Future of IP Security Camera market

[Voipmodo 0]

After attending ISC West and seeing the large number of networking vendors, both wired and wireless, is there a consensus or opinion on how long the cctv market will remain a separate segmented market space or will it eventually merge into general IT. With IP cameras, and Servers becoming more common, I see this as a possible trend. Our company does project management and online sales and a large percentage of our customers are IT installers and internal IT departments who are installing these systems. I have heard from customers that once management hears IP based they send the project to their existing IT departments to manage as they feel why send the project outside when they are already paying $$$ for internal staff and figure they should be able to handle it.

 

It may be a just a fluke based on our experience, but we see that CCTV is going to be more of an IP integrator solution then a security installer solution in the next 5-10 years. Does the learning curve for IP with network and server config becoming a barrier for adoption by security firms?

 

I am not advocating for or against a shift, but if it does occur, the economics of CCTV will drastically change as margins on hardware are much smaller in IT and cost of labor/ training higher raising the costs of entry. As we sell retail we have already seen many vendors trying to fight the downward price pressure as margins drop to IT gear levels (7-12% vs 25-50%). Many are trying restrict distribution to prevent this, but ultimately business wise is not a long term fix as a competitor will just enter the market at a lower point with the same features and drive pricing down. ( Geovision and several other emerging brands are pushing the envelope of price and feature sets already, 360 degree cameras for one)

 

End users are in increasing numbers opting to setup and install IP security gear themselves as they already know networking and dont see a value add for a security installer. When they do have it installed I would say over 50% are using an IT integrator or electrician vs a security firm. This last part was even brought up by one of our vendor partners (IP Camera) last week at a partner conference that they see one of their largest growth segments for the future to be Electricians.

 

Thoughts or comments?

[rory 0]

I guess it depends where one lives but here and i guess out of Florida (as thats who I buy the gear from) and ofcourse Latin america, I dont see any move in that direction unless IP gear becomes much less expensive and most end users become network/computer gurus .. most people still want the cheapest thing they can get to just see a picture (not concerned with ID), and with $30 Color IR cameras and $150 full featured networked DVRs flooding the market now .. this if anything seems to be the direction its going IMO .. for now but ofcourse things change.

 

For an end user why hire a $150 per hour IT guy when they can get the $70 per hour CCTV or Alarm guy to install the cameras. In fact with basic systems like that many end up installing it themselves or just hiring someone to setup the DVR and remote video side of it, both which dont take an IT guy to do so, most kids these days can do that basic stuff. And when they need someone to troubleshoot a system many end users might feel its probably best they call someone that has years of experience in the products they use instead of someone that just started or never used such products.

 

Bottom line, although I see the market for higher quality cameras, I still see it being split.

[thewireguys 3]

After attending ISC West and seeing the large number of networking vendors, both wired and wireless, is there a consensus or opinion on how long the cctv market will remain a separate segmented market space or will it eventually merge into general IT. With IP cameras, and Servers becoming more common, I see this as a possible trend. Our company does project management and online sales and a large percentage of our customers are IT installers and internal IT departments who are installing these systems. I have heard from customers that once management hears IP based they send the project to their existing IT departments to manage as they feel why send the project outside when they are already paying $$$ for internal staff and figure they should be able to handle it.

 

It may be a just a fluke based on our experience, but we see that CCTV is going to be more of an IP integrator solution then a security installer solution in the next 5-10 years. Does the learning curve for IP with network and server config becoming a barrier for adoption by security firms?

 

I am not advocating for or against a shift, but if it does occur, the economics of CCTV will drastically change as margins on hardware are much smaller in IT and cost of labor/ training higher raising the costs of entry. As we sell retail we have already seen many vendors trying to fight the downward price pressure as margins drop to IT gear levels (7-12% vs 25-50%). Many are trying restrict distribution to prevent this, but ultimately business wise is not a long term fix as a competitor will just enter the market at a lower point with the same features and drive pricing down. ( Geovision and several other emerging brands are pushing the envelope of price and feature sets already, 360 degree cameras for one)

 

End users are in increasing numbers opting to setup and install IP security gear themselves as they already know networking and dont see a value add for a security installer. When they do have it installed I would say over 50% are using an IT integrator or electrician vs a security firm. This last part was even brought up by one of our vendor partners (IP Camera) last week at a partner conference that they see one of their largest growth segments for the future to be Electricians.

 

Thoughts or comments?

 

I don't know any Electricians that know anything about IP or camera placement. I know a lot of people who think they know what they are doing but have no clue. I agree things are going IT but again I know some very smart IT guys and they don't know anything about cameras.

 

No one wins with this model but the manufactures and we (including you) let them continue to do this. Online sales kill everything. People buy cameras from companies that don't know anything about cameras then come on this forum to A) get free help B) *** that the products suck because that don't know what they are doing. This gives everyone a black eye.

 

I am so happy that Avigilon hasn't let us hang out to dry and put a great product only in the hands of people that know how to design and install top of the line systems.

 

In the long run who wins when we are all out of a job because we can't make any money And I will continue to make noise with manufactures so they put the product in peoples hands that know what they are doing with their products.

[Voipmodo 0]

Companies like Avigilon at the high end of the market with a direct to dealer model can control their price and availability but sacrifice market share and sames volume. While I am not sure, I am guessing they are a private owned company. Just like any other market, the larger the company is, and if they have share holders, this sales model will not last forever as stakeholders demand increased revenue and volume. Cisco sells both business and consumer level equipment and both are available to anyone with a credit card. If they decided one day to limit switches with 8 ports or more only to integrators or enterprise customers then they would lose a drastic amount of market share and the exec who suggested it would be out of a job. If anyone here has accounts at broadline distributors like ingram micro, d&h, or synnex, you can see how almost all major brands including axis, panasonic, sony, samsung, and others are sold where anyone can buy. Pricing is the same as any other tech product, your discount is determined on your sales volume.

 

Rory you are right that there will always be a demand for low cost analog equipment. I also agree that in todays tech world that tech savvy end users can setup and configure 90-100% of whats needed for IP CCTV.

 

Wireguys, while I agree that there is a benefit of experience and training, many installs do not require it and I am sure you and possibly most installers would be hesitant to roll a truck out to a job site for a 1-2 camera residential install and give the customer a price they would reasonably pay. This is the market who online retailers like us target. We are one of the very few in the security industry market who actively provide support and get vendor certified. Too often online marketing and sales is discounted as always bad, but I am sure there have been things you have bought online instead of driving down to a local brick and mortar.

 

If you are worried about online sales, worry about your distributors more, as they are the ones who will sell to anyone at any price. I have lost bid jobs to the distributors we purchase from and know others that will sell to end users direct if the sale is right. I would even suggest that if you are a local integrator, to partner with a company like ours that provides lead referral for end users who do want installs, or to create your own online presence. If anyone else is interested in this, just contact us and we will show you how its simple to setup.

 

I am not going to lie and say that we do not get a large amount of sales online, but our largest volume of orders actually come from project management and custom quotes. These only came to us as customers found our site, saw that we carry the products and were sold on our expertise and support in configuring their solution.

 

When it comes to pricing, we would love to have higher prices to account for our overhead and support we provide, there will always be someone around to sell lower and that most manufacturer programs fail. Do a quick search for Avigilon pricing on google and even the brand you mentioned is sold online (Avigilon 2.0MP-HD-PRO-C for $2500)

[thewireguys 3]

 

When it comes to pricing, we would love to have higher prices to account for our overhead and support we provide, there will always be someone around to sell lower and that most manufacturer programs fail. Do a quick search for Avigilon pricing on google and even the brand you mentioned is sold online (Avigilon 2.0MP-HD-PRO-C for $2500)

 

 

LOL that camera doesn't exist anymore from Avigilon!! That company is over seas and Aviglon knows all about it. Show me any other sites that have their prices posted. I spoke with Avigilon at ISC and they have no plans to go with distribution or online sales. All sales are linked to dealers so they know where every piece of equipment came from.

 

Avigilon understands the value of integrators that know what they are doing. The Walmart way is killing this country and industry.

 

I don't understand how guys like yourself are happy making 5% on product and giving away free help If everyone would stand up for themselves instead of folding like a deck cards we would all be in a better place in this country.

 

BTW do you stock everything on your site or do you just drop ship everything?

[Voipmodo 0]

Fortunately our margins are higher then 5%, probably closer to 10-15% which is not great but normal for electronics. We stock some products and others drop ship based on cost and how frequently we sell the items.

 

We provide free basic support for example on all of our Mobitix cameras including assistance with setup of basic features and motion recording. We do have premium support options ($79-129) that are paid such as router configuration and setting up a NAS. Once a device is connected to the end users network there is not much that cant be done remotely. Yes the walmart way is lowering pricing across the board, but when there are very few products actually made in the country, everything comes down to importing and selling for the lowest possible price and going to high volume over high prices. The only way to compete is in service for local companies, and with ADT and others killing margins on security systems, CCTV and home automation/ home theater are the only real segments left while those last.( Until Best Buy kills that market)

 

We have not done a full announcement yet but we are working on a program that should help bridge the gap between online retailers and installers. Once launched if an end user on our site buys lets say an IP Camera. They click a box on the product page saying they want the camera installed. Once the order is fulfilled the end user info gets passed down to one of our partners in the area who quotes the install and gets 100% of the price they charge the customer and gets a percentage of the profit from the camera sale itself (10-30% still working that part out depending on brand) That end user customer is now the Installers who can sell them other products and services. We have tested this in a few markets and both end users and the installers have given us positive feedback. We plan to have the program fully live by this summer, and have manufacturers sold on the idea and will be helping us with identifying quality installers to start with.

[thewireguys 3]

I think one way to slow this down would be to have online retailers stock all products from the manufacture. I would like to see you have to stock some of the 20,000$ DVRs and see how long you would carry that product. I am different from the rest I put quality of work and product before making money at all cost.

[Tailbone215 0]

I don't know any Electricians that know anything about IP or camera placement. I know a lot of people who think they know what they are doing but have no clue. I agree things are going IT but again I know some very smart IT guys and they don't know anything about cameras.

 

I have to agree with this. Personally I think there will be a needed learning curve in the industry and the dinosaurs that don't want to learn to adapt will go extinct. The issue here is the installer is going to have to work with the customer's IT department since most of the time the newly installed system will have to be integrated into theirs. If you are willing to learn and make the effort to adapt this is a real non-issue. Of course, there will always be an IT department that think they have the smarts to sub out all the pulling and installing. Sometimes they get lucky...

Edited April 10, 2011 by Guest

[Tailbone215 0]

I think one way to slow this down would be to have online retailers stock all products from the manufacture. I would like to see you have to stock some of the 20,000$ DVRs and see how long you would carry that product. I am different from the rest I put quality of work and product before making money at all cost.

 

It will never happen as there are too many manufacturers that don't have the intestinal fortitude to stop their distributors from drop-shipping. I guess you really can't expect them to as it is all about the dollar at the end of the day. I tried to have this conversation previously with another member and it was like talking to a cinderblock.

[thewireguys 3]

I think one way to slow this down would be to have online retailers stock all products from the manufacture. I would like to see you have to stock some of the 20,000$ DVRs and see how long you would carry that product. I am different from the rest I put quality of work and product before making money at all cost.

 

It will never happen as there are too many manufacturers that don't have the intestinal fortitude to stop their distributors from drop-shipping. I guess you really can't expect them to as it is all about the dollar at the end of the day. I tried to have this conversation previously with another member and it was like talking to a cinderblock.

 

But the manufactures win because they are selling the product to the online store. It is separate the men from the boys if they put their foot down.

[Tailbone215 0]

 

But the manufactures win because they are selling the product to the online store. It is separate the men from the boys if they put their foot down.

 

Exactly! That is my point. It would be foolish of them to have a few distributors having forced inventory when they can have an unlimited amount of drop-shippers working the channels for sales. The only downside of drop-shipping is these sellers aren't always going to be getting the merchandise shipped to their customers reliably. Drop-shippers are only as good as the company doing the actual shipping.

[thewireguys 3]

I don't know any Electricians that know anything about IP or camera placement. I know a lot of people who think they know what they are doing but have no clue. I agree things are going IT but again I know some very smart IT guys and they don't know anything about cameras.

 

I have to agree with this. Personally I think there will be a needed learning curve in the industry and the dinosaurs that don't want to learn to adapt will go extinct. The issue here is the installer is going to have to work with the customer's IT department since most of the time the newly installed system will have to be integrated into theirs. If you are willing to learn and make the effort to adapt this is a real non-issue. Of course, there will always be an IT department that think they have the smarts to sub out all the pulling and installing. Sometimes they get lucky...

 

I just got back from ISC and after taking to my manufacture partners and listening to the questions people where asking 90% of the people in this business or trying to get in this business have NO CLUE what they are doing with IP.

 

I find that most IT departments at first want there hands in this but then once I explain what is involved they want nothing to do with it. They already have 100+ devices on the network and only so much time and now I am talking about adding 100+ more devices. They see the light and don't want anything to do with it.

[Tailbone215 0]

I just got back from ISC and after taking to my manufacture partners and listening to the questions people where asking 90% of the people in this business or trying to get in this business have NO CLUE what they are doing with IP.

 

I find that most IT departments at first want there hands in this but then once I explain what is involved they want nothing to do with it. They already have 100+ devices on the network and only so much time and now I am talking about adding 100+ more devices. They see the light and don't want anything to do with it.

 

BINGO! That is why installers will have to learn how to adapt or hire/sub someone that does IT integration. This will separate the professionals from the wannabes. Either way you are working with the customer's IT department in some sort of way.

 

I do agree with you that the customer's IT department is more cooperative when they are explained the full scope of what is involved.

[Soundy 1]

Maybe we've just been lucky... only three of our big clients have their own IT departments... two of them, the IT guys don't want to bother with the camera side of things at all (beneath them, I suppose)... the other, their MIT recognizes that what we do, and our area of expertise, is beyond his expertise, and we've shown enough that we know our stuff, that he's more than happy to just let us handle the details. Then again, with the third one, we're doing all hybrid systems, so there's still analog involved, as well as the initial system design (camera locations and layouts) that he's happy to leave to the experts.

 

In all three cases, the camera systems are on a dedicated network anyway; in the third case, we tie into the corporate lan just to provide remote access/admin, and with the other two, we don't connect to their networks at all (the one exception was a site that configured their site switch with a VLAN for the cameras, and had us use that... but AFAIK it's still isolated from everything else).

[Voipmodo 0]

The industry is changing towards IP, which is how we got started doing it. We started the business doing IP and VoIP and kind of fell into more and more IP Security camera products as our clients requested it.

 

I for one personally wish there was a way to charge more money and to make better margins on the equipment. We are in a small market and if we had to rely on local installs we would be out of business rather quickly.

 

If you think the security business is tight, I started in HS and Undergrad studying telecom and Media Production only to see the entire industry evaporate as anyone with an Imac and a Camcorder could do what video editors once needed years of training and expensive AVID hardware or tape decks. Once our customers started balking at spending $30/hr for media services it was time to find a new industry. At least what I learned in school and the experience I did have in video carries over to cctv. That was about 10 years ago, and looking back glad we made the switch to telecom and Security.

[Campbell 0]

My company started off way back when as computer engineering firm. ALong the way somewhere we were asked at some point to install some security cameras and we sort of moved on from that. We started using video servers like Etrovisions about 15 years ago and dedicated IP cameras about 8-10 years ago (I just pulled out some ACTi 5120's from one of our early sites a month ago) Thankfully we have a strong background in networking to be able to support all models of IP which is why we deal almost exclusively in IP based products here in Aus because we know how to reconfigure networks and yada yada.

 

To answer the OP. The security industry is much like the PC industry in the 90's when you blinked and the technology had advanced 10 fold overnight. Most of the guys who install security stuff at the moment are those who plug in cables and everything worked. Now a days, you can't just do that with IP based products. You need to ensure that the network infrastructure is in place as well and it's this part that is WELL beyond most installers currently.

 

However, customers still need to procure the products. They still need someone with expertise in where to install the products and they still need someone to install the products. IT guys are suits, they don't want to get their hands dirty. They also have their own stuff to look after as well rather than maintaining a physical security system.

 

If you are able to do both, then in my opinion you shouldn't need to worry. And there will still be a market for low end products but that market will increasingly shrink. (I think AXIS released a white paper recently showing that IP installations are now about 15% cheaper than non-IP) Show someone the difference between an megapixel and a SD analog, and you can wax lyrical all day long about the SD analog but at the end of the day the customer will still be staring at the megapixel image going... WOW that's amazing!

 

Additionally, most new buildings are already CAT6 wired for data so the overall infrastructure cost of a new IP based security system is going to be significantly smaller and 1 megapixel camera can take the place of 2 or 3 SD analogs. All this makes it much more attractive to go megapixel IP than coax stuff.

 

Of course my market here in Aus is in education campuses and retail, so I don't have the same problems that some of you guys do with small margins on small jobs. Throw access control into that as well and its a nice little niche market that hasn't been flooded out yet (it will, but not yet).

 

PS Soundy, is your website down? ***EDIT*** Nvm, looks like I just checked it inbetween you pulling it down and putting the new temp one up.