Market for small IP camera installations expected to surge

June 19, 2012
Dropping prices and increased performance to spur growth of IP video surveillance for small business applications

According to many in the industry, the stranglehold that analog has held on small video surveillance installations soon may be released. Historically, small business owners have not invested in IP network video surveillance due to cost. Instead they often purchased pre-packaged analog camera and DVR kits available from security dealers and through popular security equipment catalogs.

Now, with prices dropping in network cameras and recorders -- and more dealers and integrators familiar with IP video surveillance installations -- industry manufacturers expect to see installations with smaller camera counts turning more to networked IP video solutions.

"Small camera count systems -- which we define as 16 cameras or less -- represent at least half of the surveillance cameras being sold in the world today," said Fredrik Nilsson, general manager of IP video surveillance products firm Axis Communications. "Within this small camera count market, more than 90 percent still uses analog technology. Think of all that coax cabling you see in small convenience stores, gas stations, banks, small offices and hotels."

Thomas R. Cook, the vice president of sales in North America for Samsung Techwin America, said that the small market is finally about to see the price flip that it needs in order to switch from analog to IP.

"The small retail business market has always been price driven more than any other market," said Cook. "We have seen since the inception of IP cameras a reduction of price, but not until this year, were the IP cameras equal -- and will be lower [priced] than -- a traditional analog solution. At this point we will see a rapid trend towards IP and its technology now that it is hitting the correct price point."

Cook noted a steady drop for the average MSRP of an IP camera from Samsung, noting that five years ago, the company didn't even offer IP cameras, and just two years ago the average MSRP for one of his firms' IP cameras would have been around $1,500, while today it's close to $700, and he expects that to drop to $500 within the next three months.

Willem Ryan, the senior product marketing manager for Bosch concurs with the steady decline in pricing for IP cameras, noting that "prices for standard definition IP cameras have been decreasing over the past five years by 10 percent or more." At the same time, the feature sets on these cameras have improved dramatically as the price has dropped.

"Today you get much more camera performance for your dollar," said Axis' Nilsson. "Case in point: today we can deliver an HDTV-quality camera with on-board SD card storage for less than $230 -- whereas the industry's first HDTV camera from Axis debuted at around $1,500 three years ago. This is typical for a high-tech market were prices drop quickly for products that remain the same, but prices can be kept flat while adding lots of new innovations that address customer needs."

Manufacturers have also smartly segmented their product lines in IP cameras, offering network camera varieties for high-end clients who need the fullest feature sets and also basic units for customers who need affordable options. Bosch is one such company that has pursued this strategy, introducing its "Advantage Line" last year. It's aimed at smaller applications (typically defined as less than 16 cameras), and Ryan said the cameras start at a MSRP of $380. What's unique about the down-market move of technology is that the cameras are offered not only in standard definition but also megapixel resolution, and the cameras include basic video analytics and a basic video management solution -- both of which are elements that customers seeking security solutions would have expected to buy separately years ago.

Besides price drops for the technology (or equivalent pricing for more feature-rich and higher-resolution technology), camera experts say that there are other factors at work. Bosch's Willem Ryan notes that edge storage can reshape the cost model. "The capacity to store sufficient amounts of data at the camera via SD card can help overcome the cost of a DVR in the analog and NVR in the IP world. Combined with free software like Bosch Video Client, this creates a very cost effective IP system for customers."

Ryan said that the proliferation of smart phones and tablets has changed how people expect to access video data -- and that they now expect to be able to access their video remotely. "As such, most IP camera solutions, regardless of price, have mobile device integration in some way. For example, Bosch provides free mobile apps to view and manage your video, and there are many independent apps available as well. This has enabled average consumers to integrate video surveillance into their everyday lives."

Additionally, he said that the trend toward commercial-off-the-shelf (COTS) technology aids the affordability of IP technology, since IP camera system pricing inevitably depends on the costs of IT market staples like PCs, servers, routers, and SD cards. These items, Ryan said, "are all part of the IP video surveillance infrastructure and these items continually drop in price while gaining in output performance."

So, with these factors in play (plus the emergence of the hosted video opportunity), what is the forecast for IP video surveillance growth in terms of sales to small businesses?

Samsung's Tom Cook said the future is sunny; he is expecting 20-30 percent growth in this area. That means long-term growth possibility, since he estimates that no more than 5 percent of Samsung's IP cameras sales are currently sales for small business applications. Others in the industry, like Axis' Fredrik Nilsson, think the growth could be even more powerful. He notes that IMS Research is forecasting that IP video will effectively take over the video surveillance market by 2020. IMS is also predicting that 2013 will be the year of IP video's "tipping point", with more IP video surveillance products sold than analog surveillance products.

"It really is an exciting time," Nilsson said. "We're seeing 30-plus percent growth overall, and that's before we've really begun tapping this small business market. We also have the chance to get back to basics and educate these new IP technology users about the benefits of IP video surveillance. I for one am looking forward to this IP video surveillance 2.0 phase where network video technology is available to and can benefit everyone. We get to re-live the initial excitement when our customers get their first taste of network video surveillance."

About the Author

Geoff Kohl | Editorial Director/Editor-in-Chief/Associate Publisher

Geoff Kohl is editor-in-chief and associate publisher of and editorial director for Cygnus Security Media magazines Security Technology Executive and Security Dealer & Integrator (SD&I). In 2011 he founded the Secured Cities conference, an urban security/municipal video surveillance conference for law enforcement and city management. In his editorial role, he has covered the security and public safety industries for eight years, and is host of SIW's webinar training series and the SIW Radio podcast program. He is also author of The Security Check blog. He can be written to at [email protected].