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INSIGHTS
Since 2010, competition among manufacturers in China, Taiwan and Korea has heated up ferociously. The rapid rise of Chinese security is catching up to its overseas counterparts, changing Asian dynamics. Chinese security companies have matured, with more players understanding overseas markets better. Coupled with low labor costs, these factors accelerate the profile of Chinese leading companies. The first competitors hammered by Chinese manufacturers are Korean companies, particularly DVR manufacturers. a&s talked to Korean companies about how they deal with challenges. Their strategies include stronger quality and product differentiation. They also bring new technologies to market sooner and work closely with overseas clients. Most importantly, Korean manufacturers are crystal clear about their future directions. The following companies offer insight into Korean security.

Korean Manufacturers Respond to Price Competition With Differentiation

Date: 2011/10/14
Source: John Shi

Pinetron
Pinetron was established in 1999 as an ASIC company, then moved toward HDD storage. In 2006 and 2007, as many SoC companies moved into the DVR business, Pinetron remained strong due to its core competence of SoC programming.

When starting its stand-alone DVR business, Pintron won orders from Japanese clients and learned about their exacting demands for product design and manufacturing.

Since OEM constitutes 70 percent of Pinetron's business, its brand is less well-known. Pinetron promotes its own brand by having one distributor per country. Chinese brands did not come to the attention of Pinetron's customers until 2010. However, current Chinese products do not directly threaten Pinetron. To accentuate its brand position and company values, Pinetron came up with a new slogan: “Our passion is your safety.”

To distinguish itself, the company focuses on its technological proficiency. Pinetron targets middle and high-end markets, such as military projects, retail stores, casinos and prisons.

Banks are an especially important target for the company. For gaming, casinos demand HD resolution but not necessarily IP.

Sales growth for 2010 to 2011 is expected to double due to the company's complete product line for storage. Its lineup includes five DVR models ranging from entrylevel to high-end and DVRs supporting IP transmission over analog cables through Intersil's security link over coaxial (SLOC). Pinetron has also developed and IP lineup of network cameras, NVRs and hybrid DVRs.

The company is an early adopter of SLOC cameras, as HDcctv's bottlenecks include limited transmission distances and one-way transmission. Pinetron wants to offer an alternative with SLOC video surveillance, befitting its guiding principles of innovation.

Comart SYSTEM
Comart started with PC - based DVRs. To avoid price competition, Comart began its HD-SDI development in 2009. The results were well-received, as its solutions have been deployed along Korean highways and pachinko parlors in Japan.

As the market grows, more players have entered and have shrunk Comart's profit. For example, Comart's 1,080p DVRs with four channels were undercut by 720p models from competitors at half the price. To overcome this price war, Comart plans to launch products with higher price-performance by the end of this year. Beside DVR price wars, camera prices have also dropped precipitously. An analog camera that retailed for US$600 in 2008 is now worth $150 and could plummet to $100 by next year. The bright side of this price drop is that market share for HD-SDI may reach 1 percent next year and could pick up fast.

HD-SDI's compatibility is one of the urgent issues to be solved. HD-SDI selections are limited and not interoperable between vendors.

Chang Hoon Seol, CEO of Comart, felt that insufficient R&D know-how is the main reason why cameras failed to meet SMPTE standards. As a result, when various HD-SDI cameras are connected to third-party DVRs, compatibility bugs occurs. To make it worse, valid transmission distances varied between companies as well.

Currently, HD-SDI cannot handle PTZ camera controls, audio or bidirectional transmissions. While establishing related standards is important, Soel felt that reaching a consensus between manufactures would take too long. Soel said SLOC is most relevant for network cameras, as it presents a transmission alternative.

KT&C
KT & C acquired a machine vision and traffic management camera company three years ago, expanding its portfolio. It focuses on developing and launching new products, such as megapixel cameras, HDcctv cameras and DVRs.

KT&C's target verticals for HD-SDI are mainly government and police projects, prisons and royal palaces. The maximum resolution for traditional surveillance cameras is 600 to 700 TVL. Once the distance between objects and cameras reaches certain distance, it is difficult to identify, which is overcome with HD-SDI. KT&C's main oversea markets include Russia, the U.S. and Europe. Sales in the Middle East and South America have also done well. It entered the China market in 2004, which is now one of its top five markets. Zoom cameras are among its bestselling product in China, resulting in KT&C establishing Chinese factories to meet local demand.

This year, KT&C will launch HD PTZ cameras,2-megapixel HD-SDI cameras and compact HDcctv cameras. The HDcctv cameras are small, but are easy to integrate and withstand high temperature. KT&C's major competitors are CNB and HDPRO, while several Taiwanese companies are co-petitors. Its revenue has yet return to prerecession levels, particularly in the Russian market, but the company expects a strong recovery in 2010 and 2011.


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