With relatively weaker markets in Western Europe and North America, and first-to-market opportunities forgone in BRIC, the next gold rush lies in CIVETS. In these price-sensitive markets, it is easy to become engaged in price wars when Chinese competitors offer hard-to-beat prices.
Manufacturers should be aware that channel partners are changing their business models, shifting from dumb box-moving to solution-oriented packages. Compared to the consumer market, volumes in physical security is much smaller and requires much more customization, communication and technical support — a margin of 10 percent is simply not good enough.
Fortunately, the industry is refocusing on helping channel partners adjust for increasingly complex technologies while also maintaining sustainable profits. Simplifying installation and configuration processes is an effective way to help systems integrators control their costs.
Diffusion of Innovations
The diffusion of innovations explains how new ideas and technologies are adopted over time. In this theory, five characteristics of an innovation influence a person's tendency toward adopting an innovation: relative advantage of the new technology, compatibility with existing systems, simplicity compared to existing implementations, the ability to test the new technology and the visibility of the change.
Currently, around 90 percent of video surveillance systems are still analog. In terms of units shipped, analog systems will still out-ship IP-based systems for years to come. While there is little doubt that HD is the future of video surveillance, the transition has not been as quick as anticipated. Not only because of the increased complexity and additional required skillsets, but also the fact that many channel players still have a lot of analog stock to clear up.
With HD-SDI still in its adolescence, network cameras remain the Primary means toward HD video surveillance. That sales revenue for network cameras will outsell analog ones is mainly driven by demand for better image quality, which has not been an easy demand to satisfy. Besides the difficult transition from the elegantly simple analog world where everything just works, other headaches appear when considering HD video, such as transmission, storage and compatibility. Multiple solutions have been proposed to help ease adoption of HD video surveillance by reducing complexity. This year they appear to be more mature, marching forward at a steady pace.
HD via Coax
Sony's money is on SLOC, a technology advocated by Intersil Techwell and marketed by Sony as "IP over coax." SLOC allows SLOC-enabled network cameras to run through existing coaxial cables, along with the analog cameras that are already in place. Products are finally coming to market that combine the low latency and simplicity of analog with HD video, all while allowing existing infrastructure to be reused.
HD-SDI is another alternative path toward HD. Manufacturers have significantly improved performance and reliability of their devices and it seems like total solutions are finally materializing, with DVRs now capable of recording 16 channels at 7 to 10 fps, up from four channels at 2 fps. Companies like Calsys are also beginning to boast total solutions and large-scale installations. Adoption for HD-SDI is picking up and prices are expected to drop in Q3 or Q4.
Something new popped up as well. ccHDTV is another technology that allows end users to capitalize on existing analog wiring infrastructure to deliver 1,080p video. New it may be — indeed, a Google search does not bring up anything — it is another response to the market, which demands simplicity and maximizing value of existing investments. ccHDTV claims to be "the best… HD solution without all the network hassles and HD-SDI infrastructure limitation." It also attempts to resolve storage issues seen in HD-SDI by compressing images at the camera, sending full HD video through coaxial cables via the DVB-T standard. The main markets it wishes to tackle are large-scale installations in South East Asia.
For the time being, many manufacturers are riding on both the IP and HD-SDI trains, waiting for the fog to clear. In any case, much emphasis has been placed on simplifying things for users and channel partners. When it comes to system architecture, installation, operation or maintenance costs, simplicity is something all parties appreciate.
In terms of education, training the SI on how to use products effectively is critical, since they are the ones that are pushing the products to the end user. On the end user's side, the increasing collaboration required between IT and security departments means that both parties must be equally informed of how a particular product will affect other components in the system.
Tides of Change
Never say never when it comes to technology. Even Apple's iPad was heavily criticized before it took the world by fire. IP-based video surveillance, HD over coax and many other technologies were all at some point "crazy ideas" (some still are). While disruptive products and services generally experience slow uptake due to caution or lack of understanding, it takes time for awareness to trickle down the distribution chain.
However, what is most important is the value delivered by these new technologies to the customer. While innovation is appreciated in any industry, not all innovation is equal. Manufacturers must get their heads out of the sand if they wish to develop compelling solutions that truly cater to their customers. At the end of the day, those who value and provide value to customers are the ones that walk away with a big smile and a fat check, while those who fail to adapt to new demands from the market will ultimately suffer.