IMS Research cuts '08 U.S. forecast for IP video

Though IP video is still a very fast growing market in the U.S. and abroad, research firm IMS Research issued a report today which dropped expectations for growth in this market area.

In a statement about the reforecast, IMS Research noted that "The market has got off to a slower start in 2008, and it seems unlikely that the market will grow as fast this year as it did last year." IMS cited a "struggling US economy" as the chief factor and the potential of a recession for the entire U.S. economy.

According to the report, the retail sector, which is a top purchaser of surveillance equipment, was one of the most hit in terms of consumer spending. IMS noted that a slower rate of growth in consumer spending has made many retail companies limit their store expansion plans. Those new projects had been a consistent source of business for the video surveillance industry.

Simon Harris, senior research director at IMS Research said that despite the economic slow-down, the firm still expects the market to grow "well above 30 percent in 2008 and may even top 40 percent, particularly if the economy picks up in the second half o the year." Harris noted that the slowdown for the U.S. market began in the fourth quarter of 2007 and has continued into Q1 2008. That slowdown, he said, was based on camera shipment numbers from some of the top manufactuers.

"The US economy slowing is affecting all markets, including the video surveillance market which includes both analog and network based [systems]," said Fredrik Nilsson, U.S. general manager for network video surveillance company Axis Communications. "Looking at the market segmentation done by researchers such as IMS often shows retail being the largest segment. We all read in the magazines that retailers are cutting back on new stores being opened, and some even plan to close stores in 2008. That, of course, affects the video surveillance market."

Nilsson said that Axis U.S. had experienced 60 percent growth in 2007 (the entire network video industry's estimated 2007 growth rate was 45 percent), but that they had noticed slower growth in the first quarter of 2008.

Julianna Benedick, group marketing manager for Panasonic Systems Solutions Company, said her firm was seeing similar indications in the market, and that they are still experiencing year-over-year growth in the company's i-Pro IP video surveillance products.

"Although we do sense some impact in the field from the slowing U.S. economy, there are pockets of activity -- especially in the education market and also with the government," said Benedick. "Security and safety are still in the forefront of people’s minds, and so we believe that if there is an eventual drop in the growth rate of IP video, it will be temporary and minor."

Bob Banerjee, product marketing manager for IP video products at Bosch said the study results were also in line with what Bosch was experiencing and that the slowdown could encourage better and more efficient system design to reduce costs.

"I agree with the study results, as it reflects our own sales," said Banerjee. "My interpretation is that this reflects a market realization that IP video is attractive in many situations, but to gain affordability and manageability, customers are embracing the opportunity to simplify the architecture. In Bosch's world, that means recording directly from IP cameras and encoders to iSCSI disk arrays, totally eliminating the PC-based NVR, the operating systems, NVR software, anti-virus software and the entire total cost of ownership that goes along with them."

IMS still forecasts a very positive long-term outlook for video surveillance, and Harris said the slowdown had not been seen to effect government-funded projects in areas like homeland security or the transportation vertical.

IMS Research also issued a forecast on Wednesday, June 4, 2008, which indicated that video surveillance storage for new surveillance porjects would exceed 3.3 exabytes by 2012. An exabyte is equivalent to 1,000 petabytes (1 petabyte of storage is equal to 1,000 terabytes).