Voices of the Industry: A conversation with Fredrik Nilsson

Nov. 1, 2019
As the landscape surrounding video surveillance technology shifts, how is the industry adapting to change?

It may not be fair to personify him as the harbinger of change in the video surveillance industry, but for close to 17 years, it wouldn’t be a stretch to say that Fredrik Nilsson and his Axis Communications team have served as the proverbial canaries in the digital technology coalmine.

Serving as the vice president of the Americas for Axis Communications overseeing operations across North and South America and as a member of the global management team since 2003, Nilsson’s two-decade career with Axis has been one of innovation and entrepreneurial vigor as he championed the seismic shift in the video surveillance marketplace from analog CCTV to today’s ubiquitous network-centric landscape.

Nilsson has played an instrumental role in the staggering growth of a company that has seen its revenues increase from $20 million to over $500 million since taking the helm in the Americas and has worked closely alongside Martin Gren, the co-founder of Axis, to maintain a spirit of innovation at the company, spanning the spectrum from advanced chipsets like the ARTPEC which has allowed for enhanced analytics and compression, to thermal video devices and audio integration. The ARTPEC 7 will also help improve the cybersecurity of Axis devices.

Outside the organization, Nilsson has also assumed a high profile as a board and executive committee member of the Security Industry Association (SIA). In 2016, Nilsson received the prestigious George R. Lippert Memorial Award presented to individuals for their long-term service to SIA and the security industry, the impact of their efforts on behalf of SIA and the industry, as well as their integrity, leadership and diplomacy in industry dealings.

I recently was able to sit down with Nilsson during a break at the Axis ACCC event in Austin, Texas to get his take on the state of the video industry and his slant on technology drivers shaping video’s future.

Steve Lasky: Axis has built its foundation on the values of innovation, client partnership, and service to the industry. Talk to me about the early days when basically you were establishing an IP technology roadmap and bringing the industry to the market and where you feel things are today.

Nilsson: If you look at where the market was early on, and yes, Axis was an innovative company when it came to technology, and I think we are still as innovative as we were when we brought out the first network camera in 1996. When I moved here in 2001, we focused on the U.S. market for IP video. It was the early days but the technology as such was not the biggest differentiator. Because even back then, vendors like Sony, Bosch and Panasonic started to manufacture IP cameras. Even then, having an IP camera was not enough to create the differentiator. Because we were a much smaller company than the Sonys, Boschs and the Panasonics of the world, we figured we needed to do things differently from a market perspective.

That's why we decided to build up this ecosystem of partners, both on the technology side and the application development partners like Milestone, Genetec, ISS, ELERTS, along with our commitment to ONVIF.  We had to make sure our solutions were easy to integrate and then make that effort to build it for the greater good of the industry. We also committed to build a channel partner model in a very consistent way and hire our own staff, that's the biggest differentiator. On the paper, those things look very easy to copy. But if you run a business, you need to make sure you have long-term owners that let you run the business with a long-term vision and who don't beat you up if you miss the numbers one quarter. Right now, we are in that spot with Canon.

I think that the bottom line for us is that consistency and a long-term vision that you can share, in addition to building momentum around it with all your many different partners is really the biggest differentiator, much more so than innovation on the technology side.

Lasky: In one of your slides during your presentation, you showed about 15 or so of the early movers and shakers in the video surveillance industry. It’s astounding to see that most are either gone or bit players now. What happened?

Nilsson: There has been a paradigm shift. It's interesting to analyze and would probably make for an interesting story for some "Harvard Business Review." You can make a comparison in other markets where companies that had enjoyed status as market leaders failed to realize when there was a technology shift happening. Rarely do companies that lead with older technology transform to become a leader of the new technology because typically for them, it's just shifting revenue from the right to left pocket. So why drive that change? Like a Kodak and Polaroid – companies that saw their technologies changing and failed to adapt.

When they do try to drive change and figure that they can do it when it's needed, they are already behind the curve. Suddenly, the market accelerates away from them. Some of the best recognized and amazing brands, with great ownership and fantastic technologies fall into this trap. Giants like Kodak, who was an early entry with their digital cameras, but later decided they really didn’t want to put any money into it. Poof, their business model collapsed. The same thing has occurred in our industry with companies that were either too slow to make the changes to digital or were simply satisfied to hang on to their analog customers.

Lasky: You bring up an interesting point about that entrepreneurial drive and spirit and that atmosphere of disruption that characterized the early security industry. You brought up the company Kodak. They had a technology that had sustained them for a hundred years, yet it was an entrepreneurial group inside Kodak that was a disrupter in the security industry (Edicon).

Nilsson: Exactly. It eventually flourished in our industry as Lenel and the rest is history. It was a success that came out of a parent company but as a totally separate group in a separate industry because Kodak could not envision a new future. I forget if it's Steve Jobs or some other famous entrepreneur who said cannibalize yourself, otherwise, someone else will do it to you. It is so easy to quote and say but it's so difficult to do for any company. Do you do it within the company? Do you spin it out? The reality is when a new venture hits a rough patch revenue-wise, a lot of companies close it down. They don't stay true to growing beyond their core.

This is one reason we have maintained an entrepreneurial approach to our business. With our size today, being close to 4,000 people globally and increasing revenue year over year, we need to continually look at ourselves. Are we staying relevant? Are we staying innovative? Who are the people challenging us? Making sure we don't become stale and trying to maintain that spirit of innovation is a challenge.

Lasky: When we talk about disruptors, especially in the video industry and on the surveillance side, what would you rate as the top disruptors over the last decade that have really moved the industry, not just Axis, but the industry as a whole?

Nilsson: I’d like to say analytics but as we talked about it before, it still is a work in progress. Many of us think the industry is finally delivering what we promised 10, 15 years ago. Eventually, we will get there, but it's hard to know the timing. Still, I would envision analytics being more of a disruptor moving forward. It's gaining some momentum, what with deep learning, we're able to make the algorithms even better and more accurate. Now we're starting to provide some meaningful and accurate predictive analytics that are useful for companies.

Today's video has amazing quality, amazing light sensitivity and that's been driving the value of video for forensic purposes. Picture quality is so much higher today than it was only five years ago. So, I think that's been a great driver as well.

I think storage is another driver. Storage continues to get less and less expensive. It used to be that users wanted to store seven and a half frames a second. I jokingly said what's so great with seven and a half frames a second? It was a fourth of 30 and that was all there was and that's all you could record. But customers really wanted 30 frames or more. They wanted to store it for as long as they can. Users really didn’t want to have any limitations. With the cost of storage dropping and the storage technology connected with it having greater compression. like (Axis) Zipstream, along with the composite value technology that can really do some magic on the compression side --that has really been a tremendous driver, especially in some industries where compliance issues are high. Take, for example, airports in some countries where they want to store data for 90 days or even 18 months. Now we can comply with those types of requests.

Cloud is another of the key drivers. It has great promise. Where we see it taking off first is more for small systems where you have one or a couple of cameras dispersed through many different sites. Cloud is a great way to make sure you upgrade the software and keep users cyber compliant. The cloud is constantly being updated. If you have a local site with your five cameras, you're never going to have a person sitting there with upgrade responsibilities. Being able to get video linked up to your phone with 4G and 5G quality is a potential game-changer. Companies are investing in the infrastructure to rapidly move this technology. But we are still in the early days. This will be a driver and disrupter for at least the next decade.

Lasky: So, if we are talking about technology and industry disruption, where does video fit in the expanding IoT universe?

Nilsson: We're a big believer in a quote from Robert Metcalf of 3Com that states the value of the network increases exponentially with the number of nodes that you connect to the network. We have customers today with thousands, if not tens of thousands, of cameras and devices. We then come to those customers and ask them how they're dealing with intercom, how they're dealing with audio and other technologies, realizing that back in 2005 video surveillance systems were mostly closed. It is quite the paradigm shift.

The evolution of IoT means customers will not only have thousands or tens of thousands of cameras on their network but they will have even more ancillary devices. We've talked about cyber risk as well. There are many organizations that are authenticating dozens of devices on their networks including laptops and IP cameras. Monitoring which devices are up, which ones are down, which one have been attacked or are vulnerable to any cyber threat is tough to manage when you have this huge array of IoT devices. It will only get worse as more IoT devices are added to an organization’s network and we expand into the age of the Smart City.

Lasky: As a vendor, what is your responsibility to initiate and ensure cybersecurity issues are being addressed and your clients are protected?

Nilsson: That's a very good question. Cyber is not so much a technology as it is a process that you need to have in place. The process as a vendor goes beyond just how you develop your technology but more importantly, providing tools internally and externally to help customers be aware of threats and help them be proactive.

As a vendor, when you find a vulnerability, which you will, do you have a system to fix it quickly and come out with new firmware both for new devices as well as the old ones that are still sitting on the network? Are you then providing the proper tools to make it easier for integrators or end-user customers to update those thousands of devices quickly and safely? This process can only be done by having close cooperation and a close partnership with your integrators and users. The key is to educate your partners and keep the communication lines open.

Like the old saying, the chain is only as strong as the weakest link. If you have great technology, great processes, great tools, great integrators but an end customer doesn't care about it, that user will have vulnerabilities. If a link breaks anywhere down the chain, it will create vulnerabilities. Right now, my biggest concern is that vulnerabilities, no matter where they originate, will ultimately reflect badly on our industry. Cyber threats will not be getting smaller anytime soon.

About the Author:

Steve Lasky is a 33-year veteran of the security publishing industry and multiple-award-winning journalist. He is currently the Editorial and Conference Director for the Endeavor Business Security Media Group, the world’s largest security media entity, serving more than 190,000 security professionals in print, interactive and events. It includes Security Technology Executive, Security Business and Locksmith Ledger International magazines, and SecurityInfoWatch.com, the most visited security web portal in the world.