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According to IMS Research, Austin, Texas, Internet protocol (IP) camera sales are growing at an annual rate of 40 percent. However, sales of network cameras still represent only a fraction of the overall security camera market. By some estimates, IP cameras currently account for 12 percent of the sales in a nearly $1 billion surveillance camera market in North America.
Swedish-based Axis Communications first introduced a network camera in 1996. Since then, Axis has grown into the fourth largest overall camera company (including analog and network-based) with 2006 U.S. sales of $163 million. The Axis business has regularly grown at 40% year-over-year, and they are not alone. Today, nearly every major manufacturer of security cameras has introduced IP camera products. Panasonic, Bosch, Pelco, Sony and many others have all joined the fray to provide IP cameras.
Why hasn't this commercial success and manufacturer focus resulted in even larger growth in the commercial security markets? What hurdles remain for network cameras to become the standard over analog cameras?
I recently asked the chief marketing executive of a major IP camera provider to name his top rival. I expected him to name one of the IP camera leaders. To my surprise, he did not hesitate to tell me that his top competitor was the analog security camera.
IT concerns
Information technology (IT) managers are inherently conservative about what goes on their network. After all, they are in the line of fire when viruses attack, systems go down or an application hogs the network's bandwidth and prevents other critical applications from functioning properly.
The current IP video solutions are complex and most require a "systems" approach. A typical system may require installation of a network switch, selecting the appropriate server and storage solution and then installing and configuring video management software. It's also likely that all of these components are provided by different manufacturers.
While this systems approach makes sense for many high end enterprise applications, it can start to lose its appeal to a security dealer who can provide an alternative surveillance solution by plugging in a digital video recorder (DVR) and a handful of cameras.
While many security dealers have upgraded their expertise and IT capabilities, there is still a general knowledge gap of IT technologies and education certifications. For this reason, many manufacturers of IP cameras and video management software simply have not targeted their sales, education and training efforts on traditional security dealers.
Cost: smaller systems are more expensive
The general overhead of installing a network, server and software generally make the IP camera solutions more expensive than their DVR and analog camera counterparts. This is particularly true for the majority of commercial surveillance installations which are typically less than 16 cameras.
Where's the killer application?
There must be a killer app to justify the current higher cost and complexity of IP video. Is it video quality? Most surveillance video is recorded at CIF resolution. The megapixel resolutions and progressive scanning features in IP cameras offer better full resolution images, but only if people are willing to invest in the higher storage expense.
The course correction from analog to video is inevitable. We will eventually reach a tipping point where IP camera sales exceed analog cameras and become the industry standard. The timeline is anyone's guess, but it will certainly arrive sooner when IP camera manufacturers focus on the security dealer channel with simplified and cost effective solutions.
And as for integrators, it wouldn't hurt to find that killer application to get the ball rolling.
Tom Galvin of NetVideo Consulting is a network video specialist. His Web site is: www.netvideoconsulting.com.
author: By Tom Galvin