligent, communicating in both directions and not just simply a video generator. Through proactive surveillance they can trigger events based on intelligent analysis of video content and also allow operators to give instructions for optimum camera functionality. For standardized analytics the surveillance camera can be used for people counting, cross line detection and license plate recognition.”

As functionality increases across the IP video spectrum and acceptance grows in non-traditional markets, ultimately it is the lower cost of implementing network video that is attracting an expanded base of users. For Mauritsson, it is a matter of the ultimate cost of ownership and eventual reality of ROI.

“I would like to refer to Moore’s Law, a well-used formula within the IT industry which states that you will get twice as many transistors – twice as much performance – for the same amount of money, every 18 months. This is still valid today. In fact, since Axis Communications introduced the world’s first network camera more than 16 years ago, network camera performance for resolution and frame rate has increased by roughly the same factor, or more than 1,000 times.

“Hard disks are also following the path of Moore’s Law with terabyte hard drives and the falling cost of raw gigabytes. Flash drives are becoming volume products, roughly doubling in capacity every year. It is also with Moore’s Law we can predict when some technology innovations are suitable for the market,” he concludes. “Thus, the IP video system outperforms analog technology in both capacity and innovations. The shift from analog to IP surveillance cameras will continue as the security surveillance industry rapidly changes and demand for smarter technology is felt from both businesses and consumers.”

 

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